DENVER, Jan. 20, 2021 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share for the fourth quarter of 2020. In addition, Antero Midstream announced plans to issue their fourth quarter 2020 earnings on Wednesday, February 17, 2021 after the close of trading on the New York Stock Exchange.
Fourth Quarter 2020 Return of Capital
Antero Midstream's fourth quarter 2020 dividend is unchanged as compared to the third quarter of 2020. The dividend will be payable on February 11, 2021 to stockholders of record as of February 3, 2021. This represents the 24th consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014. Antero Midstream did not repurchase any common shares during the fourth quarter of 2020. Antero Midstream had approximately $150 million of remaining share repurchase capacity under its $300 million authorized share repurchase program as of December 31, 2020.
Fourth Quarter 2020 Earnings Release Date and Conference Call
Antero Midstream plans to issue its fourth quarter 2020 earnings on Wednesday, February 17, 2021 after the close of trading on the New York Stock Exchange. A conference call for Antero Midstream is scheduled on Thursday, February 18, 2021 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, February 25, 2021 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13714535. 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 25, 2021 at 10:00 am MT.
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.
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SOURCE Antero Midstream Corporation
DENVER, Jan. 11, 2021 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources") announced today the pricing of its private placement to eligible purchasers of $700 million in aggregate principal amount of 7.625% senior unsecured notes due 2029 at par (the "Notes"). The offering is expected to close on January 26, 2021, subject to customary closing conditions.
Antero Resources estimates that it will receive net proceeds of approximately $692 million, after deducting the initial purchasers' discounts and estimated expenses. Antero Resources intends to use a portion of the net proceeds from the offering to fund the redemption of all $311 million aggregate principal amount of its 5.125% senior notes due 2022 (the "2022 Notes") not previously called for redemption at par plus accrued interest and to use the remaining net proceeds to repay borrowings under its credit facility. The redemption of all 2022 Notes not previously called for redemption is conditioned on the completion of the offering of the Notes. The offering of the Notes is not contingent upon the completion of such redemption.
The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. This press release shall not constitute a notice of redemption of the 2022 Notes.
Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S.
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 Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds, including to fund the redemption of all 2022 Notes not previously called for redemption, are forward-looking statements within the meaning of Section 27A of the Securities Act 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 Resources 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 Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond the Antero Resources' control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health events, including the COVID-19 pandemic, potential shut-ins of production due to lack of downstream demand or storage capacity, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2019 and in its subsequently filed Quarterly Reports on Form 10-Q.
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SOURCE Antero Resources Corporation
DENVER, Jan. 11, 2021 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources") announced today that, subject to market conditions, it intends to offer $500 million in aggregate principal amount of senior unsecured notes due 2029 (the "Notes") in a private placement to eligible purchasers.
Antero Resources intends to use a portion of the net proceeds from the offering to fund the redemption of all $310.5 million aggregate principal amount of its 5.125% senior notes due 2022 (the "2022 Notes") not previously called for redemption at par plus accrued interest and to use the remaining net proceeds to repay borrowings under its credit facility. The redemption of all 2022 Notes not previously called for redemption is expected to be conditioned on the completion of the offering of the Notes. The offering of the Notes is not contingent upon the completion of such redemption.
The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. This press release shall not constitute a notice of redemption of the 2022 Notes.
Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S.
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 Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds, including to fund the redemption of all 2022 Notes not previously called for redemption, are forward-looking statements within the meaning of Section 27A of the Securities Act 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 Resources 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 Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond the Antero Resources' control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health events, including the COVID-19 pandemic, potential shut-ins of production due to lack of downstream demand or storage capacity, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2019 and in its subsequently filed Quarterly Reports on Form 10-Q.
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SOURCE Antero Resources Corporation
DENVER, Dec. 17, 2020 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources") announced today that, subject to market conditions, it intends to offer $500 million in aggregate principal amount of senior unsecured notes due 2026 (the "Notes") in a private placement to eligible purchasers.
Antero Resources intends to use a portion of the net proceeds from the offering to fund the redemption of $350 million aggregate principal amount of its 5.125% senior notes due 2022 (the "2022 Notes") at par plus accrued interest and to use the remaining net proceeds to repay borrowings under its credit facility. The partial redemption of the 2022 Notes is expected to be conditioned on the completion of the offering of the Notes. The offering of the Notes is not contingent upon the completion of such redemption.
The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. This press release shall not constitute a notice of redemption of the 2022 Notes.
Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S.
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 Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds, including to fund the partial redemption of the 2022 Notes, are forward-looking statements within the meaning of Section 27A of the Securities Act 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 Resources 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 Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond the Antero Resources' control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health events, including the COVID-19 pandemic, potential shut-ins of production due to lack of downstream demand or storage capacity, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2019 and in its subsequently filed Quarterly Reports on Form 10-Q.
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SOURCE Antero Resources Corporation
DENVER, Nov. 5, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") announced today the pricing of the private placement by Antero Midstream Partners LP ("Antero Midstream Partners"), an indirect, wholly owned subsidiary of Antero Midstream, to eligible purchasers of $550 million in aggregate principal amount of 7.875% senior unsecured notes due 2026 at par (the "Notes"). The offering is expected to close on November 10, 2020, subject to customary closing conditions.
Antero Midstream estimates that proceeds of the offering will be approximately $544 million, after deducting the initial purchasers' discounts and estimated expenses, which Antero Midstream Partners intends to use to repay a portion of the outstanding borrowings under its credit facility.
The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A of the Securities Act and outside the United States pursuant to Regulation S of the Securities Act.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
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.
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 the proposed offering and the intended use of proceeds, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Antero Midstream's 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 Corporation's drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting Antero Resources Corporation's future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health 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.
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SOURCE Antero Midstream Corporation
DENVER, Nov. 5, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") announced today that Antero Midstream Partners LP ("Antero Midstream Partners"), an indirect, wholly owned subsidiary of Antero Midstream, subject to market conditions, intends to offer $400 million in aggregate principal amount of senior unsecured notes due 2026 (the "Notes") in a private placement to eligible purchasers.
Antero Midstream Partners intends to use the net proceeds of the offering to repay a portion of the outstanding borrowings under its credit facility. The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
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.
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 the proposed offering and the intended use of proceeds, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Antero Midstream's 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 Corporation's drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting Antero Resources Corporation's future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health 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.
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SOURCE Antero Midstream Corporation
DENVER, Oct. 29, 2020 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company") today announced that it has issued a notice to the holders of its 5.375% senior notes due 2021 (the "2021 Notes") that the Company intends to redeem all of the 2021 Notes outstanding on November 30, 2020 at par, plus accrued and unpaid interest to the redemption date (the "Note Redemption"). The Company expects to utilize a combination of proceeds from its asset sales program, cash flow from operations and available borrowings under its revolving credit facility to fund the Note Redemption.
This press release is for informational purposes only and shall not constitute an offer to purchase the 2021 Notes or any other security. Additional information concerning the terms of the redemption are fully described in the Notice of Redemption distributed to the holders of the 2021 Notes. Beneficial holders of the 2021 Notes with any questions about the redemption should contact their respective brokerage firm or financial institution.
Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S. The Company's website is located at www.anteroresources.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 Resources' control. All statements, except for statements of historical fact, made in this release regarding the Note Redemption 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 Resources 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 Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
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SOURCE Antero Resources Corporation
DENVER, Oct. 28, 2020 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources", "Antero", or the "Company") today announced its third quarter 2020 financial and operational results. The relevant unaudited condensed consolidated financial statements are included in Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Third Quarter Highlights Include:
Paul Rady, Chairman and Chief Executive Officer of Antero Resources commented, "Our third quarter results highlight the exceptional operational momentum that continues at Antero. Our development program and well results continue to exceed expectations, which drove the quarterly production outperformance. Antero's long-haul firm transportation portfolio allowed for no shut-ins or curtailments and delivered gas sales at just $0.05 per Mcf below NYMEX prices during a period of wide regional basis differentials. Our operational and strategic advantages combined with an improving backdrop for natural gas and NGLs support our expectation of significant free cash flow generation during the second half of 2020.
Mr. Rady continued "Earlier this month we published our annual Corporate Sustainability Report, which highlights our outstanding environmental, social, and governance ("ESG") performance and unwavering commitment to being an industry leader in ESG metrics. We believe that natural gas will be key to the energy transition over the coming decades as it compliments renewable energy growth. As the third largest natural gas producer in the U.S., we are well positioned to maintain our peer-leading ESG position and be a natural gas provider of choice. Finally, we are committed to improving our already low greenhouse gas metrics even further as we work to achieve our 2025 environmental goals."
Glen Warren, CFO and President of Antero Resources said, "We have delivered on our commitment to reduce debt through a combination of $751 million of asset sales and debt repurchases at a discount. Our debt repurchase program which we launched in late 2019, has resulted in a $1.3 billion reduction in near-term maturities and the elimination of $220 million of total debt due to the realized discount. During the second half of 2020, we expect to generate $175 to $200 million in free cash flow, based on today's strip prices, and to receive the first of two $51 million contingency payments from our overriding royalty holder, Sixth Street Partners, providing additional funds for debt retirement. By year-end 2020 we estimate that Antero will have reduced total debt by over $800 million. Longer term, we are committed to maximizing free cash flow and further reducing total debt and financial leverage."
For a discussion of the non-GAAP financial measures including Adjusted EBITDAX and Free Cash Flow please see "Non-GAAP Financial Measures."
Asset Sale Program Update
Since the announcement of the Company's $750 million to $1 billion asset sale target in December 2019, Antero has closed $751 million of transactions as detailed in the table below. Proceeds received to date have been used to repurchase debt at a discount. The Company intends to continue to evaluate other opportunities for asset monetizations with the proceeds earmarked for further debt reduction.
$M | |
Antero Midstream Common Stock Sale (December 2019) | $100,000 |
ORRI Transaction (June 2020)(1) | $402,000 |
Hedge Monetization (July 2020)(2) | $29,000 |
VPP Transaction (August 2020) | $220,000 |
Total Asset Sale Proceeds to Date | $751,000 |
(1) | Includes $102 million of contingent payments, $51 million of which was earned based on volume thresholds met during the third quarter of 2020. The remainder may be earned based on achieving volume thresholds through the first quarter of 2021. |
(2) | Includes hedge monetization related to the ORRI transaction that resulted in Antero being over-hedged on natural gas. |
Debt Repurchases
Antero repurchased $461 million principal amount of senior notes during the third quarter of 2020 at a 13% weighted average discount price. The total includes the results of the completed tender offer for Antero's senior notes maturing in 2021, 2022 and 2023. The repurchase discount during the third quarter reduced total indebtedness by $59 million. Since the commencement of the debt repurchase program in the fourth quarter of 2019, Antero has repurchased $1.3 billion of debt principal at a 17% weighted average discount. This discount alone reduced total indebtedness by $220 million, while interest expense has been reduced by $34 million on an annualized basis.
The table below shows the principal amount of our senior notes repurchased between September 30, 2019 and 2020.
Par Value at | Principal | Repurchase | Discount | ||||||||||
($M) | 2019 | 2020 | |||||||||||
5.375% Senior Notes Due 2021 | $ | 1,000,000 | $ | 315,279 | $ | (684,721) | $ | (596,648) | (13%) | ||||
5.375% Senior Notes Due 2022 | 1,100,000 | 660,516 | (439,484) | (355,437) | (19%) | ||||||||
5.375% Senior Notes Due 2023 | 750,000 | 579,232 | (170,768) | (127,485) | (25%) | ||||||||
5.375% Senior Notes Due 2025 | 600,000 | 590,000 | (10,000) | $ | (6,364) | (36%) | |||||||
Total | $ | 3,450,000 | $ | 2,145,027 | $ | (1,304,973) | (1,085,934) | (17%) |
Borrowing Base Redetermination Completed
As a result of the recently completed October 2020 borrowing base redetermination, the borrowing base under Antero Resources' credit facility was reaffirmed at $2.85 billion. Lender commitments under the credit facility remained at $2.64 billion, supported by 24 banks. Antero has $1.1 billion in available liquidity under its credit facility as of September 30, 2020.
Firm Transportation Commitments
Antero's firm transportation commitments will decline by 810 MMcf/d by year end 2024 at Antero's option. Of that, 300 MMcf/d of firm transportation commitments will expire during 2021 and notice has been given to the pipeline counterparties to that effect. If Antero elects to release the remaining 510 MMcf/d, the annual reduction in demand fees will total $100 million by 2024. The released commitment volumes are expected to reduce net marketing expense by approximately $25 million in 2021 and $60 million in 2022, as compared to 2020 levels, assuming maintenance level capital spending.
Third quarter net marketing expense of $0.11 per Mcfe was the lowest since Antero's full firm transportation portfolio was completed in 2018. As basis differentials widened during the third quarter of 2020, Antero's firm transportation portfolio allowed for the flow of its production without any shut-ins or curtailments and shielded it from the wide regional basis to NYMEX prices. During the month of September, when the regional basis differential expanded to over $1.50 per Mcf, Antero's firm transportation provided a $38 million benefit relative to selling gas in-basin, net of utilized transportation expense and unutilized marketing expense. The wide basis differentials continued during October and Antero experienced similar benefits from its firm transportation portfolio.
Third Quarter 2020 Free Cash Flow
Antero generated $88 million in Free Cash Flow before changes in working capital during the third quarter. After adjusting for working capital investments of $80 million during the quarter, Free Cash Flow was $7 million. Antero expects working capital adjustments to reverse during the fourth quarter of 2020 and continues to expect Free Cash Flow of $175 to $200 million during the second half of 2020, assuming strip pricing.
Three Months Ended | |||||
($MM) | 2019 | 2020 | |||
Net Cash Provided by Operating Activities | $ | 198,410 | $ | 175,870 | |
Less: Capital Expenditures | (290,825) | (151,157) | |||
Less: Distributions to Non-Controlling Interests | — | (17,249) | |||
Free Cash Flow | $ | (92,415) | $ | 7,464 | |
Changes in Working Capital | 13,653 | 80,308 | |||
Free Cash Flow before changes in working capital | $ | (78,762) | $ | 87,772 |
Corporate Sustainability Report
Antero published its 2019 Corporate Sustainability Report ("CSR") in October detailing the Company's ongoing commitment to environmental excellence, strong governance, safe operations and the communities in which it operates. The report highlights Antero's leadership in greenhouse gas (GHG) intensity, methane leak loss rate and safety metrics. Within the report, Antero set in place year 2025 environmental goals which include a 50% reduction in its 2019 methane leak loss rate to under 0.025%, a 10% reduction in GHG intensity, alignment with TCFD and SASB reporting guidelines and endeavoring to achieve net zero carbon emissions through operational improvements and carbon offsets.
The Company believes that 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 GHG 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 energy future. The CSR press release and full report is available at www.anteroresources.com/sustainability/founders-message. 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 producer of natural gas, NGLs and oil, Antero Resources 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. The Company has continued to operate under these regulations, while taking steps to protect the health and safety of its workers. Antero has implemented protocols to reduce the risk of an outbreak within its field operations, and these protocols have not had an impact on production or performance. A substantial portion of the Company's non-field level employees have transitioned to remote work from home arrangements. Antero has been able to maintain a consistent level of effectiveness, including maintaining day-to-day operations and decision making, and financial reporting systems and internal control over financial reporting. For more information, please see Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Third Quarter 2020 Financial Results
For the three months ended September 30, 2020, Antero reported a GAAP net loss of $536 million, or $1.99 per diluted share, compared to a GAAP net loss of $879 million, or $2.86 per diluted share, in the prior year period. The loss was driven by a $749 million unrealized commodity derivative fair value loss as a result of the 10% rise in the natural gas strip pricing during the quarter. Adjusted Net Income (non-GAAP measure) was $15 million, or $0.05 per diluted share, compared to Adjusted Net Loss of $150 million during the three months ended September 30, 2019, or $0.49 per diluted share.
Adjusted EBITDAX (non-GAAP measure) was $272 million, a 5% increase compared to the prior year period driven by lower operating costs and increased production. Antero's average realized gas equivalent price after hedges declined by 7% from $3.13 per Mcfe in the third quarter of 2019 to $2.92 per Mcfe in the third quarter of 2020, a $0.94 per Mcf premium to NYMEX pricing.
The following table details the components of average net production and average realized prices for the three months ended September 30, 2020:
Three months ended September 30, 2020 | ||||||||||||||||
Combined | ||||||||||||||||
Natural | ||||||||||||||||
Natural Gas | Oil | C3+ NGLs | Ethane | Gas Equivalent | ||||||||||||
(MMcf/d) | (Bbl/d) | (Bbl/d) | (Bbl/d) | (MMcfe/d) | ||||||||||||
Average Net Production | 2,453 | 14,860 | 145,654 | 59,345 | 3,772 | |||||||||||
Combined | ||||||||||||||||
Natural | ||||||||||||||||
Natural Gas | Oil | C3+ NGLs | Ethane | Gas Equivalent | ||||||||||||
Average Realized Prices | ($/Mcf) | ($/Bbl) | ($/Bbl) | ($/Bbl) | ($/Mcfe) | |||||||||||
Average realized prices before settled derivatives | $ | 1.93 | $ | 25.07 | $ | 22.01 | $ | 5.94 | $ | 2.30 | ||||||
Settled commodity derivatives | 0.80 | 9.89 | 1.80 | (0.27) | 0.62 | |||||||||||
Average realized prices after settled derivatives | $ | 2.73 | $ | 34.96 | $ | 23.81 | $ | 5.67 | $ | 2.92 | ||||||
NYMEX average price | $ | 1.98 | $ | 40.89 | $ | 1.98 | ||||||||||
Premium / (Differential) to NYMEX | $ | 0.75 | $ | (5.93) | $ | 0.94 |
Net daily natural gas equivalent production in the third quarter averaged 3,772 MMcfe/d, including 219,859 Bbl/d of liquids (65% natural gas by volume), a new company record. Net production increased 12% from the prior year period. Throughput on Antero Midstream's low pressure gathering system was 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.
Antero's average realized natural gas price before hedging was $1.93 per Mcf, representing a 23% decrease versus the prior year period. Despite a sharp widening in the regional basis differential during the quarter, Antero realized a $0.05 per Mcf discount to the average NYMEX Henry Hub price through the use of its premium firm transportation to NYMEX-based markets. Antero expects its pre-hedge natural gas differentials to return to a $0.00 to $0.10 premium to NYMEX in the fourth quarter of 2020. Including hedges, Antero's average realized natural gas price was $2.73 per Mcf, a $0.75 premium to the average NYMEX price.
Antero's average realized C3+ NGL price before hedging was $22.01 per barrel, a 47% sequential improvement and a 2% decrease versus the prior year period. Antero shipped 49% of its total C3+ NGL net production on Mariner East 2 for export and realized a $0.06 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 51% of C3+ NGL net production at a $0.10 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 145,654 Bbl/d of net C3+ NGL production was $22.01 per barrel, which was a $0.02 per gallon discount to Mont Belvieu pricing. Antero expects to sell at least 50% of its C3+ NGL production in 2020 at Marcus Hook for export at a premium to Mont Belvieu.
Three months ended September 30, 2020 | ||||||||
Pricing Point | Net C3+ NGL Production | % by | Premium (Discount) To Mont Belvieu | |||||
Propane / Butane exported on ME2 | Marcus Hook, PA | 71,426 | 49% | $0.06 | ||||
Remaining C3+ NGL volume | Hopedale, OH | 74,228 | 51% | ($0.10) | ||||
Total C3+ NGLs/Blended Premium | 145,654 | 100% | ($0.02) |
All-in cash expense, which includes lease operating, gathering, compression, processing and transportation, production and ad valorem taxes, net marketing, and general and administrative expense (excluding equity-based compensation) was $2.21 per Mcfe in the third quarter, a 10% decrease compared to $2.46 per Mcfe average during the third quarter of 2019. Lease operating expense was $0.06 per Mcfe in the third quarter, a 50% decline from $0.12 per Mcfe in the year ago period driven by a decrease in water handling costs as Antero increased water blending and reuse in completion operations. G&A expense was $0.07 per Mcfe, a 30% decrease from the third quarter of 2019 primarily due to a lower employee headcount and a 12% increase in production.
Per unit net marketing expense declined to $0.11 per Mcfe in the third quarter, compared to $0.20 per Mcfe reported in the prior year period. The decline was driven primarily by higher production volumes during the quarter and wide regional basis differentials resulting in less unutilized transportation capacity.
Third Quarter 2020 Operating Update
Marcellus Shale — Antero placed 27 horizontal Marcellus wells to sales during the third quarter with an average lateral length of 11,937 feet. Fifteen of the 27 new wells have been on-line for at least 60 days and the average 60-day rate per well was 24.5 MMcfe/d, including approximately 1,169 Bbl/d of liquids assuming 25% ethane recovery. Year-to-date, Antero has averaged over 6,000 feet per day drilling the lateral section of its wells. Additionally, Antero's ongoing emphasis on completion efficiencies resulted in an improvement during the third quarter to 8.5 stages completed per day.
These efficiency gains led to average all-in well costs of $675 per lateral foot, normalized to a 12,000 foot lateral. This represents a 30% reduction in all-in well cost per lateral foot since the beginning of 2019. The vast majority of the improvement in well costs has been driven by operational efficiency and process changes. Actual well costs averaged $640 per lateral foot during the third quarter as the average lateral length drilled was 15,900 feet. All-in well costs are expected to average $675 per lateral during the fourth quarter for a 12,000 foot lateral. Antero currently has one drilling rig and one completion crew running.
Third Quarter 2020 Capital Investment
Antero's drilling and completion capital expenditures for the three months ended September 30, 2020, were $161 million. Through the first nine months of 2020, Antero has turned in line 96 of the projected 105 well completions planned for the year. Antero anticipates a decline in capital spending during the fourth quarter of 2020, reflecting reduced drilling and completion activity with full year drilling and capital spend of $750 million, unchanged from prior guidance. In addition to capital invested in drilling and completion costs, the Company invested $10 million in land during the third quarter. For a reconciliation of accrued capital expenditures to cash capital expenditures see the table on page 11.
Balance Sheet and Liquidity
As of September 30, 2020, Antero's total debt was $3.2 billion, of which $827 million were borrowings outstanding under the Company's revolving credit facility. Antero has a borrowing base of $2.85 billion with lender commitments that total $2.64 billion. After deducting letters of credit outstanding of $730 million, the Company had $1.1 billion in available liquidity at September 30, 2020. Net debt to trailing twelve month Adjusted EBITDA ratio was 3.2x as of September 30, 2020, down from the prior quarter's ratio of 3.6x.
Commodity Derivative Positions
Antero had realized hedge gains of $234 million during the third quarter and $759 million during the first nine months of 2020. The Company has hedged 1.3 Tcf of natural gas at a weighted average index price of $2.68 per MMBtu through 2023 with fixed price swap positions. Antero also has oil, NGL and ethane fixed price swap positions, including oil positions that total 26,000 Bbl/d, NGL positions that total 10,315 Bbl/d and ethane positions that total 24,500 Bbl/d during the fourth quarter of 2020.
Please see Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, for more information on all commodity derivative positions, including basis swaps and natural gas calls.
The following tables summarize Antero's hedge position as of September 30, 2020:
Fixed price natural gas positions from October 1, 2020 through December 31, 2023 were as follows:
Natural gas | Weighted | |||||
Year ending December 31, 2020: | ||||||
NYMEX ($/MMBtu) | 2,067,500 | $2.84 | ||||
Year ending December 31, 2021: | ||||||
NYMEX ($/MMBtu) | 2,160,000 | $2.77 | ||||
Year ending December 31, 2022: | ||||||
NYMEX ($/MMBtu) | 905,897 | $2.43 | ||||
Year ending December 31, 2023: | ||||||
NYMEX ($/MMBtu) | 43,000 | $2.37 |
C3+ NGL, ethane and oil derivative contract positions from October 1, 2020 through December 31, 2020 were as follows:
Derivative Contract Type | Liquids | Weighted | Weighted | Weighted | ||
Year ending December 31, 2020: | ||||||
Total Propane (C3) – ARA (Europe) (1) | Fixed swap | 10,315 | $0.55 | $23.10 | ||
Total OPIS Ethane Mt Belvieu | Fixed swap | 24,500 | $0.20 | |||
Total NYMEX Crude Oil (2) | 26,000 | $55.63 |
(1) | Net of shipping. Assumes $0.10/gal shipping to ARA. | |||||
(2) | Hedged 20,000 Bbl/d of pentane (C5) at 80% of WTI and hedged the resulting 26,000 Bbl/d of oil-equivalent volumes at $55.63/Bbl WTI on average (80% x $55.63 = $44.52/Bbl pentane). |
Guidance
All guidance not discussed in this release is unchanged from previously stated guidance.
2020 Asset Sales Program Accounting Treatment
For the three months and nine months ended September 30, 2020, Martica Holdings, LLC ("Martica"), the entity associated with the previously announced ORRI transaction, is consolidated in the Company's consolidated financial statements. All significant intercompany accounts and transactions have been eliminated in the Company's unaudited condensed consolidated financial statements. The noncontrolling interest in the Company's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020 represents the interest in Martica, which is the entity established with the overriding royalty sale, not owned by Antero.
Under the VPP transaction entered into during the third quarter of 2020, all production volumes and reserves are treated as a divestiture and not included in the results. Net proceeds are recognized as deferred revenue as of September 30, 2020. Deferred revenue is recognized as volumes are delivered using the unit-of-production method over the term of the VPP.
For more information, please see Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Conference Call
A conference call is scheduled on Thursday, October 29, 2020 at 9:00 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 877-407-9079 (U.S.), or 201-493-6746 (International) and reference "Antero Resources". A telephone replay of the call will be available until Thursday, November 5, 2020 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13703919.
A simultaneous webcast of the call may be accessed over the internet at www.anteroresources.com. The webcast will be archived for replay on the Company's website until Thursday, November 5, 2020 at 9:00 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.anteroresources.com on the homepage.
Non-GAAP Financial Measures
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) as set forth in this release represents net income (loss), adjusted for certain items. Antero believes that Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted Net Income (Loss) is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance. The following tables reconcile net income (loss) to Adjusted Net Income (Loss) (in thousands):
Three months ended September 30, | |||||||
2019 | 2020 | ||||||
Net loss attributable to Antero Resources Corp | $ | (878,864) | $ | (535,613) | |||
Unrealized commodity derivative gains (losses) | (100,785) | 748,791 | |||||
Amortization of deferred revenue, VPP | — | (5,175) | |||||
Impairment of oil and gas properties | 1,041,469 | 29,392 | |||||
Impairment of midstream assets | 7,800 | — | |||||
Equity-based compensation | 3,875 | 5,699 | |||||
Gain on early extinguishment of debt | — | (55,633) | |||||
(Gain) loss on sale of assets | — | — | |||||
Contract termination and rig stacking | 62 | 1,246 | |||||
Tax effect of reconciling items (1) | (223,342) | (174,008) | |||||
Adjusted Net Income (Loss) | $ | (149,785) | $ | 14,699 | |||
Fully Diluted Shares Outstanding | 307,781 | 268,511 |
(1) Deferred taxes were approximately 23% for 2019 and 24% for 2020.
Per Share Amounts
Three months ended September 30, | |||||||
2019 | 2020 | ||||||
Net loss attributable to Antero Resources Corp | $ | (2.86) | (1.99) | ||||
Unrealized commodity derivative gains (losses) | (0.33) | 2.79 | |||||
Amortization of deferred revenue | — | (0.02) | |||||
Impairment of oil and gas properties | 3.38 | 0.11 | |||||
Impairment of midstream assets | 0.03 | — | |||||
Equity-based compensation | 0.02 | 0.02 | |||||
Gain on early extinguishment of debt | — | (0.21) | |||||
(Gain) loss on sale of assets | — | — | |||||
Contract termination and rig stacking | — | — | |||||
Tax effect of reconciling items (1) | (0.73) | (0.65) | |||||
Adjusted Net Income (Loss) | $ | (0.49) | 0.05 |
(1) Deferred taxes were approximately 23% for 2019 and 24% for 2020.
Net Debt
Net Debt is calculated as total debt less cash and cash equivalents. Management uses Net Debt to evaluate the Company's financial position, including its ability to service its debt obligations.
The following table reconciles consolidated total debt to Net Debt as used in this release (in thousands):
December 31, | September 30, | ||||||
2019 | 2020 | ||||||
AR bank credit facility | $ | 552,000 | 827,000 | ||||
5.375% AR senior notes due 2021 | 952,500 | 315,279 | |||||
5.125% AR senior notes due 2022 | 923,041 | 660,516 | |||||
5.625% AR senior notes due 2023 | 750,000 | 579,232 | |||||
5.000% AR senior notes due 2025 | 600,000 | 590,000 | |||||
4.250% AR convertible senior notes due 2026 | — | 287,500 | |||||
Net unamortized premium | 791 | (83,658) | |||||
Net unamortized debt issuance costs | (19,464) | (17,644) | |||||
Consolidated total debt | $ | 3,758,868 | 3,158,225 | ||||
Less: AR cash and cash equivalents | — | — | |||||
Net Debt | $ | 3,758,868 | 3,158,225 |
Free Cash Flow
Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow, or as a measure of liquidity. The Company defines Free Cash Flow as net cash provided by operating activities, less drilling and completion capital and leasehold capital, less distributions to non-controlling interests in Martica.
The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts.
Free Cash Flow is a useful indicator of the Company's ability to internally fund its activities and to service or incur additional debt. There are significant limitations to using Free Cash Flow as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Free Cash Flow reported by different companies. Free Cash Flow does not represent funds available for discretionary use because those funds may be required for debt service, land acquisitions and lease renewals, other capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations.
Adjusted EBITDAX
Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), adjusted for certain items detailed below.
Through March 12, 2019, the financial results of Antero Midstream Partners were included in our consolidated results. Effective March 13, 2019, we no longer consolidate Antero Midstream Partners and account for our interest in Antero Midstream using the equity method of accounting. Adjusted EBITDAX includes distributions received with respect to limited partner interests in Antero Midstream Partners common units through March 12, 2019.
Adjusted EBITDAX as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, working capital movement, or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:
There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.
The following table represents a reconciliation of our net income (loss), including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of our Adjusted EBITDAX to net cash provided by operating activities per our unaudited condensed consolidated statements of cash flows, in each case, for the three and nine months ended September 30, 2019 and 2020. Adjusted EBITDAX also excludes the noncontrolling interests in Martica and these adjustments are disclosed in the table below as Martica related adjustments.
Three months ended | |||||||
September 30, | |||||||
(in thousands) | 2019 | 2020 | |||||
Reconciliation of net income (loss) to Adjusted EBITDAX: | |||||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation | $ | (878,864) | (535,613) | ||||
Net income (loss) and comprehensive income (loss) attributable to noncontrolling interests | — | (18,233) | |||||
Depletion, depreciation, amortization, and accretion | 242,430 | 239,533 | |||||
Impairment of oil and gas properties | 1,041,469 | 29,392 | |||||
Impairment of midstream assets | 7,800 | — | |||||
Unrealized commodity derivative gains (losses) | (100,785) | 748,791 | |||||
Proceeds from derivative monetizations | — | (18,073) | |||||
Amortization of deferred revenue, VPP | — | (5,175) | |||||
Equity-based compensation expense | 3,875 | 5,699 | |||||
Provision for income tax expense (benefit) | (272,627) | (168,778) | |||||
Gain on early extinguishment of debt | — | (55,633) | |||||
Equity in (earnings) loss of unconsolidated affiliates | 117,859 | (24,419) | |||||
Distributions/dividends from unconsolidated affiliates | 48,714 | 42,755 | |||||
Interest expense, net | 47,754 | 48,043 | |||||
Exploration expense | 208 | 454 | |||||
Contract termination and rig stacking | 62 | 1,246 | |||||
Transaction expense | — | 524 | |||||
257,895 | 290,513 | ||||||
Antero Midstream Partners related adjustments (2) | — | — | |||||
Martica related adjustments (2) | — | (18,072) | |||||
Adjusted EBITDAX | $ | 257,895 | 272,441 | ||||
Reconciliation of our Adjusted EBITDAX to net cash provided by operating activities: | |||||||
Adjusted EBITDAX | $ | 257,895 | 272,441 | ||||
Martica related adjustments (2) | — | 18,072 | |||||
Interest expense, net | (47,754) | (48,043) | |||||
Exploration expense | (208) | (454) | |||||
Changes in current assets and liabilities | (13,653) | (86,618) | |||||
Transaction expense | — | (524) | |||||
Proceeds from derivative monetizations | — | 18,073 | |||||
Other items | 2,130 | 2,923 | |||||
Net cash provided by operating activities | $ | 198,410 | 175,870 |
(1) | The adjustments for the derivative fair value gains and losses and gains on settled derivatives have the effect of adjusting net income (loss) from operations for changes in the fair value of unsettled derivatives, which are recognized at the end of each accounting period. As a result, derivative gains included in the calculation for Adjusted EBITDAX only reflect derivatives that settled during the period. Adjusted EBITDAX does not include proceeds from derivatives monetizations. |
(2) | Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above. |
Twelve months ended | ||||
(in thousands) | September 30, 2020 | |||
Reconciliation of net loss to Adjusted EBITDAX: | ||||
Net loss and comprehensive loss attributable to Antero Resources Corporation | $ | (1,819,923) | ||
Net loss and comprehensive loss attributable to noncontrolling interests | (17,997) | |||
Depletion, depreciation, amortization, and accretion | 847,262 | |||
Impairment of oil and gas properties | 202,694 | |||
Unrealized commodity derivative gains (losses) | 946,982 | |||
Proceeds from derivative monetizations | (18,073) | |||
Amortization of deferred revenue, VPP | (5,175) | |||
Equity-based compensation expense | 21,233 | |||
Provision for income tax benefit | (528,609) | |||
Gain on early extinguishment of debt | (211,784) | |||
Equity in loss of unconsolidated affiliates | 136,431 | |||
Impairment of equity investment | 1,078,222 | |||
Distributions/dividends from unconsolidated affiliates | 176,982 | |||
Loss on sale of equity investments | 108,745 | |||
Water earnout | (125,000) | |||
Interest expense, net | 207,199 | |||
Exploration expense | 1,131 | |||
Contract termination and rig stacking | 12,317 | |||
Transaction fees | 6,662 | |||
Martica Holdings, LLC related adjustments | (21,172) | |||
Adjusted EBITDAX | $ | 998,127 |
Drilling and Completion Capital Expenditures
For a reconciliation between cash paid for drilling and completion capital expenditures and drilling and completion accrued capital expenditures during the period, please see the capital expenditures section below (in thousands):
Three months ended September 30, | ||||||||
2019 | 2020 | |||||||
Drilling and completion capital expenditures (as reported; cash basis) | $ | 277,843 | 141,693 | |||||
Change in accrued capital costs | 12,102 | 19,373 | ||||||
Accrued drilling and completion capital expenditures (accrual basis) | $ | 289,945 | 161,066 |
Notwithstanding their use for comparative purposes, the Company's non-GAAP financial measures may not be comparable to similarly titled measures employed by other companies.
Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S. The Company's website is located at www.anteroresources.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 Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as those regarding expected results, future commodity prices, future production targets, realizing potential future fee rebates or reductions, including those related to certain levels of production, future earnings, leverage targets and debt repayment, future capital spending plans, asset monetization opportunities and pricing, improved and/or increasing capital efficiency, estimated realized natural gas, NGL and oil prices, expected drilling and development plans, projected well costs and cost savings initiatives, future financial position, the amount and timing of any litigation settlements or awards, future marketing opportunities and Antero Resources' 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 Resources 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 Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond the Antero Resources' control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, impacts of world health event, including the COVID-19 pandemic, potential shut-ins of production due to lack of downstream demand or storage capacity and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2019 and in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
ANTERO RESOURCES CORPORATION | |||||||
Consolidated Balance Sheets | |||||||
December 31, 2019 and September 30, 2020 | |||||||
(In thousands, except per share amounts) | |||||||
(Unaudited) | |||||||
December 31, | September 30, | ||||||
2019 | 2020 | ||||||
Assets | |||||||
Current assets: | |||||||
Accounts receivable | $ | 46,419 | 88,062 | ||||
Accounts receivable, related parties | 125,000 | — | |||||
Accrued revenue | 317,886 | 338,729 | |||||
Derivative instruments | 422,849 | 83,057 | |||||
Other current assets | 10,731 | 11,934 | |||||
Total current assets | 922,885 | 521,782 | |||||
Property and equipment: | |||||||
Oil and gas properties, at cost (successful efforts method): | |||||||
Unproved properties | 1,368,854 | 1,265,255 | |||||
Proved properties | 11,859,817 | 12,149,941 | |||||
Gathering systems and facilities | 5,802 | 5,802 | |||||
Other property and equipment | 71,895 | 72,936 | |||||
13,306,368 | 13,493,934 | ||||||
Less accumulated depletion, depreciation, and amortization | (3,327,629) | (3,659,376) | |||||
Property and equipment, net | 9,978,739 | 9,834,558 | |||||
Operating leases right-of-use assets | 2,886,500 | 2,660,188 | |||||
Derivative instruments | 333,174 | 44,070 | |||||
Investment in unconsolidated affiliate | 1,055,177 | 272,926 | |||||
Other assets | 21,094 | 16,215 | |||||
Total assets | $ | 15,197,569 | 13,349,739 | ||||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 14,498 | 55,173 | ||||
Accounts payable, related parties | 97,883 | 81,519 | |||||
Accrued liabilities | 400,850 | 344,606 | |||||
Revenue distributions payable | 207,988 | 148,917 | |||||
Derivative instruments | 6,721 | 107,933 | |||||
Short-term lease liabilities | 305,320 | 251,568 | |||||
Deferred revenue, VPP | — | 43,192 | |||||
Other current liabilities | 6,879 | 2,467 | |||||
Total current liabilities | 1,040,139 | 1,035,375 | |||||
Long-term liabilities: | |||||||
Long-term debt | 3,758,868 | 3,158,225 | |||||
Deferred income tax liability | 781,987 | 381,233 | |||||
Derivative instruments | 3,519 | 149,222 | |||||
Long-term lease liabilities | 2,583,678 | 2,410,114 | |||||
Deferred revenue, VPP | — | 167,466 | |||||
Other liabilities | 58,635 | 64,223 | |||||
Total liabilities | 8,226,826 | 7,365,858 | |||||
Commitments and contingencies (Notes 14 and 15) | |||||||
Equity: | |||||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value; authorized - 50,000 shares; none issued | — | — | |||||
Common stock, $0.01 par value; authorized - 1,000,000 shares; 295,941 shares and 268,549 shares issued and | 2,959 | 2,685 | |||||
Additional paid-in capital | 6,130,365 | 6,165,750 | |||||
Accumulated earnings (deficit) | 837,419 | (500,308) | |||||
Total stockholders' equity | 6,970,743 | 5,668,127 | |||||
Noncontrolling interests | — | 315,754 | |||||
Total equity | 6,970,743 | 5,983,881 | |||||
Total liabilities and equity | $ | 15,197,569 | 13,349,739 |
ANTERO RESOURCES CORPORATION | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Loss | |||||||
Three Months Ended September 30, 2019 and 2020 | |||||||
(Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended September 30, | |||||||
2019 | 2020 | ||||||
Revenue and other: | |||||||
Natural gas sales | $ | 524,448 | 436,304 | ||||
Natural gas liquids sales | 284,958 | 327,426 | |||||
Oil sales | 40,561 | 34,265 | |||||
Commodity derivative fair value gains (losses) | 220,788 | (514,751) | |||||
Marketing | 46,645 | 91,497 | |||||
Amortization of deferred revenue, VPP | — | 5,175 | |||||
Other income | 1,481 | 675 | |||||
Total revenue | 1,118,881 | 380,591 | |||||
Operating expenses: | |||||||
Lease operating | 35,928 | 21,450 | |||||
Gathering, compression, processing, and transportation | 603,860 | 656,615 | |||||
Production and ad valorem taxes | 28,863 | 25,790 | |||||
Marketing | 108,216 | 128,580 | |||||
Exploration | 208 | 454 | |||||
Impairment of oil and gas properties | 1,041,469 | 29,392 | |||||
Impairment of midstream assets | 7,800 | — | |||||
Depletion, depreciation, and amortization | 241,503 | 238,418 | |||||
Accretion of asset retirement obligations | 927 | 1,115 | |||||
General and administrative (including equity-based compensation expense of $3,875 and | 35,923 | 31,640 | |||||
Contract termination and rig stacking | 62 | 1,246 | |||||
Total operating expenses | 2,104,759 | 1,134,700 | |||||
Operating loss | (985,878) | (754,109) | |||||
Other income (expense): | |||||||
Equity in earnings (loss) of unconsolidated affiliates | (117,859) | 24,419 | |||||
Transaction expense | — | (524) | |||||
Interest expense, net | (47,754) | (48,043) | |||||
Gain on early extinguishment of debt | — | 55,633 | |||||
Total other income (expense) | (165,613) | 31,485 | |||||
Loss before income taxes | (1,151,491) | (722,624) | |||||
Provision for income tax benefit | 272,627 | 168,778 | |||||
Net loss and comprehensive income loss including noncontrolling interests | (878,864) | (553,846) | |||||
Less: net loss and comprehensive loss attributable to noncontrolling interests | — | (18,233) | |||||
Net loss and comprehensive loss attributable to Antero Resources Corporation | $ | (878,864) | (535,613) | ||||
Loss per share—basic | $ | (2.86) | (1.99) | ||||
Loss per share—diluted | $ | (2.86) | (1.99) | ||||
Weighted average number of shares outstanding: | |||||||
Basic | 307,781 | 268,511 | |||||
Diluted | 307,781 | 268,511 |
ANTERO RESOURCES CORPORATION | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
Nine Months Ended September 30, 2019 and 2020 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Nine Months Ended September 30, | |||||||
2019 | 2020 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net income (loss) including noncontrolling interests | $ | 189,060 | (1,355,724) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depletion, depreciation, amortization, and accretion | 726,827 | 655,460 | |||||
Impairment of oil and gas properties | 1,253,712 | 155,962 | |||||
Impairment of midstream assets | 14,782 | — | |||||
Commodity derivative fair value (gains) losses | (471,847) | 116,933 | |||||
Gains on settled commodity derivatives | 261,794 | 740,805 | |||||
Proceeds from derivative monetizations | — | 18,073 | |||||
Loss on sale of assets | 951 | — | |||||
Equity-based compensation expense | 19,327 | 17,001 | |||||
Deferred income tax expense (benefit) | 32,019 | (426,267) | |||||
Gain on early extinguishment of debt | — | (175,365) | |||||
Equity in loss of unconsolidated affiliates | 90,193 | 83,408 | |||||
Impairment of equity investment | — | 610,632 | |||||
Gain on deconsolidation of Antero Midstream Partners LP | (1,406,042) | — | |||||
Distributions/dividends of earnings from unconsolidated affiliates | 109,241 | 128,267 | |||||
Amortization of deferred revenue | — | (5,175) | |||||
Amortization of debt issuance costs, debt discount debt premium and other | 8,179 | 7,391 | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | 14,236 | (15,454) | |||||
Accrued revenue | 193,650 | (20,843) | |||||
Other current assets | 2,365 | (1,455) | |||||
Accounts payable including related parties | (971) | (2,198) | |||||
Accrued liabilities | (11,169) | 15,522 | |||||
Revenue distributions payable | (72,176) | (54,403) | |||||
Other current liabilities | 1,387 | (60) | |||||
Net cash provided by operating activities | 955,518 | 492,510 | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to unproved properties | (69,796) | (31,136) | |||||
Drilling and completion costs | (957,931) | (693,920) | |||||
Additions to water handling and treatment systems | (24,416) | — | |||||
Additions to gathering systems and facilities | (48,239) | — | |||||
Additions to other property and equipment | (5,980) | (1,346) | |||||
Settlement of water earnout | — | 125,000 | |||||
Investments in unconsolidated affiliates | (25,020) | — | |||||
Proceeds from the Antero Midstream Partners LP Transactions | 296,611 | — | |||||
Proceeds from asset sales | 7,461 | — | |||||
Proceeds from VPP sale, net | — | 215,833 | |||||
Change in other assets | 1,983 | 1,506 | |||||
Net cash used in investing activities | (825,327) | (384,063) | |||||
Cash flows provided by (used in) financing activities: | |||||||
Repurchases of common stock | (17,924) | (43,443) | |||||
Issuance of senior notes | 650,000 | — | |||||
Issuance of convertible notes | — | 287,500 | |||||
Repayment of senior notes | — | (899,971) | |||||
Borrowings (repayments) on bank credit facilities, net | (45,000) | 275,000 | |||||
Payments of deferred financing costs | (8,259) | (8,907) | |||||
Sale of noncontrolling interest | — | 300,000 | |||||
Distributions to noncontrolling interests in Antero Midstream Partners LP | (85,076) | — | |||||
Distributions to noncontrolling interests in Martica Holdings LLC | — | (17,249) | |||||
Employee tax withholding for settlement of equity compensation awards | (2,379) | (373) | |||||
Other | (2,021) | (1,004) | |||||
Net cash provided by (used in) financing activities | 489,341 | (108,447) | |||||
Effect of deconsolidation of Antero Midstream Partners LP | (619,532) | — | |||||
Net decrease in cash and cash equivalents | — | — | |||||
Cash and cash equivalents, beginning of period | — | — | |||||
Cash and cash equivalents, end of period | $ | — | — | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 142,288 | 135,494 | ||||
Decrease in accounts payable and accrued liabilities for additions to property and equipment | $ | 22,103 | 44,302 |
The following table set forth selected operating data for the three months ended September 30, 2019 and 2020:
Three months ended | Amount of | |||||||||||
September 30, | Increase | Percent | ||||||||||
(in thousands) | 2019 | 2020 | (Decrease) | Change | ||||||||
Revenue: | ||||||||||||
Natural gas sales | $ | 524,448 | $ | 436,304 | $ | (88,144) | (17) | % | ||||
Natural gas liquids sales | 284,958 | 327,426 | 42,468 | 15 | % | |||||||
Oil sales | 40,561 | 34,265 | (6,296) | (16) | % | |||||||
Commodity derivative fair value gains (losses) | 220,788 | (514,751) | (735,539) | (333) | % | |||||||
Marketing | 46,645 | 91,497 | 44,852 | 96 | % | |||||||
Amortization of deferred revenue, VPP | — | 5,175 | 5,175 | * | ||||||||
Other income | 1,481 | 675 | (806) | (54) | % | |||||||
Total revenue | 1,118,881 | 380,591 | (738,290) | (66) | % | |||||||
Operating expenses: | ||||||||||||
Lease operating | 35,928 | 21,450 | (14,478) | (40) | % | |||||||
Gathering and compression | 209,751 | 221,004 | 11,253 | 5 | % | |||||||
Processing | 230,377 | 244,888 | 14,511 | 6 | % | |||||||
Transportation | 163,732 | 190,723 | 26,991 | 16 | % | |||||||
Production and ad valorem taxes | 28,863 | 25,790 | (3,073) | (11) | % | |||||||
Marketing | 108,216 | 128,580 | 20,364 | 19 | % | |||||||
Exploration | 208 | 454 | 246 | 118 | % | |||||||
Impairment of oil and gas properties | 1,041,469 | 29,392 | (1,012,077) | (97) | % | |||||||
Impairment of midstream assets | 7,800 | — | (7,800) | * | ||||||||
Depletion, depreciation, and amortization | 241,503 | 238,418 | (3,085) | (1) | % | |||||||
Accretion of asset retirement obligations | 927 | 1,115 | 188 | 20 | % | |||||||
General and administrative (excluding equity-based compensation) | 32,048 | 25,941 | (6,107) | (19) | % | |||||||
Equity-based compensation | 3,875 | 5,699 | 1,824 | 47 | % | |||||||
Contract termination and rig stacking | 62 | 1,246 | 1,184 | * | ||||||||
Total operating expenses | 2,104,759 | 1,134,700 | (970,059) | (46) | % | |||||||
Operating loss | (985,878) | (754,109) | 231,769 | (24) | % | |||||||
Other earnings (expenses): | ||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | (117,859) | 24,419 | 142,278 | (121) | % | |||||||
Transaction expense | — | (524) | (524) | * | ||||||||
Interest expense, net | (47,754) | (48,043) | (289) | 1 | % | |||||||
Gain on early extinguishment of debt | — | 55,633 | 55,633 | * | ||||||||
Total other income (expense) | (165,613) | 31,485 | 197,098 | (119) | % | |||||||
Loss before income taxes | (1,151,491) | (722,624) | 428,867 | (37) | % | |||||||
Provision for income tax benefit | 272,627 | 168,778 | (103,849) | (38) | % | |||||||
Net loss and comprehensive loss including noncontrolling interests | (878,864) | (553,846) | 325,018 | (37) | % | |||||||
Less: net loss and comprehensive loss attributable to noncontrolling interests | — | (18,233) | (18,233) | * | ||||||||
Net loss and comprehensive loss attributable to Antero Resources Corporation | (878,864) | (535,613) | 343,251 | (39) | % | |||||||
Adjusted EBITDAX | $ | 257,895 | $ | 272,441 | $ | 14,578 | 6 | % | ||||
* Not meaningful |
Three months ended September 30, | Amount of | Percent | ||||||||||
2019 | 2020 | (Decrease) | Change | |||||||||
Production data (1): | ||||||||||||
Natural gas (Bcf) | 210 | 226 | 16 | 8 | % | |||||||
C2 Ethane (MBbl) | 4,307 | 5,459 | 1,152 | 27 | % | |||||||
C3+ NGLs (MBbl) | 11,472 | 13,400 | 1,928 | 17 | % | |||||||
Oil (MBbl) | 865 | 1,367 | 502 | 58 | % | |||||||
Combined (Bcfe) | 310 | 347 | 37 | 12 | % | |||||||
Daily combined production (MMcfe/d) | 3,367 | 3,772 | 405 | 12 | % | |||||||
Average prices before effects of derivative settlements (2): | ||||||||||||
Natural gas (per Mcf) | $ | 2.50 | $ | 1.93 | $ | (0.57) | (23) | % | ||||
C2 Ethane (per Bbl) | $ | 6.15 | $ | 5.94 | $ | (0.21) | (3) | % | ||||
C3+ NGLs (per Bbl) | $ | 22.53 | $ | 22.01 | $ | (0.52) | (2) | % | ||||
Oil (per Bbl) | $ | 46.86 | $ | 25.07 | $ | (21.79) | (47) | % | ||||
Weighted Average Combined (per Mcfe) | $ | 2.74 | $ | 2.30 | $ | (0.44) | (16) | % | ||||
Average realized prices after effects of derivative settlements (2): | ||||||||||||
Natural gas (per Mcf) | $ | 3.05 | $ | 2.73 | $ | (0.32) | (10) | % | ||||
C2 Ethane (per Bbl) | $ | 6.15 | $ | 5.67 | $ | (0.48) | (8) | % | ||||
C3+ NGLs (per Bbl) | $ | 22.67 | $ | 23.81 | $ | 1.14 | 5 | % | ||||
Oil (per Bbl) | $ | 50.00 | $ | 34.96 | $ | (15.04) | (30) | % | ||||
Weighted Average Combined (per Mcfe) | $ | 3.13 | $ | 2.92 | $ | (0.21) | (7) | % | ||||
Average costs (per Mcfe): | ||||||||||||
Lease operating | $ | 0.12 | $ | 0.06 | $ | (0.06) | (50) | % | ||||
Gathering and compression | $ | 0.68 | $ | 0.64 | $ | (0.04) | (6) | % | ||||
Processing | $ | 0.74 | $ | 0.71 | $ | (0.03) | (4) | % | ||||
Transportation | $ | 0.53 | $ | 0.55 | $ | 0.02 | 4 | % | ||||
Production taxes | $ | 0.09 | $ | 0.07 | $ | (0.02) | (22) | % | ||||
Marketing, net | $ | 0.20 | $ | 0.11 | $ | (0.09) | (45) | % | ||||
Depletion, depreciation, amortization and accretion | $ | 0.78 | $ | 0.69 | $ | (0.09) | (12) | % | ||||
General and administrative (excluding equity-based compensation) | $ | 0.10 | $ | 0.07 | $ | (0.03) | (30) | % |
(1) | Production volumes exclude volumes related to VPP transaction. |
(2) | Average sales prices shown in the table reflect both the before and after effects of our settled commodity derivatives. Our calculation of such after effects includes gains on settlements of commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes. Oil and NGLs production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. This ratio is an estimate of the equivalent energy content of the products and does not necessarily reflect their relative economic value. |
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SOURCE Antero Resources Corporation
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:
Updated 2020 Guidance Highlights:
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 | % | |||||||||
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 | |||||||||
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:
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 | |||||||
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 | |||||||||
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 | 12 months ended | |||||||||||||||
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 | 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
DENVER, Oct. 14, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share for the third quarter of 2020. In addition, Antero Midstream announced plans to issue their third quarter 2020 earnings on Wednesday, October 28, 2020 after the close of trading on the New York Stock Exchange.
Third Quarter 2020 Return of Capital
Antero Midstream's third quarter 2020 dividend is unchanged as compared to the second quarter of 2020. The dividend will be payable on November 12, 2020 to stockholders of record as of October 29, 2020. This represents the 23rd consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014. Antero Midstream did not repurchase any common shares during the third quarter of 2020. Antero Midstream had approximately $150 million of remaining share repurchase capacity under its $300 million authorized share repurchase program as of September 30, 2020.
Third Quarter 2020 Earnings Release Date and Conference Call
Antero Midstream plans to issue its third quarter 2020 earnings on Wednesday, October 28, 2020 after the close of trading on the New York Stock Exchange. 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.
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.
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-announces-third-quarter-2020-return-of-capital-and-earnings-release-date-and-conference-call-301152600.html
SOURCE Antero Midstream
DENVER, Oct. 5, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today announced the publication of its 2019 Corporate Sustainability Report. The report details Antero's ongoing commitment to environmental excellence, strong governance, safe operations and the communities in which it operates. The full report is available at www.anteromidstream.com/community-sustainability.
Report Highlights:
2025 Environmental Goals:
Paul Rady, Chairman and Chief Executive Officer of Antero Midstream commented, "Our outstanding ESG performance exemplifies our unwavering and long-standing commitment to make every effort to do the right thing, take accountability for our actions and maintain our position as a world-class sustainable energy producer, partner and employer of choice. We are dedicated to adapting and leading, and operating ethically and responsibly. This commitment is evident in our performance and culture as we proactively care for our employees, contractors, community and the environment."
Glen Warren, President and Director of Antero Midstream said, "Natural gas is key to the energy transition and our ability to address the risks associated with climate change. As the lightest and least greenhouse gas (GHG) intensive hydrocarbon, natural gas is just 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. Natural gas is a transition fuel and part of the solution. Investors, creditors, the communities in which we operate, and employees can be stakeholders in a hydrocarbon business that is natural gas focused while at the same time meeting high ESG standards."
Presentation
The Company posted its 2019 Corporate Sustainability Report presentation on its website at 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.
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.
While Antero Midstream believes all historical calculations presented in this release and the Corporate Sustainability Report were completed consistent with current industry standards, the numbers provided have not been audited by a third party audit firm.
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 our strategy, future operations and forecasts of future events, including our 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. These forward-looking statements are management's belief, based on currently available information, as to the outcome and timing of future events. 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.
In addition, many of the standards and metrics used in preparing this release and the Corporate Sustainability Report continue to evolve and are based on management expectations and assumptions believed to be reasonable at the time of preparation but should not be considered guarantees. The standards and metrics used, and the expectations and assumptions they are based on, have not been verified by any third party.
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 filings with the SEC.
This release and the Corporate Sustainability Report contain statements based on hypothetical or severely adverse scenarios and assumptions, and these statements should not necessarily be viewed as being representative of current or actual risk or forecasts of expected risk. While future events discussed in this release or the report may be significant, any significance should not be read as necessarily rising to the level of materiality of certain disclosures included in Antero Midstream's SEC filings.
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SOURCE Antero Midstream Corporation
DENVER, July 29, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today released its second quarter 2020 financial and operating results. In addition, Antero Midstream announced a reduction of its 2020 capital budget and 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 June 30, 2020.
Second Quarter 2020 Highlights:
Updated 2020 Capital Budget & Free Cash Flow Guidance:
Paul Rady, Chairman and CEO said, "Antero Midstream delivered a strong quarter with no material volume curtailments due to the coordinated efforts and planning of Antero Midstream and Antero Resources. As a result, Antero Midstream's gathering and compression volumes increased 8% year-over-year and 6% sequentially during the second quarter. We are incredibly proud of all of our employees who have safely delivered these results despite the ongoing uncertainty and challenges surrounding the COVID-19 pandemic. This operational excellence, combined with our continued reduction in capital expenditures, resulted in Free Cash Flow of $108 million compared to $15 million the second quarter of 2019."
Mr. Rady further added, "Due to the just-in-time nature of our capital investments with no long-term major capital projects, Antero Midstream has been able to reduce its capital budget by over $100 million in 2020. This has in-turn improved our Free Cash Flow guidance by $60 million in 2020 compared to our original guidance and allows Antero Midstream to maintain a strong balance sheet with significant liquidity and financial flexibility."
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."
Antero Resources Developments
On June 15, 2020, Antero Resources announced the closing of a $402 million overriding royalty interest ("ORRI") transaction. In addition, Antero Resources announced that in July of 2020 it monetized excess 2021 natural gas hedges as a result of the ORRI transaction for proceeds of approximately $29 million. Antero Resources disclosed that, pro forma for the hedge monetization, it expects to be 100% hedged on its 2021 natural gas production at a price of $2.77/MMBtu. The hedge monetization brings Antero Resources' total asset sale proceeds to $531 million, inclusive of up to $102 million of contingent consideration relating to the ORRI transaction that may be earned through 2021, compared to a stated asset sale target of $750 million to $1.0 billion. Since the commencement of Antero Resources' debt repurchase program in the fourth quarter of 2019, Antero Resources has repurchased $888 million of notional debt at a 19% weighted average discount, reducing total indebtedness by $171 million and net interest expense by $24 million on an annualized basis. Antero Resources has stated that pro forma for the hedge monetization, its liquidity position as of June 30, 2020 was approximately $1.0 billion and that the par value of its 2021 and 2022 maturities outstanding has been reduced from $1.0 billion and $1.1 billion at issuance to $503 million and $756 million, respectively, each as of July 24, 2020.
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 June 30, 2020.
Updated Capital Budget and Free Cash Flow Guidance
Antero Midstream announced a reduction in its 2020 capital budget to a range of $200 to $215 million from the original budget of $300 to $325 million and previously revised budget of $215 to $240 million. The capital budget assumes a sequential reduction in capital expenditures in the second half of 2020 as compared to the first half of 2020 and contemplates a 2021 Antero Resources development plan that maintains flat year-over-year net production. As a result of the capital budget reduction, Antero Midstream is increasing Free Cash Flow guidance (before return of capital and changes in working capital) to $445 to $475 million from the original guidance of $375 to $425 million and previously revised guidance of $420 to $450 million. All guidance not discussed in this release, including Antero Midstream's Net Loss, Adjusted Net Income, Adjusted EBITDA and Distributable Cash Flow guidance, is unchanged from previously stated guidance.
Second Quarter 2020 Financial Results
Low pressure gathering volumes for the second quarter of 2020 averaged 2,869 MMcf/d, an 8% increase as compared to the prior year quarter. Low pressure gathering volumes were in excess of the second quarter 2020 growth incentive fee threshold of 2,700 MMcf/d, resulting in a $12 million rebate to Antero Resources. Compression volumes for the second quarter of 2020 averaged 2,712 MMcf/d, a 13% increase as compared to the second quarter of 2019. High pressure gathering volumes for the second quarter of 2020 averaged 2,839 MMcf/d, an 8% increase compared to the second quarter of 2019. Fresh water delivery volumes averaged 102 MBbl/d during the quarter, a 16% decrease compared to the second 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 1,404 MMcf/d for the second quarter of 2020, a 42% increase compared to the prior year quarter. Joint Venture processing capacity was 100% utilized during the quarter. Gross Joint Venture fractionation volumes averaged 33 MBbl/d, a 22% increase compared to the prior year quarter.
Three Months Ended June 30, | ||||||||
Average Daily Volumes: | 2019 | 2020 | % Change | |||||
Low Pressure Gathering (MMcf/d) | 2,662 | 2,869 | 8% | |||||
Compression (MMcf/d) | 2,396 | 2,712 | 13% | |||||
High Pressure Gathering (MMcf/d) | 2,620 | 2,839 | 8% | |||||
Fresh Water Delivery (MBbl/d) | 122 | 102 | (16)% | |||||
Gross Joint Venture Processing (MMcf/d) | 986 | 1,404 | 42% | |||||
Gross Joint Venture Fractionation (MBbl/d) | 27 | 33 | 22% | |||||
For the three months ended June 30, 2020, revenues were $220 million, comprised of $174 million from the Gathering and Processing segment and $63 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 $14 million and $28 million, respectively, for a total of $42 million, compared to $64 million in total direct operating expenses in the prior year quarter. Water Handling operating expenses include $26 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 second quarter of 2020. Total operating expenses included $3 million of equity compensation expense, and $28 million of depreciation.
Net income was $88 million, or $0.19 per share, representing a 36% increase compared to the prior year quarter. Net income adjusted for amortization of customer relationships, or Adjusted Net Income, was $106 million. Adjusted Net Income per share was $0.22 per share, representing a 36% increase compared to the prior year quarter. Adjusted EBITDA was $201 million, a 2% decrease compared to the prior year quarter. Antero Midstream only received two monthly Joint Venture distributions during the quarter compared to three monthly distributions received in prior quarters, resulting in a $(7) million reduction in Adjusted EBITDA. Adjusted EBITDA also included $2 million of Antero Clearwater Facility idling costs during the second quarter. Cash interest paid was $7 million. The increase in cash reserved for bond interest during the quarter was $27 million. Maintenance capital expenditures during the quarter totaled $15 million and distributable cash flow was $152 million. Based on the previously declared dividend of $0.3075 per share, Antero Midstream's Distributable Cash Flow coverage ratio was approximately 1.0x.
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 | |||||||||
2019 | 2020 | ||||||||
Net income | $ | 69,274 | 88,441 | ||||||
Amortization of customer relationships | 8,534 | 17,606 | |||||||
Impairment expense | 594 | — | |||||||
Adjusted Net Income | 78,402 | 106,047 | |||||||
Net Income | 69,274 | 88,441 | |||||||
Interest expense | 31,521 | 35,311 | |||||||
Provision for income tax expense | 30,419 | 31,921 | |||||||
Amortization of customer relationships | 8,534 | 17,606 | |||||||
Depreciation expense | 36,447 | 27,745 | |||||||
Impairment expense | 594 | — | |||||||
Accretion and change in fair value of contingent acquisition consideration | 2,366 | 61 | |||||||
Equity-based compensation | 21,543 | 2,697 | |||||||
Loss on asset sale | — | 240 | |||||||
Equity in earnings of unconsolidated affiliates | (13,623) | (20,947) | |||||||
Distributions from unconsolidated affiliates | 19,085 | 18,200 | |||||||
Adjusted EBITDA | 206,160 | 201,275 | |||||||
Interest paid | (11,896) | (7,056) | |||||||
Increase in cash reserved for bond interest (1) | (18,390) | (27,422) | |||||||
Maintenance capital expenditures (2) | (17,909) | (14,907) | |||||||
Employee tax withholding for settlement of equity compensation awards | (1,827) | (366) | |||||||
Distributable Cash Flow | $ | 156,138 | 151,524 | ||||||
Total Aggregate Dividends Declared | $ | 154,093 | 146,554 | ||||||
Distributable Cash Flow Coverage Ratio | 1.0x | 1.0x | |||||||
Adjusted EBITDA | $ | 206,160 | 201,275 | ||||||
Interest paid | (11,896) | (7,056) | |||||||
Increase in cash reserved for bond interest (1) | (18,390) | (27,422) | |||||||
Total capital expenditures | (160,378) | (59,001) | |||||||
Free Cash Flow (before return of capital and changes in working capital) | $ | 15,496 | 107,796 | ||||||
1) | Cash reserved for bond interest expense on Antero Midstream's senior notes outstanding during the period that is paid on a semi-annual basis. |
2) | 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 second quarter of 2020, Antero Midstream connected 44 wells to its gathering system. In addition, Antero Midstream added 240 MMcf/d of compression capacity in the Marcellus during the quarter bringing its total compression capacity to 3.1 Bcf/d. Antero Midstream's compression capacity was approximately 91% utilized during the quarter.
Water Handling— Antero Midstream's Marcellus water delivery systems serviced 22 well completions during the second quarter of 2020, a 12% decrease from the prior year quarter.
Balance Sheet and Liquidity
As of June 30, 2020, Antero Midstream had approximately $1.16 billion drawn on its $2.13 billion bank credit facility, resulting in approximately $970 million of liquidity. Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA ("Leverage") was 3.7x as of June 30, 2020.
Capital Investments
Total capital expenditures including investments in the Joint Venture were $59 million during the second quarter of 2020. Gathering, compression, and water infrastructure capital investments totaled $49 million and investments in unconsolidated affiliates for the Joint Venture were $10 million. Of the $49 million invested in gathering, compression, and water infrastructure, $43 million was in gathering and compression assets and $6 million was in water the handling assets.
Michael Kennedy, CFO of Antero Midstream, said, "The 63% year-over-year reduction in capital expenditures highlights our just-in-time capital investment philosophy that quickly adapts to changes in Antero Resources development plan. This allowed Antero Midstream to generate $108 million of Free Cash Flow before return of capital and changes in working capital. Importantly, after the $156 million of return of capital to shareholders and $39 million tax reimbursement, Antero Midstream's Net Debt and Leverage were flat quarter-over-quarter at $3.1 billion and 3.7x, respectively."
Conference Call
A conference call for Antero Midstream is scheduled on Thursday, July 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, August 6, 2020 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13703839. 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, August 6, 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 plus amortization of customer contracts and impairment expenses. 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 tax expense, 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:
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.
Antero Midstream's defines Distributable Cash Flow as Adjusted EBITDA less interest paid, increase 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 | $ | 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):
June 30, 2020 | |||||
Bank credit facility | $1,155,000 | ||||
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 | (22,065) | ||||
Consolidated total debt | $3,088,785 | ||||
Cash and cash equivalents | (2,997) | ||||
Consolidated net debt | $3,085,788 | ||||
The following table reconciles cash paid for capital expenditures and accrued capital expenditures during the period (in thousands):
Three months ended June 30, | ||||||||
2019 | 2020 | |||||||
Capital expenditures (as reported on a cash basis) | $ | 162,865 | 65,729 | |||||
Change in accrued capital costs | (2,487) | (6,728) | ||||||
Capital expenditures (accrual basis) | $ | 160,378 | 59,001 |
The following table reconciles net loss to Adjusted EBITDA for the last twelve months as used in this release (in thousands):
12 months ended | |||||||
Net Loss | $ | (735,903) | |||||
Amortization of customer relationships | 70,545 | ||||||
Impairment expense | 1,425,910 | ||||||
Interest expense | 145,606 | ||||||
Provision for income tax benefit | (242,496) | ||||||
Depreciation expense | 112,621 | ||||||
Accretion and change in fair value of contingent acquisition consideration | 4,941 | ||||||
Equity-based compensation | 46,586 | ||||||
Loss on asset sale | 240 | ||||||
Equity in earnings of unconsolidated affiliates | (73,080) | ||||||
Distributions from unconsolidated affiliates | 82,288 | ||||||
Conflicts committee legal & advisory fees | 2,278 | ||||||
Adjusted EBITDA | $ | 839,536 | |||||
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 subsequently filed Quarterly Reports on Form 10-Q.
ANTERO MIDSTREAM CORPORATION | |||||||
(Unaudited) | |||||||
December 31, | June 30, | ||||||
2019 | 2020 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 1,235 | 2,997 | ||||
Accounts receivable–Antero Resources | 101,029 | 76,088 | |||||
Accounts receivable–third party | 4,574 | 3,392 | |||||
Income tax receivable | — | 17,547 | |||||
Other current assets | 1,720 | 645 | |||||
Total current assets | 108,558 | 100,669 | |||||
Property and equipment, net | 3,273,410 | 3,249,643 | |||||
Investments in unconsolidated affiliates | 709,639 | 729,823 | |||||
Deferred tax asset | 103,231 | 160,579 | |||||
Customer relationships | 1,498,119 | 1,462,908 | |||||
Goodwill | 575,461 | — | |||||
Other assets, net | 14,460 | 11,433 | |||||
Total assets | $ | 6,282,878 | 5,715,055 | ||||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | 3,146 | 2,714 | ||||
Accounts payable–third party | 6,645 | 19,822 | |||||
Accrued liabilities | 104,188 | 72,284 | |||||
Contingent acquisition consideration | 125,000 | — | |||||
Other current liabilities | 3,105 | 3,325 | |||||
Total current liabilities | 242,084 | 98,145 | |||||
Long-term liabilities: | |||||||
Long-term debt | 2,892,249 | 3,088,785 | |||||
Other | 5,131 | 4,943 | |||||
Total liabilities | 3,139,464 | 3,191,873 | |||||
Stockholders' Equity: | |||||||
Preferred stock, $0.01 par value: 100,000 authorized at December 31, 2019 and June 30, 2020, respectively | |||||||
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding at both December 31, 2019 and June 30, 2020 | — | — | |||||
Common stock, $0.01 par value; 2,000,000 authorized; 484,042 and 476,486 issued and outstanding at December 31, 2019 and June 30, 2020, respectively | 4,840 | 4,765 | |||||
Additional paid-in capital | 3,480,139 | 3,164,474 | |||||
Accumulated loss | (341,565) | (646,057) | |||||
Total stockholders' equity | 3,143,414 | 2,523,182 | |||||
Total liabilities and stockholders' equity | $ | 6,282,878 | 5,715,055 |
ANTERO MIDSTREAM CORPORATION | |||||||
Three Months Ended June 30, | |||||||
2019 | 2020 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | 168,925 | 173,991 | ||||
Water handling–Antero Resources | 95,181 | 63,351 | |||||
Water handling and treatment–third party | 46 | — | |||||
Amortization of customer relationships | (8,534) | (17,606) | |||||
Total revenue | 255,618 | 219,736 | |||||
Operating expenses: | |||||||
Direct operating | 63,998 | 42,067 | |||||
General and administrative (including $21,543 and $2,697 of equity-based compensation in 2019 and 2020, respectively) | 34,622 | 12,422 | |||||
Facility idling | — | 2,475 | |||||
Impairment of property and equipment | 594 | — | |||||
Depreciation | 36,447 | 27,745 | |||||
Accretion and change in fair value of contingent acquisition consideration | 2,297 | — | |||||
Accretion of asset retirement obligations | 69 | 61 | |||||
Loss on asset sale | — | 240 | |||||
Total operating expenses | 138,027 | 85,010 | |||||
Operating income | 117,591 | 134,726 | |||||
Interest expense, net | (31,521) | (35,311) | |||||
Equity in earnings of unconsolidated affiliates | 13,623 | 20,947 | |||||
Income before income taxes | 99,693 | 120,362 | |||||
Provision for income tax expense | (30,419) | (31,921) | |||||
Net income and comprehensive income | $ | 69,274 | 88,441 | ||||
Net income per share–basic | $ | 0.14 | 0.19 | ||||
Net income per share–diluted | $ | 0.14 | 0.18 | ||||
Weighted average common shares outstanding: | |||||||
Basic | 506,816 | 476,836 | |||||
Diluted | 507,767 | 478,837 |
ANTERO MIDSTREAM CORPORATION | |||||||||||||
Three Months Ended June 30, | Amount of Increase | Percentage | |||||||||||
2019 | 2020 | or Decrease | Change | ||||||||||
Operating Data: | |||||||||||||
Gathering—low pressure (MMcf) | 242,266 | 261,039 | 18,773 | 8 | % | ||||||||
Gathering—high pressure (MMcf) | 238,406 | 258,380 | 19,974 | 8 | % | ||||||||
Compression (MMcf) | 218,020 | 246,790 | 28,770 | 13 | % | ||||||||
Fresh water delivery (MBbl) | 11,147 | 9,318 | (1,829) | (16) | % | ||||||||
Treated water (MBbl) | 2,658 | — | (2,658) | * | |||||||||
Other fluid handling (MBbl) | 5,086 | 5,433 | 347 | 7 | % | ||||||||
Wells serviced by fresh water delivery | 25 | 22 | (3) | (12) | % | ||||||||
Gathering—low pressure (MMcf/d) | 2,662 | 2,869 | 207 | 8 | % | ||||||||
Gathering—high pressure (MMcf/d) | 2,620 | 2,839 | 219 | 8 | % | ||||||||
Compression (MMcf/d) | 2,396 | 2,712 | 316 | 13 | % | ||||||||
Fresh water delivery (MBbl/d) | 122 | 102 | (20) | (16) | % | ||||||||
Treated water (MBbl/d) | 29 | — | (29) | * | |||||||||
Other fluid handling (MBbl/d) | 56 | 60 | 4 | 7 | % | ||||||||
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) | $ | 3.90 | 3.96 | 0.06 | 2 | % | |||||||
Average treatment fee ($/Bbl) | $ | 4.50 | — | (4.50) | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing—Joint Venture (MMcf) | 89,770 | 127,791 | 38,021 | 42 | % | ||||||||
Fractionation—Joint Venture (MBbl) | 2,470 | 3,014 | 544 | 22 | % | ||||||||
Processing—Joint Venture (MMcf/d) | 986 | 1,404 | 418 | 42 | % | ||||||||
Fractionation—Joint Venture (MBbl/d) | 27 | 33 | 6 | 22 | % | ||||||||
* Not meaningful or applicable. |
ANTERO MIDSTREAM CORPORATION | |||||||||||||
Gathering and | Water | Consolidated | |||||||||||
Processing | Handling | Unallocated | Total | ||||||||||
Three months ended June 30, 2020 | |||||||||||||
Revenues: | |||||||||||||
Revenue–Antero Resources | $ | 185,991 | 63,351 | — | 249,342 | ||||||||
Gathering—low pressure rebate | (12,000) | — | — | (12,000) | |||||||||
Amortization of customer relationships | (9,239) | (8,367) | — | (17,606) | |||||||||
Total revenues | 164,752 | 54,984 | — | 219,736 | |||||||||
Operating expenses: | |||||||||||||
Direct operating | 14,059 | 28,008 | — | 42,067 | |||||||||
General and administrative (excluding equity-based compensation) | 5,440 | 2,694 | 1,591 | 9,725 | |||||||||
Facility idling | — | 2,475 | — | 2,475 | |||||||||
Equity-based compensation | 2,266 | 431 | — | 2,697 | |||||||||
Depreciation | 14,406 | 13,339 | — | 27,745 | |||||||||
Accretion of asset retirement obligations | — | 61 | — | 61 | |||||||||
Loss on asset sale | — | 240 | — | 240 | |||||||||
Total expenses | 36,171 | 47,248 | 1,591 | 85,010 | |||||||||
Operating income | 128,581 | 7,736 | (1,591) | 134,726 | |||||||||
Other income (expenses): | |||||||||||||
Interest expense, net | — | — | (35,311) | (35,311) | |||||||||
Equity in earnings of unconsolidated affiliates | 20,947 | — | — | 20,947 | |||||||||
Income before taxes | 149,528 | 7,736 | (36,902) | 120,362 | |||||||||
Provision for income tax expense | — | — | (31,921) | (31,921) | |||||||||
Net income and comprehensive income | $ | 149,528 | 7,736 | (68,823) | 88,441 | ||||||||
Adjusted EBITDA | $ | 201,275 |
ANTERO MIDSTREAM CORPORATION | |||||||
Six Months Ended June 30, | |||||||
2019 | 2020 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net income (loss) | $ | 78,922 | (304,492) | ||||
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 | 44,097 | 55,088 | |||||
Payment of contingent consideration in excess of acquisition date fair value | — | (34,342) | |||||
Accretion and change in fair value of contingent acquisition consideration | 3,425 | 103 | |||||
Impairment | 594 | 664,544 | |||||
Deferred income taxes | 28,042 | (56,408) | |||||
Equity-based compensation | 32,966 | 6,035 | |||||
Equity in earnings of unconsolidated affiliates | (16,503) | (40,024) | |||||
Distributions from unconsolidated affiliates | 23,860 | 41,828 | |||||
Amortization of customer relationships | 10,315 | 35,211 | |||||
Amortization of deferred financing costs | 1,102 | 2,190 | |||||
Settlement of asset retirement obligations | — | (601) | |||||
Loss on asset sale | — | 240 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | 38,414 | 24,941 | |||||
Accounts receivable–third party | 9 | 1,089 | |||||
Income tax receivable | — | (17,547) | |||||
Other current assets | (1,867) | 930 | |||||
Accounts payable–Antero Resources | 973 | (432) | |||||
Accounts payable–third party | (4,629) | 5,495 | |||||
Income taxes payable | (15,370) | — | |||||
Accrued liabilities | (15,678) | (21,701) | |||||
Net cash provided by operating activities | 252,164 | 362,147 | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to gathering systems and facilities | (89,206) | (103,937) | |||||
Additions to water handling systems | (51,984) | (19,477) | |||||
Investments in unconsolidated affiliates | (103,409) | (21,988) | |||||
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 | 2,375 | 1,938 | |||||
Net cash used in investing activities | (221,401) | (143,341) | |||||
Cash flows provided by (used in) financing activities: | |||||||
Distributions to unitholders and dividends to stockholders | (182,625) | (296,395) | |||||
Distributions to Series B unitholders | (3,720) | — | |||||
Distributions to preferred stockholders | (98) | (275) | |||||
Repurchases of common stock | — | (24,713) | |||||
Issuance of senior notes | 650,000 | — | |||||
Payments of deferred financing costs | (6,952) | — | |||||
Borrowings (repayments) on bank credit facilities, net | (480,500) | 195,500 | |||||
Payment for contingent acquisition consideration | — | (90,658) | |||||
Employee tax withholding for settlement of equity compensation awards | (1,828) | (392) | |||||
Other | (71) | (111) | |||||
Net cash used in financing activities | (25,794) | (217,044) | |||||
Net increase in cash and cash equivalents | 4,969 | 1,762 | |||||
Cash and cash equivalents, beginning of period | 2,822 | 1,235 | |||||
Cash and cash equivalents, end of period | $ | 7,791 | 2,997 | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 31,147 | 74,665 | ||||
Cash refund 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 | $ | 9,447 | (3,461) |
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SOURCE Antero Midstream Corporation
DENVER, July 15, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share for the second quarter of 2020. In addition, Antero Midstream announced plans to issue their second quarter 2020 earnings on Wednesday, July 29, 2020 after the close of trading on the New York Stock Exchange.
Second Quarter 2020 Return of Capital
Antero Midstream's second quarter 2020 dividend is unchanged as compared to the first quarter of 2020. The dividend will be payable on August 12, 2020 to stockholders of record as of July 30, 2020. This represents the 22nd consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014. In addition, during the second quarter of 2020, Antero Midstream repurchased approximately 3.2 million shares for approximately $8.9 million. Antero Midstream had approximately $150 million of remaining share repurchase capacity under its $300 million authorized share repurchase program as of June 30, 2020.
Second Quarter 2020 Earnings Release Date and Conference Call
Antero Midstream plans to issue its second quarter 2020 earnings on Wednesday, July 29, 2020 after the close of trading on the New York Stock Exchange. A conference call for Antero Midstream is scheduled on Thursday, July 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, August 6, 2020 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13703839. 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, August 6, 2020 at 10:00 am MT.
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. Antero Midstream's website is located at www.anteromidstream.com.
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SOURCE Antero Midstream
DENVER, June 4, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today announced a change in the format of its Annual Meeting of Shareholders ("Annual Meeting") from in-person to virtual only, via a live audio webcast at www.virtualshareholdermeeting.com/AM2020. The change is due to the continuing impact of the coronavirus pandemic (COVID-19) and to support the health and well-being of Antero Midstream's stockholders, employees and their families. As previously announced, the Annual Meeting will be held on Wednesday, June 17, 2020 at 8:00 A.M., Mountain Time.
For additional information regarding how stockholders may access, vote and participate in the virtual Annual Meeting, please refer to the Company's supplemental proxy materials filed today with the Securities and Exchange Commission.
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.
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-announces-change-to-a-virtual-meeting-format-for-2020-annual-meeting-of-shareholders-301071076.html
SOURCE Antero Midstream
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:
Updated 2020 Capital Budget and Guidance:
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 | % | ||||
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 | |||||||||
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:
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 | ||||||||||
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 | |||||||
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
DENVER, April 15, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share for the first quarter of 2020. In addition, Antero Midstream announced plans to issue their first quarter 2020 earnings on Wednesday, April 29, 2020 after the close of trading on the New York Stock Exchange.
First Quarter 2020 Return of Capital
Antero Midstream's first quarter 2020 dividend is unchanged as compared to the fourth quarter of 2019. The dividend will be payable on May 12, 2020 to stockholders of record as of April 30, 2020. This represents the 21st consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014. In addition, during the first quarter of 2020, Antero Midstream repurchased approximately 4.7 million shares for approximately $15.8 million. Antero Midstream had $158 million of remaining share repurchase capacity under its $300 million authorized share repurchase program as of March 31, 2020.
First Quarter 2020 Earnings Release Date and Conference Call
Antero Midstream plans to issue its first quarter 2020 earnings on Wednesday, April 29, 2020 after the close of trading on the New York Stock Exchange. 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.
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. Antero Midstream's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, March 30, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today announced that Janine J. McArdle has been appointed to its board of directors (the "Board") as a Class I director, effective as of March 26, 2020. Ms. McArdle is an independent director under the director independence standards set forth in the rules and regulations of the Securities and Exchange Commission and the applicable listing standards of the New York Stock Exchange. Ms. McArdle's appointment increases the size of the Board to nine directors, seven of whom are independent for service on the Board.
Janine J. McArdle has been an executive in the oil and gas industry for over 30 years with extensive experience in engineering, marketing, business development, finance and risk management. Ms. McArdle is founder and CEO of Apex Strategies LLC, which is a global consultancy company providing advisory services to companies engaged in the midstream and downstream sectors of the energy industry. Prior to forming her own company, Ms. McArdle was an executive officer at Apache Corporation from 2002 to 2015, serving in senior leadership positions across LNG and Global Oil and Gas Marketing. Prior to Apache, Ms. McArdle served as President and Managing Director for Aquila Europe Ltd. from 2001 to 2002 and held executive and management positions with Aquila Energy Marketing from 1993 to 2001. Ms. McArdle was a partner in Hesse Gas from 1991 to 1993. Ms. McArdle currently serves as a Director on the Board of Directors of Santos Ltd and previously served as a Director on the Boards of Halcon Resources and the Intercontinental Exchange. Ms. McArdle holds a Bachelor of Science degree in Chemical Engineering from the University of Nebraska and a Master of Business Administration from the University of Houston.
Paul M. Rady, Chairman and CEO of Antero Midstream commented, "We are excited to welcome Janine to the Board of Antero Midstream. Janine brings tremendous industry expertise from her senior leadership positions across a number of high quality companies. That expertise, combined with her current and past directorship roles, will provide a valuable contribution to Antero Midstream and our shareholders."
Ms. McArdle stated, "I am excited to join the Board of Antero Midstream, a leading midstream provider in one of the lowest cost natural gas basins in the world. I look forward to representing the shareholders and working closely with the Board to execute on the Company's business plan and key strategic initiatives."
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. For more information, contact Michael Kennedy — CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, Feb. 12, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today released its fourth quarter and full year 2019 financial and operating results. In addition, Antero Midstream announced its 2020 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, 2019.
Fourth Quarter 2019 Highlights Include:
Full Year 2019 Highlights Include:
2020 Capital Budget and Guidance Highlights Include:
Paul Rady, Chairman and CEO said, "Antero Midstream's 2020 capital budget, which reflects a 52% decrease compared to 2019, highlights the benefit of our just-in-time capital investment philosophy. The integrated planning efforts with Antero Resources and visibility into Antero Resources' development plan allow us to be flexible and continue to focus on capital discipline. The 2020 capital budget is focused primarily in the Marcellus Shale, supporting Antero Resources' liquids-rich development program on Antero Midstream dedicated acreage."
Mr. Rady further added, "Antero Resources today announced that it expects its 2020 development plan to generate 9% year-over-year net production growth. This net production growth supports continued growth in gathering, compression, processing and fractionation volumes for 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."
Fourth Quarter 2019 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, 2018. Actual and pro forma financial statements can be found in the back of this press release.
Low pressure gathering volumes for the fourth quarter of 2019 averaged 2,639 MMcf/d, a 1% increase as compared to the prior year quarter. Compression volumes for the fourth quarter of 2019 averaged 2,414 MMcf/d, a 9% increase as compared to the fourth quarter of 2018. High pressure gathering volumes for the fourth quarter of 2019 averaged 2,613 MMcf/d, a 2% increase compared to the fourth quarter of 2018. The year-over-year increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 148 MBbl/d during the quarter, a 9% increase compared to the fourth quarter of 2018.
Gross processing volumes from the 50/50 processing and fractionation joint venture with MarkWest (a wholly owned subsidiary of MPLX) (the "Joint Venture") averaged 1,202 MMcf/d for the fourth quarter of 2019, an increase of 51% compared to the prior year quarter. Gross Joint Venture fractionation volumes averaged 31 MBbl/d, a 63% increase compared to the prior year quarter. Processing and fractionation capacity was 92% and 78% utilized during the fourth quarter of 2019, respectively. The year-over-year increase in processing and fractionation volumes is primarily driven by the increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended December 31, | ||||||||
Average Daily Volumes: | 2018(1) | 2019 | % | |||||
Low Pressure Gathering (MMcf/d) | 2,602 | 2,639 | 1% | |||||
Compression (MMcf/d) | 2,215 | 2,414 | 9% | |||||
High Pressure Gathering (MMcf/d) | 2,569 | 2,613 | 2% | |||||
Fresh Water Delivery (MBbl/d) | 136 | 148 | 9% | |||||
Gross Joint Venture Processing (MMcf/d) | 796 | 1,202 | 51% | |||||
Gross Joint Venture Fractionation (MBbl/d) | 19 | 31 | 63% |
1. Pro forma Antero Midstream Corporation. |
For the three months ended December 31, 2019, revenues were $239 million, comprised of $165 million from the Gathering and Processing segment and $92 million from the Water Handling segment, net of $17 million of amortization of customer relationships. Water Handling revenues include $38 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 $42 million, respectively, for a total of $55 million, compared to $92 million in total direct operating expenses in the prior year quarter. Water Handling operating expenses include $37 million from wastewater handling and high rate water transfer services. General and administrative expenses excluding equity-based compensation were $13 million during the fourth quarter of 2019. Total operating expenses included $20 million of equity compensation expense, $27 million of depreciation, and $3 million of accretion and change in fair value of contingent acquisition consideration and asset retirement obligations. In addition, Antero Midstream recorded a $297 million goodwill impairment expense attributable to the goodwill allocated to the fresh water delivery business as part of the Simplification Transaction.
Net loss was $(144) million, or $(0.29) per share. Adjusted Net Income was $177 million, or $0.35 per share, representing a 3% increase compared to the prior year quarter. Adjusted EBITDA was $203 million, a 6% increase compared to the prior year quarter. Adjusted EBITDA included $10 million of Antero Clearwater Facility idling costs during the fourth quarter. Cash interest paid was $8 million. The increase in cash reserved for bond interest during the quarter was $27 million. Maintenance capital expenditures during the quarter totaled $9 million and Distributable Cash Flow was $159 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 | ||||||||
2018 (1) | 2019 | |||||||
Net income | $ | 153,719 | (144,559) | |||||
Amortization of customer relationships | 17,770 | 17,832 | ||||||
Impairment expense | — | 303,888 | ||||||
Adjusted Net Income | 171,489 | 177,161 | ||||||
Interest expense | 24,484 | 36,530 | ||||||
Provision for income tax expense (benefit) | 54,185 | (68,240) | ||||||
Depreciation expense | 26,626 | 26,969 | ||||||
Accretion and change in fair value of contingent acquisition consideration | (104,826) | 2,807 | ||||||
Equity-based compensation | 13,259 | 20,422 | ||||||
Equity in earnings of unconsolidated affiliates | (10,913) | (16,334) | ||||||
Distributions from unconsolidated affiliates | 16,755 | 21,750 | ||||||
Conflicts committee legal & advisory fees | — | 2,278 | ||||||
Adjusted EBITDA | 191,059 | 203,343 | ||||||
Interest paid | (9,268) | (7,944) | ||||||
Increase in cash reserved for bond interest (2) | (8,734) | (27,422) | ||||||
Maintenance capital expenditures(3) | (7,988) | (8,898) | ||||||
AMGP general and administrative expenses | 3,183 | — | ||||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards | (1,029) | (7) | ||||||
Distributable Cash Flow | $ | 167,223 | 159,072 | |||||
Distributions or Dividends Declared to Antero Midstream Holders | ||||||||
Distributions to limited partners | $ | 88,045 | — | |||||
Distributions to incentive distribution rights and Series B unitholders | 43,492 | — | ||||||
Dividends | — | 148,856 | ||||||
Total Aggregate Distributions and Dividends | $ | 131,537 | 148,856 | |||||
Distributable Cash Flow Coverage Ratio | 1.3x | 1.1x |
1) | Three months ended December 31, 2018 presented on a pro forma basis except for distributions and dividends declared. |
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. |
Gathering and Processing — During the fourth quarter of 2019, Antero Midstream connected 29 wells to its gathering system and compression capacity was approximately 85% utilized throughout the quarter. Antero Midstream added 120 MMcf/d of additional compression capacity in the Marcellus Shale during the fourth quarter of 2019 to support the anticipated growth in Antero Resources' production. Antero Resources is currently operating 4 drilling rigs and 4 completion crews on Antero Midstream dedicated acreage. The Joint Venture recently placed the Sherwood 12 and Sherwood 13 processing plants online, bringing the Joint Venture's total processing capacity to 1.4 Bcf/d.
Water Handling— Antero Midstream's Marcellus water delivery systems serviced 32 well completions during the fourth quarter of 2019, a 7% increase from the prior year quarter.
Balance Sheet and Liquidity
As of December 31, 2019, Antero Midstream had approximately $960 million drawn on its $2.13 billion bank credit facility, resulting in approximately $1.2 billion of liquidity. Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA was 3.5x as of December 31, 2019.
Capital Investments
Total capital expenditures including investments in the Joint Venture were $126 million during the fourth quarter of 2019. Gathering, compression, and water infrastructure capital investments totaled $89 million and investments in unconsolidated affiliates for the Joint Venture were $37 million during the quarter. Of the $89 million invested in gathering, compression, and water infrastructure, $63 million was invested in gathering and compression assets and $26 million was invested in water handling assets.
2020 Guidance and Capital Budget
Today in a separate news release, Antero Resources announced its 2020 drilling and completion capital budget of $1.15 billion, which is forecast to generate net production growth of approximately 9% over 2019 production. Antero Resources has stated that it is more than 94% hedged on its expected natural gas production in 2020 at a price of $2.87/MMbtu, or approximately 40% above current NYMEX strip pricing. In addition, Antero Resources announced that it expects its budget to be cash flow neutral in 2020 with leverage to trend towards the mid 2-times range, assuming execution of its previously announced asset sale program. Based on Antero Resources' net production growth forecast, Antero Resources expects to achieve all quarterly low pressure gathering targets under the recently announced growth incentive fee program in 2020, which results in $48 million of midstream fee reductions from Antero Midstream that are included in Antero Midstream's financial guidance. Antero Resources' release can be found at www.anteroresources.com.
The following is a summary of Antero Midstream's 2020 guidance ($ in millions):
2020 | |||||||
Low | High | ||||||
Capital Expenditures | $ | 300 | — | $ | 325 | ||
Net Income | 410 | — | 460 | ||||
Adjusted Net Income | 345 | — | 385 | ||||
Adjusted EBITDA | 850 | — | 900 | ||||
Distributable Cash Flow | 625 | — | 675 | ||||
Free Cash Flow (before return of capital and changes in working capital) | 375 | — | 425 |
During 2020, Antero Midstream plans to expand its existing Marcellus and Ohio Utica Shale gathering, compression and fresh water delivery systems, and the processing capabilities of the Joint Venture to accommodate Antero Resources' development program. Antero Midstream has budgeted capital investments in 2020 of $300 million to $325 million, including $245 million to $260 in expansion capital and $55 million to $65 million in maintenance capital, respectively.
The capital budget includes approximately $200 million of investment in gathering and compression infrastructure primarily in the Marcellus Shale in West Virginia to support production growth in the liquids-rich production areas. Antero Midstream has budgeted an investment of $75 million for fresh water delivery and wastewater blending and pipeline infrastructure to support Antero Resources' development in Tyler and Wetzel Counties, West Virginia. Antero Midstream's capital budget also includes an investment of $30 million for its 50% interest in the Joint Venture, primarily for the continued construction of the Smithburg processing complex. Antero Midstream expects to fund all 2020 capital expenditures through cash flow from operations.
Michael Kennedy, CFO of Antero Midstream, said, "As a result of the 52% year-over-year reduction in capital expenditures combined with Adjusted EBITDA growth in 2020, Antero Midstream expects to generate significant free cash flow and maintain a strong balance sheet with Net Debt to Adjusted EBITDA in the mid 3-times range."
Conference Call
A conference call for Antero Midstream is scheduled on Thursday, February 13, 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 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 20, 2020 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13693464.
A simultaneous webcast of the call and presentation may be accessed over the internet at www.anteromidstream.com. The webcast will be archived for replay on Antero Midstream's website until Thursday, February 20, 2020 at 10:00 am MT.
Presentation
An updated company presentation will be posted to Antero Midstream's website. The presentation can be found at www.anteromidstream.com on the homepage. Information on Antero Midstream's website does not constitute a portion of, and is not incorporated by reference into, this press release.
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, 2018. 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 Annual Report on Form 10-K for the year ended December 31, 2019.
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. 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:
Antero Midstream defines Free Cash Flow as Adjusted EBITDA less interest expense less capital expenditures before dividend payments or share repurchases. 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.
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 and, as applicable, 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 | |||||||||
Low | High | ||||||||
Depreciation expense | $ | 110 | — | $ | 120 | ||||
Equity based compensation expense | 10 | — | 20 | ||||||
Interest expense | 160 | — | 170 | ||||||
Amortization of customer relationships | 65 | — | 75 | ||||||
Distributions from unconsolidated affiliates | 95 | — | 105 |
This press release also includes information about Antero Resources' expected leverage, which is a non-GAAP financial measure. For more information regarding this measure, please refer to Antero Resources' press release dated February 12, 2020, which is available on Antero Resources' website at www.anteroresources.com.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
December 31, 2019 | |||
Bank credit facility | $959,500 | ||
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 | (23,101) | ||
Consolidated total debt | $2,892,249 | ||
Cash and cash equivalents | (1,235) | ||
Consolidated net debt | $2,891,014 |
The following table reconciles net income to Adjusted EBITDA for the last twelve months as used in this release (in thousands):
12 months ended | ||||||
Net income | $ | (285,076) | ||||
Amortization of customer relationships | 70,874 | |||||
Impairment expense | 768,942 | |||||
Adjusted Net Income | 554,740 | |||||
Interest expense | 130,518 | |||||
Provision for income tax expense (benefit) | (79,120) | |||||
Depreciation expense | 120,363 | |||||
Accretion and change in fair value of contingent acquisition consideration | 10,254 | |||||
Equity-based compensation | 75,994 | |||||
Equity in earnings of unconsolidated affiliates | (62,394) | |||||
Distributions from unconsolidated affiliates | 76,925 | |||||
Conflicts committee legal & advisory fees | 2,278 | |||||
Adjusted EBITDA | $ | 829,558 |
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 the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, 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, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and governmental regulations, actions taken by third party producers, operators, processors and transporters, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM CORPORATION | |||||
Consolidated Balance Sheets | |||||
December 31, 2018 and 2019 | |||||
(In thousands) | |||||
December 31, | |||||
2018 | 2019 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 2,822 | 1,235 | ||
Accounts receivable–Antero Resources | — | 101,029 | |||
Accounts receivable–third party | — | 4,574 | |||
Other current assets | 87 | 1,720 | |||
Total current assets | 2,909 | 108,558 | |||
Property and equipment, net | — | 3,273,410 | |||
Investments in unconsolidated affiliates | 43,492 | 709,639 | |||
Deferred tax asset | 1,304 | 103,231 | |||
Customer relationships | — | 1,498,119 | |||
Goodwill | — | 575,461 | |||
Other assets, net | — | 14,460 | |||
Total assets | $ | 47,705 | 6,282,878 | ||
Liabilities and Equity | |||||
Current liabilities: | |||||
Accounts payable–Antero Resources | $ | 731 | 3,146 | ||
Accounts payable–third party | 28 | 6,645 | |||
Accrued liabilities | 407 | 104,188 | |||
Contingent acquisition consideration | — | 125,000 | |||
Taxes payable | 15,678 | — | |||
Other current liabilities | — | 3,105 | |||
Total current liabilities | 16,844 | 242,084 | |||
Long-term liabilities: | |||||
Long-term debt | — | 2,892,249 | |||
Other | — | 5,131 | |||
Total liabilities | 16,844 | 3,139,464 | |||
Partners' Capital and Stockholders' Equity: | |||||
Common shareholders—186,219 shares issued and outstanding at December 31, 2018; none issued and outstanding at December 31, 2019 | (41,969) | — | |||
IDR LLC Series B units (66 units vested at December 31, 2018; none issued and outstanding at December 31, 2019) | 72,830 | — | |||
Preferred stock, $0.01 par value: none authorized or issued at December 31, 2018; 100,000 authorized at December 31, 2019 | |||||
Series A non-voting perpetual preferred stock; none designated, issued or outstanding at December 31, 2018; 12 designated and 10 issued and outstanding at December 31, 2019 | — | — | |||
Common stock, $0.01 par value; none authorized, issued or outstanding at December 31, 2018; 2,000,000 authorized and 484,042 issued and outstanding at December 31, 2019 | — | 4,840 | |||
Additional paid-in capital | — | 3,480,139 | |||
Accumulated loss | — | (341,565) | |||
Total partners' capital and stockholders' equity | 30,861 | 3,143,414 | |||
Total liabilities and partners' capital and stockholders' equity | $ | 47,705 | 6,282,878 |
ANTERO MIDSTREAM CORPORATION | ||||||
Consolidated Statements of Operations and Comprehensive Income | ||||||
Three Months Ended December 31, 2018 and 2019 | ||||||
(In thousands, except per share amounts) | ||||||
(Unaudited) | ||||||
Three Months Ended December 31, | ||||||
2018 | 2019 | |||||
Revenue: | ||||||
Gathering and compression–Antero Resources | $ | — | 165,360 | |||
Water handling and treatment–Antero Resources | — | 91,539 | ||||
Amortization of customer relationships | — | (17,832) | ||||
Total revenue | — | 239,067 | ||||
Operating expenses: | ||||||
Direct operating | — | 55,030 | ||||
General and administrative (including $8,792 and $20,422 of equity-based compensation in 2018 and 2019, respectively) | 11,975 | 33,087 | ||||
Facility idling | — | 9,889 | ||||
Impairment of property and equipment | — | 1,297 | ||||
Impairment of goodwill | — | 296,591 | ||||
Impairment of customer relationships | — | 6,000 | ||||
Depreciation | — | 26,969 | ||||
Accretion and change in fair value of contingent acquisition consideration | — | 2,753 | ||||
Accretion of asset retirement obligations | — | 54 | ||||
Total operating expenses | 11,975 | 431,670 | ||||
Operating loss | (11,975) | (192,603) | ||||
Interest expense, net | (54) | (36,530) | ||||
Equity in earnings of unconsolidated affiliates | 43,492 | 16,334 | ||||
Income (loss) before income taxes | 31,463 | (212,799) | ||||
Provision for income tax benefit (expense) | (10,075) | 68,240 | ||||
Net income (loss) and comprehensive income (loss) | $ | 21,388 | (144,559) | |||
Net income (loss) per share–basic and diluted | $ | 0.09 | (0.29) | |||
Weighted average common shares outstanding: | ||||||
Basic | 186,218 | 500,043 | ||||
Diluted | 186,218 | 500,043 |
ANTERO MIDSTREAM CORPORATION | ||||||||
Consolidated Statements of Operations and Comprehensive Income | ||||||||
Years Ended December 31, 2017, 2018, and 2019 | ||||||||
(In thousands, except per share amounts) | ||||||||
Year Ended December 31, | ||||||||
2017 | 2018 | 2019 | ||||||
Revenue: | ||||||||
Gathering and compression–Antero Resources | $ | — | — | 543,538 | ||||
Water handling–Antero Resources | — | — | 306,010 | |||||
Water handling–third party | — | — | 50 | |||||
Amortization of customer relationships | — | — | (57,010) | |||||
Total revenue | — | — | 792,588 | |||||
Operating expenses: | ||||||||
Direct operating | — | — | 195,818 | |||||
General and administrative (including $34,933, $35,111 and $73,517 of equity-based compensation in 2017, 2018 and 2019, respectively) | 41,134 | 43,851 | 118,113 | |||||
Facility idling | — | — | 11,401 | |||||
Impairment of property and equipment | — | — | 409,739 | |||||
Impairment of goodwill | — | — | 340,350 | |||||
Impairment of customer relationships | — | — | 11,871 | |||||
Depreciation | — | — | 95,526 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | — | 8,076 | |||||
Accretion of asset retirement obligations | — | — | 187 | |||||
Total operating expenses | 41,134 | 43,851 | 1,191,081 | |||||
Operating loss | (41,134) | (43,851) | (398,493) | |||||
Interest expense, net | — | (136) | (110,402) | |||||
Equity in earnings of unconsolidated affiliates | 69,720 | 142,906 | 51,315 | |||||
Income (loss) before income taxes | 28,586 | 98,919 | (457,580) | |||||
Provision for income tax benefit (expense) | (26,261) | (32,311) | 102,466 | |||||
Net income (loss) and comprehensive income (loss) | $ | 2,325 | 66,608 | (355,114) | ||||
Net income (loss) per share–basic and diluted | $ | 0.03 | 0.33 | (0.80) | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 186,176 | 186,203 | 442,640 | |||||
Diluted | 186,176 | 186,203 | 442,640 |
ANTERO MIDSTREAM CORPORATION | |||||||||||||
Selected Operating Data | |||||||||||||
Three Months Ended December 31, 2018 and 2019 | |||||||||||||
(Unaudited) | |||||||||||||
Amount of | |||||||||||||
Three Months Ended December 31, | Increase | Percentage | |||||||||||
2018(1) | 2019 | or Decrease | Change | ||||||||||
Operating Data: | |||||||||||||
Gathering—low pressure (MMcf) | 239,392 | 242,785 | 3,393 | 1 | % | ||||||||
Gathering—high pressure (MMcf) | 236,332 | 240,366 | 4,034 | 2 | % | ||||||||
Compression (MMcf) | 203,740 | 222,050 | 18,310 | 9 | % | ||||||||
Fresh water delivery (MBbl) | 12,514 | 13,602 | 1,088 | 9 | % | ||||||||
Treated water (MBbl) | 782 | — | (782) | * | |||||||||
Other fluid handling (MBbl) | 5,406 | 5,380 | (26) | (1) | % | ||||||||
Wells serviced by fresh water delivery | 30 | 32 | 2 | 7 | % | ||||||||
Gathering—low pressure (MMcf/d) | 2,602 | 2,639 | 37 | 1 | % | ||||||||
Gathering—high pressure (MMcf/d) | 2,569 | 2,613 | 44 | 2 | % | ||||||||
Compression (MMcf/d) | 2,215 | 2,414 | 199 | 9 | % | ||||||||
Fresh water delivery (MBbl/d) | 136 | 148 | 12 | 9 | % | ||||||||
Treated water (MBbl/d) | 9 | — | (9) | * | |||||||||
Other fluid handling (MBbl/d) | 59 | 58 | (1) | (2) | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering—low pressure fee ($/Mcf) | $ | 0.32 | 0.33 | 0.01 | 3 | % | |||||||
Average gathering—high pressure fee ($/Mcf) | $ | 0.19 | 0.18 | (0.01) | (5) | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.20 | 0.01 | 5 | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.78 | 3.90 | 0.12 | 3 | % | |||||||
Average treatment fee ($/Bbl) | $ | 4.64 | — | (4.64) | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing—Joint Venture (MMcf) | 73,260 | 110,647 | 37,387 | 51 | % | ||||||||
Fractionation—Joint Venture (MBbl) | 1,718 | 2,871 | 1,153 | 67 | % | ||||||||
Processing—Joint Venture (MMcf/d) | 796 | 1,202 | 406 | 51 | % | ||||||||
Fractionation—Joint Venture (MBbl/d) | 19 | 31 | 12 | 63 | % |
1) Three months ended December 31, 2018 are presented on a pro forma basis |
* Not meaningful or applicable. |
ANTERO MIDSTREAM CORPORATION | |||||||||||||||
Consolidated Results of Segment Operations | |||||||||||||||
Three Months Ended December 31, 2019 | |||||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Gathering and | Water | Pro Forma | Consolidated | ||||||||||||
Processing | Handling | Adjustments | Unallocated | Total | |||||||||||
Three months ended December 31, 2019 | |||||||||||||||
Revenues: | |||||||||||||||
Revenue–Antero Resources | $ | 165,360 | 91,539 | — | — | 256,899 | |||||||||
Amortization of customer relationships | (10,584) | (7,248) | — | — | (17,832) | ||||||||||
Total revenues | 154,776 | 84,291 | — | — | 239,067 | ||||||||||
Operating expenses: | |||||||||||||||
Direct operating | 13,037 | 41,993 | — | — | 55,030 | ||||||||||
General and administrative (excluding equity-based compensation) | 5,564 | 3,268 | — | 3,833 | 12,665 | ||||||||||
Facility idling | — | 9,889 | — | — | 9,889 | ||||||||||
Equity-based compensation | 1,550 | 541 | — | 18,331 | 20,422 | ||||||||||
Impairment of property and equipment | — | 1,297 | — | — | 1,297 | ||||||||||
Impairment of goodwill | — | 296,591 | — | — | 296,591 | ||||||||||
Impairment of customer relationships | — | 6,000 | — | — | 6,000 | ||||||||||
Depreciation | 12,662 | 14,307 | — | — | 26,969 | ||||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 2,753 | — | — | 2,753 | ||||||||||
Accretion of asset retirement obligations | — | 54 | — | — | 54 | ||||||||||
Total expenses | 32,822 | 376,684 | — | 22,164 | 431,670 | ||||||||||
Operating income | 121,954 | (292,393) | — | (22,164) | (192,603) | ||||||||||
Other income (expenses): | |||||||||||||||
Interest expense, net | — | — | — | (36,530) | (36,530) | ||||||||||
Equity in earnings of unconsolidated affiliates | 16,334 | — | — | — | 16,334 | ||||||||||
Income (loss) before taxes | 138,288 | (292,393) | — | (58,694) | (212,799) | ||||||||||
Provision for income tax benefit | — | — | — | 68,240 | 68,240 | ||||||||||
Net income (loss) and comprehensive income (loss) | $ | 138,288 | (292,393) | — | 9,546 | (144,559) | |||||||||
Adjusted EBITDA | $ | 203,343 |
ANTERO MIDSTREAM CORPORATION | |||||||||
Consolidated Statements of Cash Flows | |||||||||
Years Ended December 31, 2017, 2018 and 2019 | |||||||||
(In thousands) | |||||||||
Year Ended December 31, | |||||||||
2017 | 2018 | 2019 | |||||||
Cash flows provided by (used in) operating activities: | |||||||||
Net income (loss) | $ | 2,325 | 66,608 | (355,114) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Distributions from Antero Midstream Partners LP, prior to the Transactions | 53,491 | 123,186 | 43,492 | ||||||
Depreciation | — | — | 95,526 | ||||||
Accretion and change in fair value of contingent acquisition consideration | — | — | 8,263 | ||||||
Impairment | — | — | 761,960 | ||||||
Deferred income tax benefit | — | (1,304) | (101,927) | ||||||
Equity-based compensation | 34,933 | 35,111 | 73,517 | ||||||
Equity in earnings of unconsolidated affiliates | (69,720) | (142,906) | (51,315) | ||||||
Distributions from unconsolidated affiliates | — | — | 64,320 | ||||||
Amortization of customer relationships | — | — | 57,010 | ||||||
Amortization of deferred financing costs | — | 148 | 3,183 | ||||||
Changes in assets and liabilities: | |||||||||
Accounts receivable–Antero Resources | — | — | 42,484 | ||||||
Accounts receivable–third party | — | — | 185 | ||||||
Other current assets | — | (5) | (335) | ||||||
Accounts payable–Antero Resources | 57 | 674 | (2,103) | ||||||
Accounts payable–third party | — | 28 | (9,762) | ||||||
Accrued liabilities | (190) | 171 | 8,681 | ||||||
Income taxes payable | 7,184 | 1,820 | (15,678) | ||||||
Net cash provided by operating activities | 28,080 | 83,531 | 622,387 | ||||||
Cash flows used in investing activities: | |||||||||
Additions to gathering systems and facilities | — | — | (267,383) | ||||||
Additions to water handling systems | — | — | (124,607) | ||||||
Investments in unconsolidated affiliates | — | — | (154,359) | ||||||
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 | — | — | 901 | ||||||
Change in other liabilities | — | — | (1,050) | ||||||
Net cash used in investing activities | — | — | (525,675) | ||||||
Cash flows provided by (used in) financing activities: | |||||||||
Distributions to Antero Resources Investment LLC | (15,691) | — | — | ||||||
Distributions to unitholders and dividends to stockholders | (16,011) | (84,166) | (492,103) | ||||||
Distributions to Series B unitholders | — | (2,300) | (3,720) | ||||||
Distributions to preferred stockholders | — | — | (374) | ||||||
Repurchases of common stock | — | — | (125,519) | ||||||
Issuance of senior notes | — | — | 650,000 | ||||||
Payments of deferred financing costs | — | (230) | (8,894) | ||||||
Payments on bank credit facilities, net | — | — | (115,500) | ||||||
Employee tax withholding for settlement of equity compensation awards | — | — | (2,015) | ||||||
Other | — | — | (174) | ||||||
Net cash used in financing activities | (31,702) | (86,696) | (98,299) | ||||||
Net decrease in cash and cash equivalents | (3,622) | (3,165) | (1,587) | ||||||
Cash and cash equivalents, beginning of period | 9,609 | 5,987 | 2,822 | ||||||
Cash and cash equivalents, end of period | $ | 5,987 | 2,822 | 1,235 | |||||
Supplemental disclosure of cash flow information: | |||||||||
Cash paid during the period for interest | $ | — | 3 | 83,016 | |||||
Cash paid during the period for income taxes | $ | 19,077 | 31,795 | 16,079 | |||||
Decrease in accrued capital expenditures and accounts payable for property and equipment | $ | — | — | (6,215) |
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SOURCE Antero Midstream Corporation
DENVER, Jan. 15, 2020 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share ($1.23 per share annualized) for the fourth quarter of 2019. In addition, Antero Midstream announced plans to issue their fourth quarter and full year 2019 earnings on Wednesday, February 12, 2020 after the close of trading on the New York Stock Exchange.
Fourth Quarter 2019 Return of Capital
Antero Midstream's fourth quarter 2019 dividend is unchanged as compared to the third quarter of 2019. The dividend will be payable on February 12, 2020 to stockholders of record as of January 31, 2020. This represents the twentieth consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014.
On December 8, 2019, Antero Midstream announced that it agreed to purchase $100 million of common stock from Antero Resources based on a formulaic pricing mechanism taking into account both historical and future pricing. The pricing mechanism resulted in Antero Midstream purchasing and retiring 19.4 million shares from Antero Resources at a price of $5.16 per share. As a result, Antero Midstream had 484 million shares outstanding as of December 31, 2019. To-date, Antero Midstream has repurchased 22.9 million shares for $125 million under its $300 million share repurchase program.
Fourth Quarter and Full Year 2019 Earnings Release Date and Conference Call
Antero Midstream plans to issue its fourth quarter and full year 2019 earnings on Wednesday, February 12, 2020 after the close of trading on the New York Stock Exchange. A conference call for Antero Midstream is scheduled on Thursday, February 13, 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, February 20, 2020 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13693464. 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 20, 2020 at 10:00 am MT.
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. Antero Midstream's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, Dec. 9, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today announced that it has agreed to repurchase $100 million of Antero Midstream shares from Antero Resources Corporation ("Antero Resources"). In addition, Antero Midstream and Antero Resources have agreed to a growth incentive fee program where Antero Midstream will provide a reduction in low pressure gathering fees for volumes gathered from January 1, 2020 through December 31, 2023 subject to achieving increasing volumetric targets. The growth incentive fee program aligns with Antero Resources' current 8% to 10% compound annual net production growth plan in 2020 and 2021. The share repurchase and growth incentive fee reduction transactions have been negotiated and recommended by the Conflicts Committees of Antero Midstream and Antero Resources and approved by both Boards of Directors.
Highlights Include:
Paul Rady, Chairman and CEO said, "The growth incentive fee program supports a stronger Antero Resources with an enhanced cash flow and liquidity profile, which facilitates the continued development and increasing gathering, compression, and processing volumes on Antero Midstream dedicated acreage."
Mr. Rady further added, "Antero Resources has announced that it believes that this growth incentive fee program, in conjunction with midstream fee restructurings agreed to with other third parties, supports ongoing development and a moderate growth profile that fills Antero Resources' premium firm transportation capacity to attractively priced markets. In addition, Antero Resources has announced that the fee restructurings, planned asset sales and improvement in NGL prices and outlook during the quarter allow it to target a 2020 budget that generates positive free cash flow and results in leverage in the low 2-times range."
Share Repurchase Summary
Antero Midstream agreed to repurchase $100 million of Antero Midstream common stock from Antero Resources. The number of shares to be purchased will be based on a formulaic pricing mechanism taking into account both the historical and future market pricing of Antero Midstream shares. Including the $25 million of shares repurchased on the open market in the third quarter of 2019, Antero Midstream will have repurchased approximately $125 million of shares to-date in 2019. Based on the targeted $1.23 per share dividend in 2020, the $125 million of shares repurchased to-date reduces the Company's total dividend payments by over $25 million annually. Antero Midstream will have $175 million of remaining capacity under its share repurchase program that could be used to repurchase shares in the open market or additional Antero Midstream shares held by Antero Resources.
2020 Capital Budget Update
Due to additional optimization of the midstream infrastructure buildout, Antero Midstream is now targeting a 2020 capital program of approximately $300 to $325 million. This represents a $75 to $100 million, or 22% reduction, compared to the previous target of $375 to $425 million. Antero Resources' previously announced preliminary 2020 target of 110 to 120 completions in 2020, with an average lateral length of 12,100 feet is unchanged. Both Antero Resources and Antero Midstream expect to finalize their respective capital budgets early in the first quarter of 2020 following Board approval. Formal guidance is expected to be released following Board approval.
Growth Incentive Fee Program Summary
Antero Midstream and Antero Resources have agreed to a growth incentive fee program where Antero Midstream will provide fee reductions to Antero Resources from January 1, 2020 through December 31, 2023, contingent upon Antero Resources achieving volumetric growth targets on low pressure gathering. Antero Midstream's compression, high pressure gathering, and fresh water delivery fees remain unchanged. In addition, Antero Midstream and Antero Resources agreed to extend the gathering and compression contract term for four additional years. The decision to provide a fee reduction on low pressure gathering services was driven by the strong rates of return on low pressure gathering projects. These returns have improved materially relative to expectations at the time the gathering and compression agreement was signed in 2014 due to more wells per pad, longer laterals and higher estimated ultimate recoveries per foot. In addition, Antero Midstream believes that the growth incentive fee program will drive continued throughput growth from Antero Resources supporting Antero Midstream's gathering, compression, processing, fractionation and fresh water delivery businesses.
The following table summarizes the low pressure gathering thresholds and associated reduction in low pressure gathering fees that will be realized on a quarterly basis. The growth incentive targets were structured in a manner that aligns with Antero Resources' plan to grow net production 8% to 10% through 2021 in order to fill its premium firm transportation portfolio. The initial threshold approximates Antero Midstream's third quarter 2019 low pressure volumes. If actual low pressure volumes are below the lowest tier for the respective calendar years, Antero Resources will not receive a reduction in low pressure gathering fees.
Calendar Year 2020 | Low Pressure Gathering | Quarterly Fee | |||
First Quarter 2020 | > 2,700 | $12 | |||
Second Quarter 2020 | > 2,700 | $12 | |||
Third Quarter 2020 | > 2,800 | $12 | |||
Fourth Quarter 2020 | > 2,900 | $12 | |||
Calendar Years 2021 - 2023 | |||||
Threshold 1 | > 2,900 and < 3,150 | $12 | |||
Threshold 2 | > 3,150 and < 3,400 | $15.5 | |||
Threshold 3 | > 3,400 | $19 |
Michael Kennedy, CFO of Antero Midstream said, "The fee reduction, share repurchase and capital budget update announced today result in a net cash flow positive impact to Antero Midstream in 2020 of approximately $60 to $65 million. This allows Antero Midstream to target a 2020 DCF coverage ratio of approximately 1.1x in 2020 assuming the targeted $1.23 per share annual dividend. Importantly, Antero Midstream expects to maintain a strong balance sheet with net debt to Adjusted EBITDA in the mid-to-high 3-times range in 2020 with no need to access the capital markets to deliver on its organic growth plan."
Financial and Legal Advisors
Goldman Sachs & Co. LLC and Richards, Layton, & Finger acted as financial and legal advisors, respectively, to the Conflicts Committee of Antero Midstream. Baird and Potter, Anderson & Corroon acted as financial and legal advisors, respectively, to the Conflicts Committee of Antero Resources. Vinson & Elkins LLP acted as legal advisors to Antero Midstream and Antero Resources.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses non-GAAP financial measures in this press release. Antero Midstream uses Adjusted EBITDA as an important indicator of Antero Midstream's performance. 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:
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 Antero Midstream Partners LP equity-based compensation awards, ongoing maintenance capital expenditures paid, and AMGP general and administrative expenses. 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 DCF Coverage ratio as Distributable Cash Flow divided by dividends declared.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.
Antero Midstream defines Net Debt as total debt less cash and cash equivalents. Antero Midstream views Net Debt as an important indicator in evaluating Antero Midstream's financial leverage.
Included in this press release are certain 2020 through 2023 target projections. Antero Midstream has not included a reconciliation of Adjusted EBITDA, Distributable Cash Flow, and DCF Coverage to the nearest GAAP financial measure for 2019 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise.
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, the expected benefits of the growth incentive fee program, the savings resulting from Antero Midstream's repurchase of Antero Resources' shares, 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 the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, 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, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and governmental regulations, actions taken by third party producers, operators, processors and transporters, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, Nov. 6, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") announced today the pricing of an underwritten public offering of an aggregate of 25,965,437 shares of common stock by certain affiliates of Warburg Pincus and certain investment funds managed by Yorktown Partners LLC. The underwriter intends to offer the shares from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The gross proceeds from the sale of the shares by the selling stockholders are expected to be approximately $171 million. Antero Midstream is not selling any shares of common stock in the offering and will not receive any proceeds therefrom.
Barclays Capital Inc. is acting as the sole underwriter for the offering. The offering of these securities will be made only by means of a prospectus supplement. When available, a copy of the prospectus supplement and the accompanying base prospectuses may be obtained from Barclays, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Barclaysprospectus@broadridge.com, (888) 603-5847.
This offering is made pursuant to an effective shelf registration statement filed by Antero Midstream with the Securities and Exchange Commission. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful without registration or qualification under the securities laws of any such state or jurisdiction.
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.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, Nov. 6, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") announced today the commencement of an underwritten public offering of an aggregate of 25,965,437 shares of common stock by certain affiliates of Warburg Pincus and certain investment funds managed by Yorktown Partners LLC. Antero Midstream will not sell any shares of common stock in the offering and will not receive any proceeds therefrom.
Barclays Capital Inc. is acting as the sole underwriter for the offering. The offering of these securities will be made only by means of a prospectus supplement. When available, a copy of the prospectus supplement and the accompanying base prospectuses may be obtained from Barclays, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Barclaysprospectus@broadridge.com, (888) 603-5847.
This offering is made pursuant to an effective shelf registration statement filed by Antero Midstream with the Securities and Exchange Commission. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful without registration or qualification under the securities laws of any such state or jurisdiction.
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.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, Oct. 29, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today released its third quarter 2019 financial and operating results. The relevant condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed with the Securities and Exchange Commission.
Third Quarter 2019 Highlights Include:
Commenting on Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream delivered another strong quarter, generating 25% and 71% year-over-year growth in low pressure gathering and processing volumes, respectively. We remain focused on delivering on our organic growth strategy and implementing blending and produced water transportation initiatives that support the capital efficient development program of our producer customer. Antero Resources has already realized a portion of these reduced costs and reported a 20% decrease in lease operating expenses per unit and an 8% decrease in drilling and completion cost per thousand feet in the third quarter of 2019 as compared to the first half of 2019."
Mr. Rady further added, "Antero Resources today announced plans to target a drilling and completion budget in 2020 of $1.15 to $1.2 billion. Antero Resources has stated that it expects this development program to generate 8% to 10% year-over-year net production growth with only a modest outspend of $100 to $150 million assuming current strip pricing. Antero Midstream's just-in-time capital philosophy and core infrastructure investments in 2019 allow it to further leverage its asset base and take advantage of already existing infrastructure in 2020. This results in a targeted capital budget of $375 to $425 million in 2020, or approximately a 40% year-over-year reduction in capital investment compared to the midpoint of the updated 2019 guidance range."
For a discussion of the non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income and Distributable Cash Flow presented on an actual and pro forma basis, as well as Net Debt, please see "Non-GAAP Financial Measures."
2019 Guidance Updates
Antero Midstream is revising its 2019 capital budget down to a range of $665 to $685 million from a previous range of $750 to $800 million. The reduction is driven by the deferral of just-in-time gathering, processing and fresh water delivery projects, as well as capital savings initiatives, and removal of the final Antero Clearwater Facility milestone payments assumed in the capital budget. Antero Midstream is also revising its GAAP net income guidance from a range of $305 to $365 million to a net loss range of $55 million to $45 million as a result of the non-cash impairment of the Antero Clearwater Facility. In addition, Antero Midstream is revising its 2019 Adjusted EBITDA guidance from a range of $870 to $920 million to a range of $840 to $850 million and Distributable Cash Flow guidance from a range of $680 to $730 to a range of $655 to $665 million. The reduction is driven primarily by the reduced wastewater volume throughout the year and the idling of the Antero Clearwater Facility. The revised guidance includes an additional $10 to $15 million of idling expenses in the fourth quarter of 2019. The net positive cash flow impact to Antero Midstream as a result of the revised capital budget and Adjusted EBITDA guidance is approximately $55 million in 2019 based on the midpoint of the revised guidance ranges.
Preliminary 2020 Outlook
In a separate release, Antero Resources announced that it is targeting 110 to 120 completions in 2020, with an average lateral length of 12,100 feet as compared to 115 to 125 completions in 2019 with an average lateral of 10,200 feet. This represents a 14% increase in total lateral feet completed. As a result of the well cost reductions achieved to date and expectations for 2020, Antero Resources announced that its preliminary drilling and completion capital budget for 2020 is expected to be $1.15 to $1.2 billion.
Antero Midstream is initially targeting a 2020 capital program of approximately $375 to $425 million, or a 40% decrease as compared to the midpoint of the revised 2019 capital budget. The preliminary 2020 capital program does not include the $125 million earn-out payment from the water drop down that Antero Midstream expects to pay in the first quarter of 2020 to Antero Resources. Antero Midstream's 2020 capital budget will be flexible based on Antero Resources 2020 budget and completion activity. Antero Midstream's and Antero Resources' 2020 budgets remain subject to respective board approvals and are both expected to be finalized by the first quarter of 2020.
Return of Capital Program
On August 12, 2019, the Board of Directors of Antero Midstream authorized a share repurchase program to opportunistically repurchase up to $300 million of shares of its outstanding common stock through June 30, 2021. During the third quarter of 2019, Antero Midstream repurchased approximately 3.5 million shares under this program for approximately $25 million, leaving approximately $275 million of remaining capacity as of September 30, 2019. In addition, Antero Midstream declared a third quarter dividend of $0.3075 per share, which was unchanged as compared to the second quarter of 2019. Importantly, Antero Midstream's declining capital program in 2020 combined with anticipated Adjusted EBITDA growth in 2020 positions Antero Midstream to continue targeting high single digit return of capital growth in 2020 as compared to 2019 based on the expected Antero Resources development plan. Based on the attractive rates of return and cash flow per share accretion from repurchasing shares at the current share price, Antero Midstream currently expects this return of capital growth in 2020 to be in the form of share repurchases. The future allocation of Antero Midstream's return of capital to shareholders between dividend growth and share repurchases is subject to Board approval.
Increased Credit Facility Commitments
In October of 2019, Antero Midstream added Royal Bank of Canada ("RBC") to its lending group with $132 million of incremental commitments. Pro forma for the addition of RBC, Antero Midstream's lender commitments increased to $2.13 billion and the Company's available liquidity increased to $1.4 billion.
Third Quarter 2019 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, 2018. GAAP and pro forma financial statements can be found in the back of this press release.
Low pressure gathering volumes for the third quarter of 2019 averaged 2,698 MMcf/d, a 25% increase as compared to the prior year quarter. Compression volumes for the third quarter of 2019 averaged 2,434 MMcf/d, a 39% increase as compared to the third quarter of 2018. High pressure gathering volumes for the third quarter of 2019 averaged 2,662 MMcf/d, a 23% increase over the third quarter of 2018. The year-over-year increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 141 MBbl/d during the quarter, a 28% decrease compared to the third quarter of 2018, driven by a decrease in Antero Resources' completion activity.
Gross processing volumes from the 50/50 processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 1,036 MMcf/d for the third quarter of 2019, an increase of 71% compared to the prior year quarter. The five Sherwood Joint Venture plants operated at 100% utilization for the quarter. Gross Joint Venture fractionation volumes averaged 32 MBbl/d, an 88% increase compared to the prior year quarter. The Joint Venture's fractionation capacity was 80% utilized during the quarter. The year-over-year increase in processing and fractionation volumes is primarily driven by the increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended | ||||||
Average Daily Volumes: | 2018(1) | 2019 | % | |||
Low Pressure Gathering (MMcf/d) | 2,166 | 2,698 | 25% | |||
Compression (MMcf/d) | 1,756 | 2,434 | 39% | |||
High Pressure Gathering (MMcf/d) | 2,173 | 2,662 | 23% | |||
Fresh Water Delivery (MBbl/d) | 195 | 141 | (28)% | |||
Gross Joint Venture Processing (MMcf/d) | 606 | 1,036 | 71% | |||
Gross Joint Venture Fractionation (MBbl/d) | 17 | 32 | 88% |
1. | Represents results for Antero Midstream Partners. |
For the three months ended September 30, 2019, revenues were $244 million, comprised of $176 million from the Gathering and Processing segment and $97 million from the Water Handling and Treatment segment, net of $(29) million of amortization of customer relationships. Water Handling and Treatment segment revenues include $11 million from wastewater treatment at the Antero Clearwater Facility and $36 million from wastewater handling and high rate water transfer services. Wastewater handling and high rate transfer service revenues, which are billed at cost plus 3%, decreased by 10% compared to the second quarter of 2019 driven by water savings initiatives, improved trucking logistics, and blending operations during the month of September. These support lower operating and capital costs for Antero Resources.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $13 million and $49 million, respectively, for a total of $62 million, compared to $81 million in total direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $11 million from wastewater treatment at the Antero Clearwater Facility and $35 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%. Antero Midstream incurred $2 million in costs to idle the Antero Clearwater Facility during the third quarter. General and administrative expenses excluding equity-based compensation were $10 million during the third quarter of 2019. Total operating expenses were $578 million, including $20 million of equity compensation expense, $457 million of impairment, $24 million of depreciation, and $2 million of accretion and change in fair value of contingent acquisition consideration and asset retirement obligations.
During the third quarter of 2019, Antero Midstream idled the Antero Clearwater wastewater treatment facility. The decision to idle the facility was driven by its inability to operate at its intended specifications. As a result of idling the facility, Antero Midstream incurred a $457 million non-cash impairment during the quarter related to the property, plant and equipment, as well as the impairment of goodwill and customer relationship value related to the facility as a result of the simplification transaction. Antero Midstream will continue to evaluate strategic options for the future of the Antero Clearwater Facility.
Net loss was $289 million, or $(0.57) per share. Adjusted Net Income was $197 million, or $0.39 per share, representing a 156% increase compared to the prior year quarter. Adjusted EBITDA was $218 million, an 18% increase compared to the prior year quarter. Adjusted EBITDA for the quarter included $19 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $44 million. The decrease in cash reserved for bond interest during the quarter was $9 million. Maintenance capital expenditures during the quarter totaled $13 million and Distributable Cash Flow was $170 million, representing an 8% increase over the prior year quarter. Based on the previously declared dividend of $0.3075 per share, Antero Midstream's Distributable Cash Flow coverage ratio was 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 | ||||||
2018 (1) | 2019 | |||||
Net income | $ | 57,975 | (289,477) | |||
Amortization of customer relationships | 17,843 | 28,863 | ||||
Impairment expense | 1,157 | 457,478 | ||||
Adjusted Net Income | 76,975 | 196,864 | ||||
Interest expense | 22,493 | 36,134 | ||||
Provision for income tax expense (benefit) | 22,233 | (62,268) | ||||
Depreciation expense | 42,390 | 24,460 | ||||
Accretion and change in fair value of contingent acquisition consideration | 4,020 | 1,977 | ||||
Accretion of asset retirement obligations | 33 | 54 | ||||
Equity-based compensation | 13,102 | 20,129 | ||||
Equity in earnings of unconsolidated affiliates | (9,235) | (18,478) | ||||
Distributions from unconsolidated affiliates | 11,765 | 18,710 | ||||
Adjusted EBITDA | 183,776 | 217,582 | ||||
Interest paid | (24,958) | (43,925) | ||||
Decrease in cash reserved for bond interest (2) | 8,734 | 9,150 | ||||
Maintenance capital expenditures(3) | (10,964) | (12,915) | ||||
AMGP general and administrative expenses | 2,229 | — | ||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards | (1,500) | (180) | ||||
Distributable Cash Flow | $ | 157,317 | 169,712 | |||
Distributions or Dividends Declared to Antero Midstream Holders | ||||||
Distributions to Limited Partners | $ | 82,302 | — | |||
Distributions to incentive distribution rights and Series B unitholders | 37,815 | — | ||||
Dividends | — | 153,023 | ||||
Total Aggregate Distributions and Dividends | $ | 120,117 | 153,023 | |||
Distributable Cash Flow Coverage Ratio | 1.3x | 1.1x |
1) | Three months ended September 30, 2018 presented on a pro forma basis. |
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. |
Gathering and Processing — During the third quarter of 2019, Antero Midstream connected 33 wells to its gathering system and Antero Midstream's compression capacity was approximately 90% utilized throughout the quarter. Antero Midstream expects to add 120 MMcf/d of additional compression capacity in the Marcellus Shale during the fourth quarter of 2019 to support the anticipated growth in Antero Resources' production. Antero Resources is currently operating four drilling rigs on Antero Midstream dedicated acreage. The Joint Venture's processing capacity during the third quarter was 1.0 Bcf/d, which was 100% utilized. The Joint Venture recently placed the Sherwood 12 processing plant online and expects Sherwood 13 to be placed into service later in the fourth quarter of 2019, bringing the Joint Venture's total processing capacity to 1.4 Bcf/d.
Water Handling and Treatment — Antero Midstream's Marcellus water delivery systems serviced 30 well completions during the third quarter of 2019, a 21% decrease from the prior year quarter. During the third quarter, Antero Resources operated three completion crews. Antero Resources plans to operate three to four completion crews during the fourth quarter, which is expected to drive an increase in fresh water delivery volumes during the fourth quarter of 2019 as compared to the third quarter of 2019.
Balance Sheet and Liquidity
As of September 30, 2019, Antero Midstream had approximately $726 million drawn on its $2.13 billion bank credit facility, resulting in approximately $1.4 billion of liquidity. Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA was 3.3x as of September 30, 2019.
Commenting on Antero Midstream's growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream reported another strong quarter which generated 18% and 8% year-over-year growth in Adjusted EBITDA and Distributable Cash Flow, respectively. Importantly, Antero Midstream's DCF coverage increased to 1.1x during the third quarter and we expect a continued trend of increasing DCF coverage during the fourth quarter of 2019. In addition, Antero Midstream's balance sheet remains very strong with 3.3x net debt to Adjusted EBITDA and approximately $1.4 billion of liquidity."
Capital Investments
Total capital expenditures including investments in the Joint Venture were $135 million during the third quarter of 2019. Gathering, compression, and water infrastructure capital investments totaled $121 million and investments in unconsolidated affiliates for the Joint Venture were $14 million during the quarter. Of the $121 million invested in gathering, compression, and water infrastructure, $82 million was invested in gathering and compression assets and $39 million was invested in water handling and treatment assets.
Conference Call
A conference call for Antero Midstream is scheduled on Wednesday, October 30, 2019 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 877-407-9126 (U.S.), or 201-493-6751 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, November 6, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13693464.
A simultaneous webcast of the call and presentation may be accessed over the internet at www.anteromidstream.com. The webcast will be archived for replay on Antero Midstream's website until Wednesday, November 6, 2019 at 10:00 am MT.
Guidance
Included in this press release are updates to certain 2019 guidance projections. Antero Midstream has not included a reconciliation of Adjusted EBITDA and Distributable Cash Flow to the nearest GAAP financial measure for 2019 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 Adjusted EBITDA and net income (in thousands):
Twelve Months Ending | ||||||
Low | High | |||||
Depreciation expense | $ | 125,000 | $ | 135,000 | ||
Interest expense | 125,000 | 135,000 | ||||
Equity based compensation expense | 70,000 | 80,000 | ||||
Equity in earnings of unconsolidated affiliates | 58,000 | 73,000 | ||||
Distributions from unconsolidated affiliates | 76,000 | 81,000 |
Presentation
An updated company presentation will be posted to Antero Midstream's website. The presentation can be found at www.anteromidstream.com on the homepage. Information on Antero Midstream's website does not constitute a portion of, and is not incorporated by reference into, this press release.
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, 2018. 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 September 30, 2019.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses non-GAAP financial measures that are presented on an actual and pro forma basis. The definitions, uses, reconciliations to the nearest GAAP financial measure, and disclosures discussed in this release apply to both an actual and pro forma basis. Antero Midstream uses Adjusted EBITDA as an important indicator of Antero Midstream's performance. 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:
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 Antero Midstream Partners LP equity-based compensation awards, ongoing maintenance capital expenditures paid, and AMGP general and administrative expenses. 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 and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.
Antero Midstream defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating Antero Midstream's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
September 30, 2019 | ||
Bank credit facility | $725,500 | |
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 | (23,600) | |
Consolidated total debt | $2,657,750 | |
Cash and cash equivalents | — | |
Consolidated net debt | $2,657,750 |
Antero Midstream defines Adjusted Net Income as net income plus amortization of customer contracts and impairment. Antero Midstream believes Adjusted Net Income is useful to investors in evaluating operational trends and its performance relative to other midstream companies. Adjusted Net Income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.
The following table reconciles pro forma net income to pro forma Adjusted EBITDA for the twelve months ended September 30, 2019 as used in this release (in thousands):
Twelve Months | |||
Pro forma net income | $ | 13,294 | |
Amortization of customer relationships | 70,792 | ||
Impairment expense | 465,054 | ||
Pro forma Adjusted Net Income | 549,140 | ||
Interest expense | 118,471 | ||
Income tax expense | 43,336 | ||
Depreciation expense | 120,017 | ||
Accretion of contingent acquisition consideration | (97,609) | ||
Accretion of asset retirement obligations | 230 | ||
Equity-based compensation | 68,831 | ||
Equity in earnings of unconsolidated affiliates | (57,072) | ||
Distributions from unconsolidated affiliates | 71,930 | ||
Pro forma Adjusted EBITDA | $ | 817,274 |
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 the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, 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, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and governmental regulations, actions taken by third party producers, operators, processors and transporters, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.
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, 2018 and September 30, 2019 | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
December 31, | September 30, | ||||||
2018 | 2019 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,822 | — | ||||
Accounts receivable–Antero Resources | — | 105,182 | |||||
Accounts receivable–third party | — | 940 | |||||
Other current assets | 87 | 3,102 | |||||
Total current assets | 2,909 | 109,224 | |||||
Property and equipment, net | — | 3,215,978 | |||||
Investments in unconsolidated affiliates | 43,492 | 672,310 | |||||
Deferred tax asset | 1,304 | 35,530 | |||||
Customer relationships | — | 1,496,951 | |||||
Goodwill | — | 902,777 | |||||
Other assets, net | — | 12,734 | |||||
Total assets | $ | 47,705 | 6,445,504 | ||||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | 731 | 4,745 | ||||
Accounts payable–third party | 28 | 32,569 | |||||
Accrued liabilities | 407 | 96,944 | |||||
Contingent acquisition consideration | — | 122,247 | |||||
Asset retirement obligations | — | 2,630 | |||||
Taxes payable | 15,678 | — | |||||
Other current liabilities | — | 493 | |||||
Total current liabilities | 16,844 | 259,628 | |||||
Long-term liabilities: | |||||||
Long-term debt | — | 2,657,750 | |||||
Asset retirement obligations | — | 3,441 | |||||
Other | — | 1,655 | |||||
Total liabilities | 16,844 | 2,922,474 | |||||
Partners' Capital and Stockholders' Equity: | |||||||
Common shareholders—186,219 shares issued and outstanding at December 31, 2018; none issued and outstanding at September 30, 2019 | (41,969) | — | |||||
IDR LLC Series B units (66 units vested at December 31, 2018; none issued and outstanding at September 30, 2019) | 72,830 | — | |||||
Preferred stock, $0.01 par value: none authorized or issued at December 31, 2018; 100,000 authorized at September 30, 2019 | |||||||
Series A non-voting perpetual preferred stock; none designated, issued or outstanding at December 31, 2018; 12 designated and 10 issued and outstanding at September 30, 2019 | — | — | |||||
Common stock, $0.01 par value; none authorized, issued or outstanding at December 31, 2018; 2,000,000 authorized and 503,378 issued and outstanding at September 30, 2019 | — | 5,034 | |||||
Additional paid-in capital | — | 3,715,002 | |||||
Accumulated earnings (loss) | — | (197,006) | |||||
Total partners' capital and stockholders' equity | 30,861 | 3,523,030 | |||||
Total liabilities and partners' capital and stockholders' equity | $ | 47,705 | 6,445,504 |
ANTERO MIDSTREAM CORPORATION | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||||
Three Months Ended September 30, 2018 and 2019 | |||||||
(Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended | |||||||
2018 | 2019 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | — | 175,719 | ||||
Water handling and treatment–Antero Resources | — | 96,939 | |||||
Amortization of customer relationships | — | (28,863) | |||||
Total revenue | — | 243,795 | |||||
Operating expenses: | |||||||
Direct operating | — | 61,808 | |||||
General and administrative (including $8,574 and $20,129 of equity-based compensation in 2018 and 2019, respectively) | 10,803 | 30,595 | |||||
Facility idling | — | 1,512 | |||||
Impairment of property and equipment | — | 407,848 | |||||
Impairment of goodwill | — | 43,759 | |||||
Impairment of customer relationships | — | 5,871 | |||||
Depreciation | — | 24,460 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | 1,977 | |||||
Accretion of asset retirement obligations | — | 54 | |||||
Total operating expenses | 10,803 | 577,884 | |||||
Operating loss | (10,803) | (334,089) | |||||
Interest expense, net | (68) | (36,134) | |||||
Equity in earnings of unconsolidated affiliates | 37,816 | 18,478 | |||||
Income (loss) before income taxes | 26,945 | (351,745) | |||||
Provision for income tax benefit (expense) | (8,917) | 62,268 | |||||
Net income (loss) and comprehensive income (loss) | $ | 18,028 | (289,477) | ||||
Net income (loss) per share–basic and diluted | $ | 0.09 | (0.57) | ||||
Weighted average common shares outstanding: | |||||||
Basic | 186,208 | 506,419 | |||||
Diluted | 186,208 | 506,419 |
ANTERO MIDSTREAM CORPORATION | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
Nine Months Ended September 30, 2018 and 2019 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Nine Months Ended September 30, | |||||||
2018 | 2019 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net income (loss) | $ | 45,220 | (210,555) | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Distributions received from Antero Midstream Partners LP, prior to the Transactions | 85,371 | 43,492 | |||||
Depreciation | — | 68,557 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | 5,323 | |||||
Accretion of asset retirement obligations | — | 133 | |||||
Impairment of property and equipment | — | 408,442 | |||||
Impairment of goodwill | — | 43,759 | |||||
Impairment of customer relationships | — | 5,871 | |||||
Deferred income benefit | — | (34,226) | |||||
Equity-based compensation | 26,319 | 53,095 | |||||
Equity in earnings of unconsolidated affiliates | (99,414) | (34,981) | |||||
Distributions from unconsolidated affiliates | — | 42,570 | |||||
Amortization of customer relationships | — | 39,178 | |||||
Amortization of deferred financing costs | 90 | 2,123 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | — | 38,331 | |||||
Accounts receivable–third party | — | 12 | |||||
Other current assets | (56) | (1,788) | |||||
Accounts payable–Antero Resources | — | (503) | |||||
Accounts payable–third party | — | (3,635) | |||||
Accrued liabilities | 646 | (19,648) | |||||
Income taxes payable | (636) | (15,678) | |||||
Net cash provided by operating activities | 57,540 | 429,872 | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to gathering systems and facilities | — | (170,921) | |||||
Additions to water handling and treatment systems | — | (91,144) | |||||
Investments in unconsolidated affiliates | — | (117,339) | |||||
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 | — | 3,338 | |||||
Change in other liabilities | — | (1,050) | |||||
Net cash used in investing activities | — | (356,293) | |||||
Cash flows provided by (used in) financing activities: | |||||||
Distributions to shareholders | (57,349) | (336,772) | |||||
Distributions to Series B unitholders | (1,702) | (3,720) | |||||
Distributions to preferred shareholders | — | (235) | |||||
Repurchases of common stock | — | (25,519) | |||||
Issuance of senior notes | — | 650,000 | |||||
Payments of deferred financing costs | (230) | (8,523) | |||||
Payments on bank credit facilities, net | — | (349,500) | |||||
Employee tax withholding for settlement of equity compensation awards | — | (2,008) | |||||
Other | — | (124) | |||||
Net cash used in financing activities | (59,281) | (76,401) | |||||
Net decrease in cash and cash equivalents | (1,741) | (2,822) | |||||
Cash and cash equivalents, beginning of period | 5,987 | 2,822 | |||||
Cash and cash equivalents, end of period | $ | 4,246 | — | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | — | 75,071 | ||||
Cash paid during the period for income taxes | $ | 22,871 | 16,001 | ||||
Increase in accrued capital expenditures and accounts payable for property and equipment | $ | — | 34,667 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | |||||||||||||
Selected Operating Data | |||||||||||||
Three Months Ended September 30, 2018 and 2019 | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Amount of | |||||||||||||
Three Months Ended September 30, | Increase | Percentage | |||||||||||
2018 | 2019 | or Decrease | Change | ||||||||||
Operating Data: | |||||||||||||
Gathering—low pressure (MMcf) | 199,226 | 248,208 | 48,982 | 25 | % | ||||||||
Gathering—high pressure (MMcf) | 199,897 | 244,937 | 45,040 | 23 | % | ||||||||
Compression (MMcf) | 161,549 | 223,904 | 62,355 | 39 | % | ||||||||
Fresh water delivery (MBbl) | 17,984 | 12,945 | (5,039) | (28) | % | ||||||||
Treated water (MBbl) | 1,062 | 2,332 | 1,270 | 120 | % | ||||||||
Other fluid handling (MBbl) | 5,080 | 5,114 | 34 | 1 | % | ||||||||
Wells serviced by fresh water delivery | 38 | 30 | (8) | (21) | % | ||||||||
Gathering—low pressure (MMcf/d) | 2,166 | 2,698 | 532 | 25 | % | ||||||||
Gathering—high pressure (MMcf/d) | 2,173 | 2,662 | 489 | 23 | % | ||||||||
Compression (MMcf/d) | 1,756 | 2,434 | 678 | 39 | % | ||||||||
Fresh water delivery (MBbl/d) | 195 | 141 | (54) | (28) | % | ||||||||
Treated water (MBbl/d) | 12 | 25 | 13 | 108 | % | ||||||||
Other fluid handling (MBbl/d) | 55 | 56 | 1 | 2 | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering—low pressure fee ($/Mcf) | $ | 0.32 | 0.33 | 0.01 | 3 | % | |||||||
Average gathering—high pressure fee ($/Mcf) | $ | 0.19 | 0.21 | 0.02 | 11 | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.78 | 3.90 | 0.12 | 3 | % | |||||||
Average treatment fee ($/Bbl) | $ | 4.92 | 4.55 | (0.37) | (8) | % | |||||||
Joint Venture Operating Data: | |||||||||||||
Processing—Joint Venture (MMcf) | 55,720 | 95,333 | 39,613 | 71 | % | ||||||||
Fractionation—Joint Venture (MBbl) | 1,598 | 2,964 | 1,366 | 85 | % | ||||||||
Processing—Joint Venture (MMcf/d) | 606 | 1,036 | 430 | 71 | % | ||||||||
Fractionation—Joint Venture (MBbl/d) | 17 | 32 | 15 | 88 | % |
_______________________________ |
1) Three months ended September 30, 2018 are presented on a pro forma basis |
* Not meaningful or applicable. |
ANTERO MIDSTREAM CORPORATION | ||||||||||||||||
Condensed Consolidated Results of Segment Operations | ||||||||||||||||
Three Months Ended September 30, 2019 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Gathering | Water | Pro Forma | Unallocated | Consolidated | ||||||||||||
Three months ended September 30, 2019 | ||||||||||||||||
Revenues: | ||||||||||||||||
Revenue–Antero Resources | $ | 175,719 | 96,939 | — | — | 272,658 | ||||||||||
Amortization of customer relationships | (16,363) | (12,500) | — | — | (28,863) | |||||||||||
Total revenues | 159,356 | 84,439 | — | — | 243,795 | |||||||||||
Operating expenses: | ||||||||||||||||
Direct operating | 13,197 | 48,611 | — | — | 61,808 | |||||||||||
General and administrative (excluding equity-based compensation) | 6,741 | 3,098 | — | 627 | 10,466 | |||||||||||
Facility idling | — | 1,512 | — | — | 1,512 | |||||||||||
Equity-based compensation | 1,348 | 450 | — | 18,331 | 20,129 | |||||||||||
Impairment of property and equipment | — | 407,848 | — | — | 407,848 | |||||||||||
Impairment of goodwill | — | 43,759 | — | — | 43,759 | |||||||||||
Impairment of customer relationships | — | 5,871 | — | — | 5,871 | |||||||||||
Depreciation | 11,709 | 12,751 | — | — | 24,460 | |||||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 1,977 | — | — | 1,977 | |||||||||||
Accretion of asset retirement obligations | — | 54 | — | — | 54 | |||||||||||
Total expenses | 32,995 | 525,931 | — | 18,958 | 577,884 | |||||||||||
Operating income | 126,361 | (441,492) | — | (18,958) | (334,089) | |||||||||||
Other income (expenses): | ||||||||||||||||
Interest expense, net | — | — | — | (36,134) | (36,134) | |||||||||||
Equity in earnings of unconsolidated affiliates | 18,478 | — | — | — | 18,478 | |||||||||||
Income (loss) before taxes | 144,839 | (441,492) | — | (55,092) | (351,745) | |||||||||||
Provision for income tax benefit | — | — | — | 62,268 | 62,268 | |||||||||||
Net income (loss) and comprehensive income (loss) | $ | 144,839 | (441,492) | — | 7,176 | (289,477) | ||||||||||
Adjusted EBITDA | $ | 217,582 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | ||||||||||||||||
Condensed Consolidated Results of Segment Operations | ||||||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Water | Pro Forma | |||||||||||||||
Gathering and | Handling and | Pro Forma | Consolidated | |||||||||||||
Processing | Treatment | Adjustments | Unallocated | Total | ||||||||||||
Three months ended September 30, 2018 | ||||||||||||||||
Revenues: | ||||||||||||||||
Revenue–Antero Resources | $ | 133,202 | 132,898 | — | — | 266,100 | ||||||||||
Revenue–third-party | — | 105 | — | — | 105 | |||||||||||
Amortization of customer relationships | — | — | (17,843) | — | (17,843) | |||||||||||
Total revenues | 133,202 | 133,003 | (17,843) | — | 248,362 | |||||||||||
Operating expenses: | ||||||||||||||||
Direct operating | 12,317 | 69,158 | — | — | 81,475 | |||||||||||
General and administrative (excluding equity-based compensation) | 8,117 | 2,373 | — | 2,229 | 12,719 | |||||||||||
Equity-based compensation | 3,666 | 862 | — | 8,574 | 13,102 | |||||||||||
Impairment of property and equipment | 1,157 | — | — | — | 1,157 | |||||||||||
Depreciation | 25,830 | 12,626 | 3,934 | — | 42,390 | |||||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 4,020 | — | — | 4,020 | |||||||||||
Accretion of asset retirement obligations | — | 33 | — | — | 33 | |||||||||||
Total expenses | 51,087 | 89,072 | 3,934 | 10,803 | 154,896 | |||||||||||
Operating income | 82,115 | 43,931 | (21,777) | (10,803) | 93,466 | |||||||||||
Other income (expenses): | ||||||||||||||||
Interest expense, net | — | — | (5,437) | (17,056) | (22,493) | |||||||||||
Equity in earnings of unconsolidated affiliates | 10,706 | — | (1,471) | — | 9,235 | |||||||||||
Income before taxes | 92,821 | 43,931 | (28,685) | (27,859) | 80,208 | |||||||||||
Provision for income tax expense | — | — | (13,316) | (8,917) | (22,233) | |||||||||||
Net income and comprehensive income | $ | 92,821 | 43,931 | (42,001) | (36,776) | 57,975 | ||||||||||
Pro Forma Adjusted EBITDA | $ | 183,776 |
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SOURCE Antero Midstream Corporation
DENVER, Oct. 16, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share ($1.23 per share annualized) for the third quarter of 2019. In addition, Antero Midstream announced plans to issue its third quarter 2019 earnings on Tuesday, October 29, 2019 after the close of trading on the New York Stock Exchange.
Third Quarter 2019 Return of Capital
Antero Midstream's third quarter 2019 dividend is unchanged as compared to the second quarter of 2019 and represents a 114% increase as compared to Antero Midstream GP LP's ("AMGP") third quarter 2018 distribution. The dividend will be payable on November 13, 2019 to stockholders of record as of November 1, 2019. The dividend also represents a 32% increase compared to Antero Midstream Partners LP's third quarter 2018 distribution, adjusted for the 1.8926 exchange ratio for unitholders who elected to receive stock in the simplification transaction. This represents the nineteenth consecutive quarterly dividend or distribution paid since Antero Midstream Partners LP's initial public offering in November 2014.
On August 12, 2019, the Board of Directors of Antero Midstream authorized a share repurchase program to opportunistically repurchase up to $300 million of shares of its outstanding common stock through June 30, 2021. During the third quarter of 2019, Antero Midstream repurchased approximately 3.5 million shares under this program for approximately $25 million, leaving approximately $275 million of remaining capacity as of September 30, 2019.
Third Quarter Earnings Release Date and Conference Call
Antero Midstream plans to issue its third quarter 2019 earnings on Tuesday, October 29, 2019 after the close of trading on the New York Stock Exchange. A conference call for Antero Midstream is scheduled on Wednesday, October 30, 2019 at 10:00 am MT to discuss the third quarter 2019 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 Wednesday, November 6, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13693464.
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 Wednesday, November 6, 2019 at 10:00 am MT.
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. Antero Midstream's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DALLAS, Aug. 23, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® Energy Supply Chain Index (the "Index") as part of normal index operations. After the markets close on August 30, 2019, the constituents of the Index will be rebalanced, and the following changes will become effective on September 3, 2019:
Constituents added:
NGL Energy Partners LP (NYSE: NGL)
Western Midstream Partners, LP (NYSE: WES)
Noble Midstream Partners LP (NYSE: NBLX)
MPLX LP (NYSE: MPLX)
BP Midstream Partners LP (NYSE: BPMP)
Amcor plc (NYSE: AMCR)
Corteva, Inc. (NYSE: CTVA)
Constituents removed:
Antero Midstream Corporation (NYSE: AM)
EQM Midstream Partners, LP (NYSE: EQM)
Energy Transfer LP (NYSE: ET)
NuStar Energy L.P. (NYSE: NS)
Shell Midstream Partners, L.P. (NYSE: SHLX)
Sealed Air Corporation (NYSE: SEE)
Newmont Goldcorp Corporation (NYSE: NEM)
ABOUT THE CUSHING® ENERGY SUPPLY CHAIN INDEX
The Cushing® Energy Supply Chain Index tracks the performance of widely held companies engaged in exploration and production, refining and marketing, or storage and transportation of oil, natural gas, coal and consumable fuels; oil and natural gas equipment and services companies; and companies that extract and/or manufacture materials. Constituents of the Index are weighted based on current yield. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "CSCI".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts, providing active management in markets where inefficiencies exist.
Cushing is also dedicated to serving the needs of investors by sponsoring a variety of benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® 30 MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® Energy Supply Chain Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-CSCI
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SOURCE Cushing Asset Management, LP, and Swank Capital, LLC
DALLAS, Aug. 23, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® Energy Index (the "Index") as part of normal index operations. After the markets close on August 30, 2019, the constituents of the Index will be rebalanced, and the following changes will become effective on September 3, 2019:
Constituents added:
NGL Energy Partners LP (NYSE: NGL)
Western Midstream Partners, LP (NYSE: WES)
Noble Midstream Partners LP (NYSE: NBLX)
MPLX LP (NYSE: MPLX)
BP Midstream Partners LP (NYSE: BPMP)
Pioneer Natural Resources Company (NYSE: PXD)
Constituents removed:
Antero Midstream Corporation (NYSE: AM)
EQM Midstream Partners, LP (NYSE: EQM)
Energy Transfer LP (NYSE: ET)
NuStar Energy L.P. (NYSE: NS)
Shell Midstream Partners, L.P. (NYSE: SHLX)
ABOUT THE CUSHING® ENERGY INDEX
The Cushing® Energy Index tracks the performance of widely held companies engaged in exploration and production, refining and marketing, and storage and transportation of oil, natural gas, coal and consumable fuels, as well as oil and natural gas equipment and services companies. Constituents of the Index are weighted based on current yield. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "CENI".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts, providing active management in markets where inefficiencies exist.
Cushing is also dedicated to serving the needs of investors by sponsoring a variety of benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® 30 MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® Energy Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-CENI
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SOURCE Cushing Asset Management, LP; Swank Capital, LLC
DALLAS, Aug. 9, 2019 /PRNewswire/ -- Alerian reported, as of June 28, 2019, total products directly tied to and tracking the Alerian indices was $13.7 billion.
Exchange traded funds, exchange traded notes, return of capital notes, and variable insurance portfolios represent $12.7 billion of the total $13.7 billion. Below is a list of energy master limited partnership (MLP) positions, as of June 28, 2019, in the $12.7 billion of such assets tracking Alerian's indices.
Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | |
AM | 2,402,831 | 209,671 | HESM | 7,694,422 | 394,586 | |
AMID | 4,919,211 | 951,492 | MMLP | 5,598,671 | 784,128 | |
ANDX | 403,075,523 | 11,094,840 | MMP | 1,276,581,260 | 19,946,582 | |
BPL | 782,332,474 | 19,058,038 | MPLX | 1,273,711,451 | 39,568,545 | |
BPMP | 18,205,543 | 1,176,069 | NBLX | 89,522,800 | 2,691,606 | |
CEQP | 220,495,699 | 6,164,263 | NGL | 214,053,630 | 14,492,460 | |
CNXM | 14,513,491 | 1,032,989 | NS | 331,580,260 | 12,217,401 | |
CQP | 214,074,794 | 5,075,268 | OMP | 5,663,726 | 263,429 | |
DCP | 329,731,673 | 11,253,641 | PAA | 1,305,749,277 | 53,624,200 | |
DKL | 6,791,101 | 212,222 | PAGP | 7,638,294 | 305,899 | |
ENBL | 153,164,680 | 11,171,749 | PBFX | 16,284,545 | 770,319 | |
ENLC | 327,210,823 | 32,429,219 | PSXP | 342,743,828 | 6,945,164 | |
EPD | 1,277,755,891 | 44,258,950 | SHLX | 319,209,192 | 15,405,849 | |
EQM | 462,044,829 | 10,341,200 | SMLP | 7,589,588 | 1,020,106 | |
ET | 1,262,122,882 | 89,639,409 | TCP | 253,540,259 | 6,739,507 | |
GEL | 298,090,775 | 13,611,451 | TGE | 419,509,147 | 19,872,532 | |
GPP | 3,882,098 | 277,293 | USDP | 3,861,679 | 342,044 | |
HEP | 156,422,759 | 5,688,100 | WES | 773,416,245 | 25,135,400 |
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of June 28, 2019, nearly $14 billion of products, including exchange traded funds and notes, are directly tied to and tracking the Alerian Index Series. Visit alerian.com to learn more.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-june-30-2019-index-linked-product-positions-300899499.html
SOURCE Alerian
DENVER, July 31, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today released its second quarter 2019 financial and operating results. The relevant condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which has been filed with the Securities and Exchange Commission.
Second Quarter 2019 Highlights Include:
Commenting on Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream continued to deliver its organic growth strategy during the quarter generating 34% and 54% increases in low pressure gathering and compression volumes, respectively, compared to the second quarter of 2018. Looking forward, Antero Midstream will continue to organically build out the infrastructure needed to support Antero Resources' development plan which targets a 10% compound annual growth rate in net production at current strip pricing. Antero Resources has announced that is has already achieved material well cost savings this year and has initiatives underway to achieve a 10% to 14% reduction in well costs, as well as further reductions in lease operating expenses, by 2020. Antero Resources has announced that it believes these well cost and operating cost reductions will enable it to continue executing its development plan at current strip pricing."
Mr. Rady further added, "Importantly, the integrated development program results in capital efficient spending at both Antero Resources and Antero Midstream, allowing for a strong balance sheet at both entities assuming the current commodity price strip."
For a discussion of the non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income and Distributable Cash Flow presented on an actual and pro forma basis, as well as Net Debt, please see "Non-GAAP Financial Measures."
Incremental Flowback and Produced Water Services
In conjunction with Antero Resources' well cost initiatives, Antero Midstream plans to expand the scope of its water business to support the growing flowback and produced water volumes from Antero Resources. Antero Midstream plans to implement localized storage and fresh water blending operations, utilize mobile treatment for flowback and produced water volumes in Antero's northern fairway, repurpose portions of the existing fresh water system to transport flowback and produced water, and construct a limited amount of new pipelines to deliver flowback and produced water to localized blending and treatment operations and the Antero Clearwater Facility. The fresh water blending and mobile treatment options could be implemented as soon as the second half of 2019 in certain areas of development. The infrastructure buildout will be a flexible, fit-for-purpose system based on Antero Resources' development plan and Antero Midstream believes the system could be phased in beginning in 2020. These localized operations would replace a significant amount of the flowback and produced volumes trucked by third parties and generate attractive margins and rates of return for Antero Midstream, while also resulting in significant savings for Antero Resources.
Based on ongoing assessments of drilling and completion designs, Antero Resources announced that it expects to trend lower in water used in completion operations over time. Depending on the areas being developed, Antero Resources expects water use will be reduced by 5 to 7 barrels per foot from the current design of 40 to 45 barrels per foot to 35 to 38 barrels per foot in the Marcellus, beginning in January 2020. Based on Antero's expected completion schedule in 2020, this would result in a reduction in Adjusted EBITDA for Antero Midstream of approximately $25 to $35 million. Importantly, Antero Resources has announced that the savings from completion optimization, combined with other savings initiatives, is forecast to allow Antero Resources to continue targeting its 10% production CAGR, despite the decline in overall commodity prices. In combination with the expanded scope of produced water services, the continued development plan for Antero Resources is expected to offset a majority of the cash flow impact to Antero Midstream from reduced water use.
Antero Midstream Second Quarter 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, 2018. GAAP and pro forma financial statements can be found in the back of this release.
Low pressure gathering volumes for the second quarter of 2019 averaged 2,662 MMcf/d, a 34% increase as compared to the prior year quarter. Compression volumes for the second quarter of 2019 averaged 2,396 MMcf/d, a 54% increase as compared to the second quarter of 2018. High pressure gathering volumes for the second quarter of 2019 averaged 2,620 MMcf/d, a 36% increase over the second quarter of 2018. The year-over-year increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 122 MBbl/d during the quarter, a 46% decrease compared to the second quarter of 2018, driven by a decrease in Antero Resources' completion activity. During the quarter, Antero Resources released one of its completion crews, which was subsequently recontracted early in the third quarter of 2019 and is expected to drive an increase in completion activity and fresh water delivery volumes in the second half of 2019. Antero Midstream treated an average of 29 MBbl/d of wastewater at the Antero Clearwater Facility during the second 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 986 MMcf/d for the second quarter of 2019, an increase of 73% compared to the prior year quarter. The five Sherwood Joint Venture plants operated at 99% utilization for the quarter. Gross Joint Venture fractionation volumes averaged 27 MBbl/d, a 170% increase compared to the prior year quarter. The year-over-year increase in processing and fractionation volumes is primarily driven by the increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended June 30 | ||||||
Average Daily Volumes: | 2018(1) | 2019 | % | |||
Low Pressure Gathering (MMcf/d) | 1,981 | 2,662 | 34% | |||
Compression (MMcf/d) | 1,558 | 2,396 | 54% | |||
High Pressure Gathering (MMcf/d) | 1,932 | 2,620 | 36% | |||
Fresh Water Delivery (MBbl/d) | 228 | 122 | (46)% | |||
Clearwater Treatment Volumes (MBbl/d) | 8 | 29 | 263% | |||
Gross Joint Venture Processing (MMcf/d) | 571 | 986 | 73% | |||
Gross Joint Venture Fractionation (MBbl/d) | 10 | 27 | 170% |
1. | Three months ended June 30, 2018 presented on a pro forma basis |
For the three months ended June 30, 2019, revenues were $256 million, comprised of $167 million from the Gathering and Processing segment and $89 million from the Water Handling and Treatment segment, net of $(9) million of amortization of customer contracts. Revenues increased 5% compared to the prior year quarter, driven by growth in gathering, compression, and Clearwater treatment volumes. Water Handling and Treatment segment revenues include $12 million from wastewater treatment at the Antero Clearwater Facility and $40 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $12 million and $52 million, respectively, for a total of $64 million, compared to $76 million in total direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $9 million from wastewater treatment at the Antero Clearwater Facility and $39 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%. General and administrative expenses excluding equity-based compensation were $13 million during the second quarter of 2019. Total operating expenses were $138 million, including $36 million of depreciation, $22 million of equity-based compensation, $1 million of impairment and $2 million of accretion of contingent acquisition consideration and asset retirement obligations.
Net income was $69 million, or $0.14 per share. Adjusted Net Income was $78 million, or $0.15 per share, representing a 19% increase compared to the prior year quarter. Adjusted EBITDA was $206 million, an 18% increase compared to the prior year quarter. Adjusted EBITDA for the quarter included $19 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $12 million. The increase in cash reserved for bond interest during the quarter was $18 million. Maintenance capital expenditures during the quarter totaled $18 million and Distributable Cash Flow was $156 million, representing a 9% increase over the prior year quarter. Based on the previously declared dividend of $0.3075 per share, Antero Midstream's Distributable Cash Flow coverage ratio was 1.0x.
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 | ||||||||
2018(1) | 2019 | |||||||
Net income | $ | 52,614 | 69,274 | |||||
Amortization of customer relationships | 8,533 | 8,534 | ||||||
Impairment expense | 4,614 | 594 | ||||||
Adjusted Net Income | 65,761 | 78,402 | ||||||
Interest expense | 20,085 | 31,521 | ||||||
Provision for income tax expense | 19,974 | 30,419 | ||||||
Depreciation expense | 44,820 | 36,447 | ||||||
Accretion of contingent acquisition consideration | 3,947 | 2,297 | ||||||
Accretion of asset retirement obligations | 34 | 69 | ||||||
Equity-based compensation | 14,978 | 21,543 | ||||||
Equity in earnings of unconsolidated affiliates | (6,272) | (13,623) | ||||||
Distributions from unconsolidated affiliates | 10,810 | 19,085 | ||||||
Adjusted EBITDA | 174,137 | 206,160 | ||||||
Interest paid | (6,270) | (11,896) | ||||||
Decrease (increase) in cash reserved for bond interest (2) | (8,734) | (18,390) | ||||||
Maintenance capital expenditures | (17,289) | (17,909) | ||||||
AMGP general and administrative expenses | 2,398 | — | ||||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards (3) | (1,500) | (1,827) | ||||||
Distributable Cash Flow | $ | 142,742 | 156,138 | |||||
Distributions or Dividends Declared to Antero Midstream Holders | ||||||||
Distributions to Limited Partners | $ | 77,624 | — | |||||
Distributions to incentive distribution rights and Series B unitholders | 23,782 | — | ||||||
Dividends | — | 154,093 | ||||||
Total Aggregate Distributions and Dividends | $ | 101,046 | 154,093 | |||||
Distributable Cash Flow Coverage Ratio | 1.4x | 1.0x |
1) | Three months ended June 30, 2018 presented on a pro forma basis. |
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. |
Gathering and Processing —During the second quarter of 2019, Antero Midstream connected 44 wells to its gathering system and Antero Midstream's compression capacity was approximately 88% utilized throughout the quarter. Antero Midstream expects to add 120 MMcf/d of additional compression capacity in the Marcellus Shale during the second half of 2019 to support the anticipated growth in Antero Resources' production. Antero Resources is currently operating four drilling rigs on Antero Midstream dedicated acreage. The Joint Venture's processing capacity is currently 1.0 Bcf/d, which was 99% utilized in the second quarter of 2019. The Sherwood 12 processing plant with 200 MMcf/d of capacity is mechanically complete and will be placed into commercial service in the third quarter on a just-in-time basis to support the anticipated growth in liquids-rich production from Antero Resources. The Joint Venture expects the Sherwood 13 processing plant to be placed into service in the fourth quarter of 2019, bringing the Joint Venture's total processing capacity to 1.4 Bcf/d.
Water Handling and Treatment — Antero Midstream's Marcellus water delivery systems serviced 25 well completions during the second quarter of 2019, a 48% decrease from the prior year quarter. During the second quarter, Antero Resources operated three completion crews. During the third quarter Antero Resources added an additional completion crew that is expected to drive an increase in fresh water delivery volumes during the second half of 2019 as compared to the second quarter of 2019. During the quarter, Antero Midstream treated an average of 29 MBbl/d of wastewater at the Antero Clearwater Facility. The facility was voluntarily shut down for approximately two weeks during the quarter for the installation of additional equipment designed to improve the quality and consistency of the byproducts and reduce the associated operating expenses with the disposal of those byproducts. Excluding the shut-down, the Antero Clearwater Facility treated approximately 36 MBbl/d on average during the second quarter.
Balance Sheet and Liquidity
As of June 30, 2019, Antero Midstream had approximately $595 million drawn on its $2.0 billion bank credit facility, resulting in approximately $1.4 billion of liquidity. Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA was 3.2x as of June 30, 2019.
Commenting on Antero Midstream's growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream exited the second quarter with a strong balance sheet with Net Debt to trailing twelve months pro forma Adjusted EBITDA of 3.2x and $1.4 billion of liquidity after a successful upsized senior note offering at an attractive 5.75% coupon. Consistent with prior expectations, Antero Midstream does not need to access the equity markets to deliver on its organic project backlog and is targeting high single digit return of capital growth to shareholders in 2020 as compared to 2019."
Capital Investments
Total capital expenditures including investments in the Joint Venture were $163 million during the second quarter of 2019. Gathering, compression, and water infrastructure capital investments totaled $125 million and investments in unconsolidated affiliates for the Joint Venture were $38 million during the quarter. Capital invested in gathering systems and related facilities was $82 million and capital invested in water handling and treatment assets was $43 million.
Conference Call
A conference call for Antero Midstream is scheduled on Thursday, August 1, 2019 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 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, August 8, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13691275.
A simultaneous webcast of the call and presentation may be accessed over the internet at www.anteromidstream.com. The webcast will be archived for replay on Antero Midstream's website until Thursday, August 8, 2019 at 10:00 am MT.
Presentation
An updated Company Presentation will be posted to Antero Midstream's website. The presentation can be found at www.anteromidstream.com on the homepage. Information on Antero Midstream's website does not constitute a portion of, and is not incorporated by reference into, this press release.
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, 2018. 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 June 30, 2019.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses non-GAAP financial measures that are presented on an actual and pro forma basis. The definitions, uses, reconciliations to the nearest GAAP financial measure, and disclosures discussed in this release apply to both an actual and pro forma basis. Antero Midstream uses Adjusted EBITDA as an important indicator of Antero Midstream's performance. Antero Midstream defines Adjusted EBITDA as net income before amortization of customer relationships, impairment expense, interest expense, provision for income taxes, 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:
Antero Midstream's defines Distributable Cash Flow as Adjusted EBITDA less interest paid, cash reserved for bond interest, income tax withholding upon vesting of Antero Midstream Partners LP 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 and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.
Antero Midstream defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating Antero Midstream's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
June 30, 2019 | |||
Bank credit facility | $594,500 | ||
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 | (24,016) | ||
Consolidated total debt | $2,526,334 | ||
Cash and cash equivalents | (7,791) | ||
Consolidated net debt | $2,518,543 |
Antero Midstream defines Adjusted Net Income as net income plus amortization of customer contracts and impairment. Antero Midstream believes Adjusted Net Income is useful to investors in evaluating operational trends and its performance relative to other midstream companies. Adjusted Net Income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.
The following table reconciles pro forma net income to pro forma Adjusted EBITDA for the twelve months ended June 30, 2019 as used in this release (in thousands):
Twelve Months | |||
Pro forma net income | $ | 366,616 | |
Amortization of customer relationships | 34,228 | ||
Impairment expense | 8,733 | ||
Pro forma Adjusted Net Income | 409,577 | ||
Interest expense | 104,835 | ||
Income tax expense | 131,532 | ||
Depreciation expense | 149,628 | ||
Accretion of contingent acquisition consideration | (95,566) | ||
Accretion of asset retirement obligations | 209 | ||
Equity-based compensation | 61,804 | ||
Equity in earnings of unconsolidated affiliates | (43,536) | ||
Distributions from unconsolidated affiliates | 64,985 | ||
Pro forma Adjusted EBITDA | $ | 783,468 |
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, information regarding potential incremental flowback and produced water services, which are subject to approval by the Board of Antero Midstream, and there can be no assurance that such approval will be obtained, 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 the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, 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, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and governmental regulations, actions taken by third party producers, operators, processors and transporters, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019
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, 2018 and June 30, 2019 | |||||
(Unaudited) | |||||
(In thousands) | |||||
December 31, 2018 | June 30, 2019 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 2,822 | 7,791 | ||
Accounts receivable–Antero Resources | — | 103,898 | |||
Accounts receivable–third party | — | 586 | |||
Other current assets | 87 | 3,092 | |||
Total current assets | 2,909 | 115,367 | |||
Property and equipment, net | — | 3,744,336 | |||
Investments in unconsolidated affiliates | 43,492 | 1,186,161 | |||
Deferred tax asset | 1,304 | — | |||
Customer relationships | — | 547,685 | |||
Goodwill | — | 1,135,266 | |||
Other assets, net | — | 40,194 | |||
Total assets | $ | 47,705 | 6,769,009 | ||
Liabilities and Equity | |||||
Current liabilities: | |||||
Accounts payable–Antero Resources | $ | 731 | 5,021 | ||
Accounts payable–third party | 28 | 27,003 | |||
Accrued liabilities | 407 | 82,077 | |||
Contingent acquisition consideration | — | 120,270 | |||
Asset retirement obligations | — | 2,615 | |||
Taxes payable | 15,678 | — | |||
Other current liabilities | — | 518 | |||
Total current liabilities | 16,844 | 237,504 | |||
Long-term liabilities: | |||||
Long-term debt | — | 2,526,334 | |||
Asset retirement obligations | — | 3,402 | |||
Deferred tax liability | — | 26,738 | |||
Other | — | 2,672 | |||
Total liabilities | 16,844 | 2,796,650 | |||
Partners' Capital and Stockholders' Equity: | |||||
Common shareholders—186,219 shares issued and outstanding at December 31, 2018; none issued and outstanding at June 30, 2019 | (41,969) | — | |||
IDR LLC Series B units (66 units vested at December 31, 2018; none issued and outstanding at June 30, 2019) | 72,830 | — | |||
Preferred stock, $0.01 par value: none authorized or issued at December 31, 2018; 100,000 authorized at June 30, 2019 | |||||
Series A non-voting perpetual preferred stock; none designated, issued or outstanding at December 31, 2018; 12 designated and 10 issued and outstanding at June 30, 2019 | — | — | |||
Common stock, $0.01 par value; none authorized, issued or outstanding at December 31, 2018; 2,000,000 authorized and 506,847 issued and outstanding at June 30, 2019 | — | 5,068 | |||
Additional paid-in capital | — | 3,874,820 | |||
Accumulated earnings | — | 92,471 | |||
Total partners' capital and stockholders' equity | 30,861 | 3,972,359 | |||
Total liabilities and partners' capital and stockholders' equity | $ | 47,705 | 6,769,009 |
ANTERO MIDSTREAM CORPORATION | |||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||
Three Months Ended June 30, 2018 and 2019 | |||||
(Unaudited) | |||||
(In thousands) | |||||
Three Months Ended June 30, | |||||
2018 | 2019 | ||||
Revenue: | |||||
Gathering and compression–Antero Resources | $ | — | 168,925 | ||
Water handling and treatment–Antero Resources | — | 95,181 | |||
Water handling and treatment–third party | — | 46 | |||
Amortization of customer relationships | — | (8,534) | |||
Total revenue | — | 255,618 | |||
Operating expenses: | |||||
Direct operating | — | 63,998 | |||
General and administrative (including $9,111 and $21,543 of equity-based compensation in 2018 and 2019, respectively) | 11,509 | 34,622 | |||
Impairment of property and equipment | — | 594 | |||
Depreciation | — | 36,447 | |||
Accretion and change in fair value of contingent acquisition consideration | — | 2,297 | |||
Accretion of asset retirement obligations | — | 69 | |||
Total operating expenses | 11,509 | 138,027 | |||
Operating income (loss) | (11,509) | 117,591 | |||
Interest expense, net | (18) | (31,521) | |||
Equity in earnings of unconsolidated affiliates | 33,145 | 13,623 | |||
Income before taxes | 21,618 | 99,693 | |||
Provision for income tax expense | (7,231) | (30,419) | |||
Net income and comprehensive income | $ | 14,387 | 69,274 | ||
Net income per share–basic and diluted | $ | 0.07 | 0.14 | ||
Weighted average common shares outstanding: | |||||
Basic | 186,199 | 506,816 | |||
Diluted | 186,199 | 507,767 |
ANTERO MIDSTREAM CORPORATION | |||||
Condensed Consolidated Statements of Cash Flows | |||||
Six Months Ended June 30, 2018 and 2019 | |||||
(Unaudited) | |||||
(In thousands) | |||||
Six Months Ended June 30, | |||||
2018 | 2019 | ||||
Cash flows provided by (used in) operating activities: | |||||
Net income | $ | 27,192 | 78,922 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Distributions received from Antero Midstream Partners LP, prior to the Transactions | 52,232 | 43,492 | |||
Depreciation | — | 44,097 | |||
Accretion and change in fair value of contingent acquisition consideration | — | 3,346 | |||
Accretion of asset retirement obligations | — | 79 | |||
Impairment of property and equipment | — | 594 | |||
Deferred income taxes | — | 28,042 | |||
Equity-based compensation | 17,745 | 32,966 | |||
Equity in earnings of unconsolidated affiliates | (61,598) | (16,503) | |||
Distributions from unconsolidated affiliates | — | 23,860 | |||
Amortization of customer relationships | — | 10,315 | |||
Amortization of deferred financing costs | 18 | 1,102 | |||
Changes in assets and liabilities: | |||||
Accounts receivable–Antero Resources | — | 38,414 | |||
Accounts receivable–third party | — | 9 | |||
Other current assets | (974) | (1,867) | |||
Accounts payable–Antero Resources | (6) | 973 | |||
Accounts payable–third party | 31 | (4,629) | |||
Accrued liabilities | 506 | (15,370) | |||
Income taxes payable | (548) | (15,678) | |||
Net cash provided by operating activities | 34,598 | 252,164 | |||
Cash flows provided by (used in) investing activities: | |||||
Additions to gathering systems and facilities | — | (89,206) | |||
Additions to water handling and treatment systems | — | (51,984) | |||
Investments in unconsolidated affiliates | — | (103,409) | |||
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 | — | 2,375 | |||
Net cash used in investing activities | — | (221,401) | |||
Cash flows provided by (used in) financing activities: | |||||
Distributions to shareholders | (34,073) | (182,625) | |||
Distributions to Series B unitholders | (1,197) | (3,720) | |||
Distributions to preferred shareholders | — | (98) | |||
Issuance of senior notes | — | 650,000 | |||
Payments of deferred financing costs | (15) | (6,952) | |||
Payments on bank credit facilities, net | — | (480,500) | |||
Employee tax withholding for settlement of equity compensation awards | — | (1,828) | |||
Other | — | (71) | |||
Net cash used in financing activities | (35,285) | (25,794) | |||
Net increase (decrease) in cash and cash equivalents | (687) | 4,969 | |||
Cash and cash equivalents, beginning of period | 5,987 | 2,822 | |||
Cash and cash equivalents, end of period | $ | 5,300 | 7,791 | ||
Supplemental disclosure of cash flow information: | |||||
Cash paid during the period for interest | $ | 3 | 31,147 | ||
Cash paid during the period for income taxes | $ | 13,867 | 16,001 | ||
Increase in accrued capital expenditures and accounts payable for property and equipment | $ | — | 9,447 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | ||||||||||||
Selected Operating Data | ||||||||||||
Three Months Ended June 30, 2018 and 2019 | ||||||||||||
(Unaudited) | ||||||||||||
Amount of | ||||||||||||
Three Months Ended June 30, | Increase | Percentage | ||||||||||
2018(1) | 2019 | or Decrease | Change | |||||||||
Operating Data: | ||||||||||||
Gathering—low pressure (MMcf) | 180,268 | 242,266 | 61,998 | 34 | % | |||||||
Gathering—high pressure (MMcf) | 175,818 | 238,406 | 62,588 | 36 | % | |||||||
Compression (MMcf) | 141,819 | 218,020 | 76,201 | 54 | % | |||||||
Fresh water delivery (MBbl) | 20,766 | 11,147 | (9,619) | (46) | % | |||||||
Treated water (MBbl) | 700 | 2,658 | 1,958 | 280 | % | |||||||
Other fluid handling (MBbl) | 4,382 | 5,086 | 704 | 16 | % | |||||||
Wells serviced by fresh water delivery | 48 | 25 | (23) | (48) | % | |||||||
Gathering—low pressure (MMcf/d) | 1,981 | 2,662 | 681 | 34 | % | |||||||
Gathering—high pressure (MMcf/d) | 1,932 | 2,620 | 688 | 36 | % | |||||||
Compression (MMcf/d) | 1,558 | 2,396 | 838 | 54 | % | |||||||
Fresh water delivery (MBbl/d) | 228 | 122 | (106) | (46) | % | |||||||
Treated water (MBbl/d) | 8 | 29 | 21 | 263 | % | |||||||
Other fluid handling (MBbl/d) | 48 | 56 | 8 | 17 | % | |||||||
Average realized fees: | ||||||||||||
Average gathering—low pressure fee ($/Mcf) | $ | 0.32 | 0.33 | 0.01 | 3 | % | ||||||
Average gathering—high pressure fee ($/Mcf) | $ | 0.19 | 0.20 | 0.01 | 5 | % | ||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | ||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.78 | 3.90 | 0.12 | 3 | % | ||||||
Average treatment fee ($/Bbl) | $ | 4.11 | 4.50 | 0.39 | 9 | % | ||||||
Joint Venture Operating Data: | ||||||||||||
Processing—Joint Venture (MMcf) | 51,921 | 89,770 | 37,849 | 73 | % | |||||||
Fractionation—Joint Venture (MBbl) | 914 | 2,470 | 1,556 | 170 | % | |||||||
Processing—Joint Venture (MMcf/d) | 571 | 986 | 415 | 73 | % | |||||||
Fractionation—Joint Venture (MBbl/d) | 10 | 27 | 17 | 170 | % |
______________________________ |
1) Three months ended June 30, 2018 are presented on a pro forma basis |
* Not meaningful or applicable. |
ANTERO MIDSTREAM CORPORATION | |||||||||
Condensed Consolidated Results of Segment Operations | |||||||||
Three Months Ended June 30, 2019 | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Water | Pro Forma | ||||||||
Gathering and | Handling and | Consolidated | |||||||
Processing | Treatment | Unallocated | Total | ||||||
Three months ended June 30, 2019 | |||||||||
Revenues: | |||||||||
Revenue–Antero Resources | $ | 168,925 | 95,181 | — | 264,106 | ||||
Revenue–third-party | — | 46 | — | 46 | |||||
Amortization of customer contracts | (2,402) | (6,132) | — | (8,534) | |||||
Total revenues | 166,523 | 89,095 | — | 255,618 | |||||
Operating expenses: | |||||||||
Direct operating | 12,377 | 51,621 | — | 63,998 | |||||
General and administrative (excluding equity-based compensation) | 7,335 | 3,958 | 1,786 | 13,079 | |||||
Equity-based compensation | 2,285 | 927 | 18,331 | 21,543 | |||||
Impairment of property and equipment | 592 | 2 | — | 594 | |||||
Depreciation | 12,721 | 23,726 | — | 36,447 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | 2,297 | — | 2,297 | |||||
Accretion of asset retirement obligations | — | 69 | — | 69 | |||||
Total expenses | 35,310 | 82,600 | 20,117 | 138,027 | |||||
Operating income | 131,213 | 6,495 | (20,117) | 117,591 | |||||
Other income (expenses): | |||||||||
Interest expense, net | — | — | (31,521) | (31,521) | |||||
Equity in earnings of unconsolidated affiliates | 13,623 | — | — | 13,623 | |||||
Income before taxes | 144,836 | 6,495 | (51,638) | 99,693 | |||||
Provision for income tax expense | — | — | (30,419) | (30,419) | |||||
Net income and comprehensive income | $ | 144,836 | 6,495 | (82,057) | 69,274 | ||||
Adjusted EBITDA | $ | 206,160 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | |||||||||||
Condensed Consolidated Results of Segment Operations | |||||||||||
Three Months Ended June 30, 2018 | |||||||||||
(Unaudited) | |||||||||||
(In thousands) | |||||||||||
Water | Pro Forma | ||||||||||
Gathering and | Handling and | Pro Forma | Consolidated | ||||||||
Processing | Treatment | Adjustments | Unallocated | Total | |||||||
Three months ended June 30, 2018 | |||||||||||
Revenues: | |||||||||||
Revenue–Antero Resources | $ | 118,136 | 132,231 | — | — | 250,367 | |||||
Revenue–third-party | — | 25 | — | — | 25 | ||||||
Gain on sale of assets–Antero Resources | 583 | — | — | — | 583 | ||||||
Amortization of customer contracts | — | — | (8,533) | — | (8,533) | ||||||
Total revenues | 118,719 | 132,256 | (8,533) | — | 242,442 | ||||||
Operating expenses: | |||||||||||
Direct operating | 12,405 | 63,218 | — | — | 75,623 | ||||||
General and administrative (excluding equity-based compensation) | 7,240 | 2,387 | — | 2,398 | 12,025 | ||||||
Equity-based compensation | 4,754 | 1,113 | — | 9,111 | 14,978 | ||||||
Impairment of property and equipment | 4,614 | — | — | — | 4,614 | ||||||
Depreciation | 24,258 | 12,175 | 8,387 | — | 44,820 | ||||||
Accretion and change in fair value of contingent acquisition consideration | — | 3,947 | — | — | 3,947 | ||||||
Accretion of asset retirement obligations | — | 34 | — | — | 34 | ||||||
Total expenses | 53,271 | 82,874 | 8,387 | 11,509 | 156,041 | ||||||
Operating income | 65,448 | 49,382 | (16,920) | (11,509) | 86,401 | ||||||
Other income (expenses): | |||||||||||
Interest expense, net | — | — | (5,439) | (14,646) | (20,085) | ||||||
Equity in earnings of unconsolidated affiliates | 9,264 | — | (2,992) | — | 6,272 | ||||||
Income before taxes | 74,712 | 49,382 | (25,351) | (26,155) | 72,588 | ||||||
Provision for income tax expense | — | — | (12,743) | (7,231) | (19,974) | ||||||
Net income and comprehensive income | $ | 74,712 | 49,382 | (38,094) | (33,386) | 52,614 | |||||
Pro Forma Adjusted EBITDA | $ | 174,137 |
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SOURCE Antero Midstream Corporation
DENVER, July 10, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced that the Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share ($1.23 per share annualized) for the second quarter of 2019. In addition, Antero Midstream announced plans to issue its second quarter 2019 earnings on Wednesday, July 31, 2019 after the close of trading on the New York Stock Exchange.
Second Quarter 2019 Dividend
Antero Midstream's second quarter 2019 dividend represents a 2% increase sequentially and a 146% increase as compared to Antero Midstream GP LP's ("AMGP") second quarter 2018 distribution. The dividend will be payable on August 7, 2019 to stockholders of record as of July 26, 2019. The dividend also represents a 40% increase compared to Antero Midstream Partners LP's second quarter 2018 distribution, adjusted for the 1.8926 exchange ratio for unitholders who elected to receive stock in the simplification transaction. This represents the eighteenth consecutive quarterly dividend or distribution increase since Antero Midstream Partners LP's initial public offering in November 2014.
Second Quarter Earnings Release Date and Conference Call
A conference call for Antero Midstream is scheduled on Thursday, August 1, 2019 at 10:00 am MT to discuss the second quarter 2019 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, August 8, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13691275.
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, August 8, 2019 at 10:00 am MT.
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. Antero Midstream's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, June 25, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") announced today the pricing of the private placement by Antero Midstream Partners LP ("Antero Midstream Partners"), an indirect wholly owned subsidiary of Antero Midstream, to eligible purchasers of $650 million in aggregate principal amount of 5.75% senior unsecured notes due 2028 at par (the "Notes"). The offering is expected to close on June 28, 2019, subject to customary closing conditions.
Antero Midstream estimates that proceeds of the offering will be approximately $643 million, after deducting the initial purchasers' discounts and estimated expenses, which Antero Midstream Partners intends to use to repay a portion of the outstanding borrowings under its credit facility.
The securities to be offered have not been registered under the Securities Act of 1933 as amended (the "Securities Act"), or any state securities laws, and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
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 or Antero Midstream Partners' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Midstream and Antero Midstream Partners expect, believe or anticipate will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds, 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 and Antero Midstream Partners believe 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. Antero Midstream and Antero Midstream Partners expressly disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements.
Antero Midstream and Antero Midstream Partners caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's or Antero Midstream Partners' control, incident to our business. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
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. Antero Midstream's website is located at www.anteromidstream.com. For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DENVER, June 25, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") announced today that Antero Midstream Partners LP ("Antero Midstream Partners"), an indirect, wholly owned subsidiary of Antero Midstream, subject to market conditions, intends to offer $600 million in aggregate principal amount of senior unsecured notes due 2028 (the "Notes") in a private placement to eligible purchasers.
Antero Midstream Partners intends to use the net proceeds of the offering to repay a portion of the outstanding borrowings under its credit facility. The securities to be offered have not been registered under the Securities Act of 1933 as amended, (the "Securities Act"), or any state securities laws, and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
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 or Antero Midstream Partners' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Midstream and Antero Midstream Partners expect, believe or anticipate will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds, 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 and Antero Midstream Partners believe 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. Antero Midstream and Antero Midstream Partners expressly disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements.
Antero Midstream and Antero Midstream Partners caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's or Antero Midstream Partners' control, incident to our business. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
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. Antero Midstream's website is located at www.anteromidstream.com. For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Corporation
DALLAS, May 23, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® Energy Supply Chain Index (the "Index") as part of normal index operations. After the markets close on May 31, 2019, the constituents of the Index will be rebalanced, and the following changes will become effective on June 3, 2019:
Constituents added:
Antero Midstream Corporation (NYSE: AM)
BP Midstream Partners LP (NYSE: BPMP)
NGL Energy Partners LP (NYSE: NGL)
Constituents removed:
Anadarko Petroleum Corporation (NYSE: APC)
Energy Transfer LP (NYSE: ET)
Shell Midstream Partners, L.P. (NYSE: SHLX)
Sunoco LP (NYSE: SUN)
ABOUT THE CUSHING® ENERGY SUPPLY CHAIN INDEX
The Cushing® Energy Supply Chain Index tracks the performance of widely held companies engaged in exploration and production, refining and marketing, or storage and transportation of oil, natural gas, coal and consumable fuels; oil and natural gas equipment and services companies; and companies that extract and/or manufacture materials. Constituents of the Index are weighted based on current yield. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "CSCI".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of midstream energy infrastructure companies and other natural resource companies.
Cushing is also dedicated to serving the needs of investors by sponsoring a variety of benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® 30 MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® Energy Supply Chain Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-CSCI
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SOURCE Cushing Asset Management, LP; Swank Capital, LLC
DALLAS, May 23, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® Utility Index (the "Index") as part of normal index operations. After the markets close on May 31, 2019, the constituents of the Index will be rebalanced, and the following changes will become effective on June 3, 2019:
Constituents added:
Antero Midstream Corporation (NYSE: AM)
BP Midstream Partners LP (NYSE: BPMP)
NGL Energy Partners LP (NYSE: NGL)
Constituents removed:
Energy Transfer LP (NYSE: ET)
Shell Midstream Partners, L.P. (NYSE: SHLX)
Sunoco LP (NYSE: SUN)
ABOUT THE CUSHING® UTILITY INDEX
The Cushing® Utility Index tracks the performance of widely held companies engaged in electric, gas and water utility services as well as master limited partnerships (MLPs) engaged in storage and transportation of oil, natural gas, coal and consumable fuels. Constituents of the Index are weighted based on current yield. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "CUTI".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of midstream energy infrastructure companies and other natural resource companies.
Cushing is also dedicated to serving the needs of investors by sponsoring a variety of benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® 30 MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI) and The Cushing® Transportation Index (Bloomberg Ticker: CTRI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® Utility Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-CUTI
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SOURCE Cushing Asset Management, LP; Swank Capital, LLC
DALLAS, May 23, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce today the upcoming rebalancing of The Cushing® Transportation Index (the "Index") as part of normal index operations. After the markets close on May 31, 2019, the constituents of the Index will be rebalanced, and the following changes will become effective on June 3, 2019:
Constituents added:
Antero Midstream Corporation (NYSE: AM)
BP Midstream Partners LP (NYSE: BPMP)
NGL Energy Partners LP (NYSE: NGL)
Constituents removed:
Energy Transfer LP (NYSE: ET)
Shell Midstream Partners, L.P. (NYSE: SHLX)
Sunoco LP (NYSE: SUN)
ABOUT THE CUSHING® TRANSPORTATION INDEX
The Cushing® Transportation Index tracks the performance of widely held companies engaged in road, rail, marine and air transportation of cargoes and passengers, as well as master limited partnerships (MLPs) engaged in storage and transportation of oil, natural gas, coal and consumable fuels. Constituents of the Index are weighted based on current yield. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "CTRI".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of midstream energy infrastructure companies and other natural resource companies.
Cushing is also dedicated to serving the needs of investors by sponsoring a variety of benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® 30 MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® Transportation Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-CTRI
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SOURCE Cushing Asset Management, LP; Swank Capital, LLC
DENVER, May 1, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today released its first quarter 2019 financial and operating results and announced a new financial policy. The relevant condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, which has been filed with the Securities and Exchange Commission.
The previously announced simplification transaction between Antero Midstream GP LP ("AMGP") and Antero Midstream Partners LP ("Antero Midstream Partners") closed on March 12, 2019. The GAAP financial results discussed in this release include the results of AMGP for all periods prior to March 12, 2019 and the results of Antero Midstream Corporation, which consolidates the operations of Antero Midstream Partners, beginning on March 13, 2019 through March 31, 2019. All pro forma financial results discussed in this release reflect the applicable results as if the simplification transaction closed on January 1, 2018 unless otherwise noted. For additional information regarding our pro forma financial results for the quarters ended March 31, 2019 and 2018, please see the unaudited pro forma financial and operating data included elsewhere in this release.
Antero Midstream Highlights Include:
Commenting on Antero Midstream, Paul Rady, Chairman and CEO said, "The first quarter of 2019 marks an important inflection point for Antero Midstream with the closing of the simplification transaction. Our new corporate structure, including a board comprised of a majority of independent directors, along with our new financial policy detailed below, further strengthens our position as a premier high growth Appalachian infrastructure company. Looking ahead, we will continue to focus on delivering per share cash flow growth through attractive mid-teens return on invested capital, while maintaining a strong balance sheet and appropriate return of capital to our shareholders."
Mr. Rady further added, "During the first quarter we continued to invest in the 50/50 processing and fractionation Joint Venture with the election to acquire 20 MBbl/d of new fractionation capacity at the Hopedale 4 fractionation plant. The investment doubles the Joint Venture's total fractionation capacity to 40 MBbl/d and complements the Joint Venture's 1.0 Bcf/d of processing capacity, which was over 99% utilized in the first quarter. We remain excited about the continued growth in the processing and fractionation business and expect to place two additional 200 MMcf/d processing plants online in 2019 at the Sherwood processing complex, which is already the largest processing complex in North America. Further, the Hopedale 5 fractionator is now under construction and will provide the Joint Venture the opportunity to acquire an additional 27 MBbl/d of fractionation capacity."
For a discussion of the non-GAAP financial measures including pro forma Adjusted EBITDA, pro forma Adjusted Net Income, pro forma Distributable Cash Flow, and Net Debt please see "Non-GAAP Financial Measures."
Antero Midstream Corporation Financial Policy
The newly formed Antero Midstream Board of Directors, comprised of a majority of independent directors, will continue to evaluate the most optimal way to maintain balance sheet strength and return capital to shareholders through a combination of growing dividends per share and potential opportunistic share repurchases in order to maximize shareholder value. This financial policy will be flexible and will take into account Antero Resources Corporation's ("Antero Resources") development plan including the commodity price outlook as well as future funding needs for attractive organic and third-party growth opportunities. This financial policy targets Distributable Cash Flow ("DCF") coverage increasing to 1.3x or higher over the long-term, leverage in the low 3x range or less, and the ability to flex the balance sheet for accretive transactions.
Antero Midstream's 2019 dividend guidance of $1.23 to $1.25 per share and pro forma DCF coverage guidance of 1.1x to 1.2x remains unchanged. Looking ahead to 2020, Antero Midstream is targeting DCF coverage of approximately 1.2x and leverage in the low 3x range with high single digit growth in return of capital to shareholders as compared to 2019.
Based on Antero Midstream's previously disclosed 18% DCF compound annual growth rate ("CAGR") outlook corresponding to a $50/Bbl oil and $2.85/MMBtu gas price outlook for Antero Resources, Antero Midstream expects to reach its leverage and DCF coverage targets by year-end 2021. Increases in DCF growth towards the 25% DCF CAGR scenario corresponding to a $60/Bbl oil and $3.15/MMBtu gas price outlook and any corresponding growth increase for Antero Resources, will be evaluated by the Board for further de-leveraging, DCF coverage increases, and return of capital to shareholders.
2019 GAAP Net Income Guidance Update for Simplification Closing
Antero Midstream is updating its 2019 GAAP net income guidance to reflect the closing of the simplification transaction that required certain GAAP purchase accounting adjustments. GAAP purchase accounting required an increase in the book value of Antero Midstream's assets to fair value and higher book depreciation, in addition to other adjustments. Antero Midstream's previously communicated GAAP net income guidance of $475 million to $525 million prior to the simplification is no longer applicable and has been adjusted to a range of $305 million to $365 million. On a pro forma basis, Antero Midstream's previously communicated Adjusted EBITDA guidance of $870 to $920 million, Distributable Cash Flow guidance of $680 to $730 million, dividend guidance of $1.23 to $1.25 per share and DCF coverage ratio guidance of 1.1x to 1.2x for 2019 are unchanged. In addition, Antero Midstream expects to file a Current Report on Form 8-K/A to update the previously filed pro forma financials included in the Form 8-K filed on March 12, 2019.
Antero Midstream Pro Forma First Quarter Financial Results
All non-GAAP and pro forma financial results discussed in this section reflect the applicable results as if the simplification transaction closed on January 1, 2018 unless otherwise noted. The pro forma information is for illustrative purposes only. If this acquisition 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 this acquisition had taken place on January 1, 2018. In addition, future results may vary significantly from the pro forma results reflected herein 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, 2019.
Low pressure gathering volumes for the first quarter of 2019 averaged 2,562 MMcf/d, a 40% increase as compared to the prior year quarter. Compression volumes for the first quarter of 2019 averaged 2,255 MMcf/d, a 60% increase as compared to the first quarter of 2018. High pressure gathering volumes for the first quarter of 2019 averaged 2,498 MMcf/d, a 42% increase over the first quarter of 2018. The year-over-year increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 153 MBbl/d during the quarter, a 31% decrease compared to the first quarter of 2018, driven by a decrease in AR's completion activity. Antero Midstream treated 24 MBbl/d of wastewater at the Antero Clearwater Facility during the first quarter of 2019. The Antero Clearwater Facility was placed into service during the second quarter of 2018.
Gross processing volumes from the 50/50 processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 996 MMcf/d for the first quarter of 2019, an increase of 92% compared to the prior year quarter. The five Sherwood Joint Venture plants operated at over 99% utilization for the quarter. Gross Joint Venture fractionation volumes averaged 22 MBbl/d, a 267% increase compared to the prior year quarter. Fractionation volumes included volumes from Hopedale 4 following the Joint Venture's election effective March 1, 2019 and the weighted average capacity was 83% utilized during the quarter. The year-over-year increase in processing and fractionation volumes is primarily driven by the increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended March 31 | |||||||||
Average Daily Volumes: | 2018 | 2019 | % | ||||||
Low Pressure Gathering (MMcf/d) | 1,835 | 2,562 | 40% | ||||||
Compression (MMcf/d) | 1,413 | 2,255 | 60% | ||||||
High Pressure Gathering (MMcf/d) | 1,765 | 2,498 | 42% | ||||||
Fresh Water Delivery (MBbl/d) | 221 | 153 | (31)% | ||||||
Clearwater Treatment Volumes (MBbl/d) | — | 24 | — | ||||||
Gross Joint Venture Processing (MMcf/d) | 519 | 996 | 92% | ||||||
Gross Joint Venture Fractionation (MBbl/d) | 6 | 22 | 267% | ||||||
For the three months ended March 31, 2019, pro forma revenues were $266 million, comprised of $158 million from the Gathering and Processing segment and $116 million from the Water Handling and Treatment segment, net of $8 million of amortization of customer contracts. Revenues increased 20% compared to the prior year quarter, driven by growth in gathering, compression, and Clearwater treatment volumes. Water Handling and Treatment segment revenues include $10 million from wastewater treatment at the Antero Clearwater Facility and $53 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.
Pro forma direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $14 million and $66 million, respectively, for a total of $80 million, compared to $67 million in total direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $7 million from wastewater treatment at the Antero Clearwater Facility and $51 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%. Pro forma general and administrative expenses excluding equity-based compensation were $9 million during the first quarter of 2019. Total pro forma operating expenses were $167 million, including $39 million of depreciation, $7 million of impairment and $3 million of accretion of contingent acquisition consideration and asset retirement obligations.
Pro forma net income was $82 million, or $0.16 per share. Pro forma Adjusted Net Income was $98 million, or $0.19 per share, representing a 64% increase compared to the prior year quarter. Pro forma Adjusted EBITDA was $202 million, a 26% increase compared to the prior year quarter. Pro forma Adjusted EBITDA for the quarter included $17 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $26 million. The decrease in cash reserved for bond interest during the quarter was $5 million. Maintenance capital expenditures during the quarter totaled $16 million and pro forma Distributable Cash Flow was $166 million, representing a 28% increase over the prior year quarter. Based on the declared dividend of $0.3025 per share, Antero Midstream's pro forma DCF coverage ratio was 1.1x.
The following table reconciles pro forma net income to pro forma Adjusted Net Income, pro forma Adjusted EBITDA and pro forma Distributable Cash Flow as used in this release (in thousands):
Three Months Ended | |||||||||
2018 | 2019 | ||||||||
Pro forma net income | $ | 50,970 | 82,123 | ||||||
Amortization of customer relationships | 8,440 | 8,440 | |||||||
Impairment expense | — | 6,982 | |||||||
Pro forma Adjusted Net Income | 59,410 | 97,545 | |||||||
Interest expense | 16,738 | 22,861 | |||||||
Income tax expense | 18,810 | 21,781 | |||||||
Depreciation expense | 44,357 | 38,765 | |||||||
Accretion of contingent acquisition consideration | 3,874 | 2,977 | |||||||
Accretion of asset retirement obligations | 34 | 73 | |||||||
Equity-based compensation | 14,846 | 13,900 | |||||||
Equity in earnings of unconsolidated affiliates | (4,903) | (12,809) | |||||||
Distributions from unconsolidated affiliates | 7,085 | 17,380 | |||||||
Pro forma Adjusted EBITDA | 160,251 | 202,473 | |||||||
Interest paid | (22,348) | (26,059) | |||||||
Decrease in cash reserved for bond interest (1) | 8,734 | 5,205 | |||||||
Maintenance capital expenditures (2) | (16,488) | (15,514) | |||||||
Pro forma Distributable Cash Flow | $ | 130,149 | 166,105 | ||||||
Distributions or Dividends Declared to Antero Midstream Holders | |||||||||
Distributions to Limited Partners | $ | 68,231 | — | ||||||
Distributions to Incentive distribution rights | 23,772 | — | |||||||
Dividends | — | 151,572 | |||||||
Total Aggregate Distributions and Dividends | $ | 92,003 | 151,572 | ||||||
Pro forma DCF Coverage Ratio | 1.4x | 1.1x |
1) | Cash reserved for bond interest expense on Antero Midstream's senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) | 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, Antero Midstream connected 23 wells to its gathering system and added 240 MMcf/d of compression capacity in the Marcellus Shale. Antero Midstream's compression capacity was approximately 85% utilized throughout the quarter. Antero Resources is currently operating 4 drilling rigs on Antero Midstream dedicated acreage. In addition, the Joint Venture elected to acquire 20 MBbl/d of fractionation capacity at the Hopedale 4 fractionator. The acquisition brings the Joint Venture's total fractionation capacity to 40 MBbl/d. The Joint Venture's processing capacity is currently 1.0 Bcf/d, which was over 99% utilized in the first quarter of 2019. The Joint Venture expects to place online two more 200 MMcf/d processing plants at the Sherwood complex by year-end 2019, consistent with the previously announced capital budget.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 31 well completions during the first quarter of 2019, a 33% decrease from the prior year quarter. During the quarter Antero Midstream treated an average of 24 MBbl/d of wastewater at the Antero Clearwater Facility including planned downtime scheduled for January 2019, in line with previous expectations of 25 Bbl/d for the first quarter. In March and April, the Antero Clearwater Facility treated volumes in excess of the 25 MBbl/d average during the first quarter and operations are on track to achieve the previously communicated treatment volumes of approximately 40 MBbl/d for the remainder of the year.
Balance Sheet and Liquidity
As of March 31, 2019, Antero Midstream had approximately $1.1 billion drawn on its $2.0 billion bank credit facility, resulting in approximately $900 million of liquidity. Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA was 3.1x as of March 31, 2019.
Commenting on Antero Midstream's growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream delivered another strong quarter generating 26% and 28% year-over-year growth in pro forma Adjusted EBITDA and pro forma distributable cash flow, respectively. Importantly, our organic strategy and efficient capital investment allowed us to pay out approximately $600 million for the cash consideration in the simplification transaction while still maintaining a strong balance sheet with leverage of 3.1x at quarter-end."
Mr. Kennedy further added, "Our outlook for 2020 and beyond includes DCF coverage improvement, resulting in excess retained cash flow to maintain a strong balance sheet, and growing return of capital to shareholders."
Capital Investments
Total pro forma capital expenditures including investments in the Joint Venture were $184 million during the first quarter of 2019. Gathering, compression, and water infrastructure capital investments totaled $93 million in the first quarter of 2019 as compared to $128 million in the first quarter of 2018. Capital invested in gathering systems and related facilities was $56 million and capital invested in water handling and treatment assets was $37 million. Investments in unconsolidated affiliates for the Joint Venture were $91 million during the quarter, including the election for 20 MBbl/d of fractionation capacity at the Hopedale 4 fractionation plant. Antero Midstream's 2019 capital budget for the Joint Venture of $200 million included the Hopedale 4 election in the first quarter of 2019 and does not include any additional fractionation plant elections during 2019. Antero Midstream's total capital budget of $750 to $800 million is currently trending towards the bottom end of the guidance range.
Conference Call
A joint conference call for Antero Midstream is scheduled on Thursday, May 2, 2019 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 887-407-9126 (U.S.), or 201-493-6757 (International) and reference "Antero Midstream".
Presentation
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 on Antero Midstream's website until Thursday, May 9, 2019 at 10:00 am MT. Information on Antero Midstream's website does not constitute a portion of this press release.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses pro forma Adjusted EBITDA as an important indicator of Antero Midstream's performance. Antero Midstream defines pro forma Adjusted EBITDA as net income before interest expense, provision for income taxes, impairment expense, amortization of customer relationships, depreciation expense, accretion, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates.
Antero Midstream uses pro forma Adjusted EBITDA to assess:
Antero Midstream's defines pro forma Distributable Cash Flow as pro forma Adjusted EBITDA less interest paid, cash reserved for bond interest 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.
Pro forma Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to pro forma Adjusted EBITDA and pro forma Distributable Cash Flow is Net Income. The non-GAAP financial measures of pro forma Adjusted EBITDA and pro forma Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Pro forma Adjusted EBITDA and pro forma Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and pro forma Adjusted EBITDA. You should not consider pro forma Adjusted EBITDA and pro forma Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of pro forma Adjusted EBITDA and pro forma Distributable Cash Flow may not be comparable to similarly titled measures of other companies.
Antero Midstream defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating Antero Midstream's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
March 31, 2019 | ||||||
Bank credit facility | $ | 1,100,000 | ||||
5.375% senior notes due 2024 | 652,600 | |||||
5.75% senior notes due 2027 | 653,250 | |||||
Net unamortized debt issuance costs | (15,858) | |||||
Consolidated total debt | $ | 2,389,992 | ||||
Cash and cash equivalents | (1,968) | |||||
Consolidated net debt | $ | 2,382,024 |
Antero Midstream defines Adjusted Net Income as net income plus amortization of customer contracts and impairment. Antero Midstream believes Adjusted Net Income is useful to investors in evaluating operational trends and its performance relative to other midstream companies. Adjusted Net Income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.
The following table reconciles pro forma net income to pro forma Adjusted EBITDA for the twelve months ended March 31, 2019 as used in this release (in thousands):
Twelve Months | |||||||
Pro forma net income | $ | 359,761 | |||||
Amortization of customer relationships | 34,227 | ||||||
Impairment expense | 12,753 | ||||||
Pro forma Adjusted Net Income | 406,741 | ||||||
Interest expense | 89,917 | ||||||
Income tax expense | 112,775 | ||||||
Depreciation expense | 172,121 | ||||||
Accretion of contingent acquisition consideration | (93,916) | ||||||
Accretion of asset retirement obligations | 174 | ||||||
Equity-based compensation | 55,438 | ||||||
Equity in earnings of unconsolidated affiliates | (36,184) | ||||||
Distributions from unconsolidated affiliates | 56,710 | ||||||
Pro forma Adjusted EBITDA | $ | 763,776 | |||||
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, 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. 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 the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, 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, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019
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, 2018 and March 31, 2019 | |||||||
(Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
December 31, 2018 | March 31, 2019 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,822 | 1,968 | ||||
Accounts receivable–Antero Resources | — | 110,980 | |||||
Accounts receivable–third party | — | 256 | |||||
Other current assets | 87 | 3,515 | |||||
Total current assets | 2,909 | 116,719 | |||||
Property and equipment, net | — | 3,659,677 | |||||
Investments in unconsolidated affiliates | 43,492 | 1,153,943 | |||||
Deferred tax asset | 1,304 | 3,681 | |||||
Customer relationships | — | 556,218 | |||||
Goodwill | — | 1,135,266 | |||||
Other assets, net | — | 42,923 | |||||
Total assets | $ | 47,705 | 6,668,427 | ||||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | 731 | 3,603 | ||||
Accounts payable–third party | 28 | 22,871 | |||||
Accrued liabilities | 407 | 73,448 | |||||
Asset retirement obligations | — | 1,925 | |||||
Taxes payable | 15,678 | 15,678 | |||||
Other current liabilities | — | 537 | |||||
Total current liabilities | 16,844 | 118,062 | |||||
Long-term liabilities: | |||||||
Long-term debt | — | 2,389,992 | |||||
Contingent acquisition consideration | — | 117,972 | |||||
Asset retirement obligations | — | 4,041 | |||||
Other | — | 2,810 | |||||
Total liabilities | 16,844 | 2,632,877 | |||||
Partners' Capital and Stockholders' Equity: | |||||||
Common shareholders—186,219,438 shares issued and outstanding at December 31, 2018; none issued and outstanding at March 31, 2019 | (41,969) | — | |||||
IDR LLC Series B units (65,745 units vested at December 31, 2018; none issued and outstanding at March 31, 2019) | 72,830 | — | |||||
Preferred stock, $0.01 par value: none authorized or issued at December 31, 2018; 100,000,000 authorized at March 31, 2019 | — | — | |||||
Series A non-voting perpetual preferred stock; none designated, issued or outstanding at December 31, 2018; 12,000 designated and 10,000 issued and outstanding at March 31, 2019 | — | — | |||||
Common stock, $0.01 par value; none authorized, issued or outstanding at December 31, 2018; 2,000,000,000 authorized and 506,640,947 issued and outstanding at March 31, 2019 | — | 5,066 | |||||
Additional paid-in capital | — | 4,007,287 | |||||
Accumulated earnings | — | 23,197 | |||||
Total partners' capital and stockholders' equity | 30,861 | 4,035,550 | |||||
Total liabilities and partners' capital and stockholders' equity | $ | 47,705 | 6,668,427 |
ANTERO MIDSTREAM CORPORATION | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||||
Three Months Ended March 31, 2018 and 2019 | |||||||
(Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended March 31, | |||||||
2018 | 2019 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | — | 33,534 | ||||
Water handling and treatment–Antero Resources | — | 22,351 | |||||
Water handling and treatment–third party | — | 4 | |||||
Amortization of customer relationships | — | (1,781) | |||||
Total revenue | — | 54,108 | |||||
Operating expenses: | |||||||
Direct operating | — | 14,982 | |||||
General and administrative (including $8,635 and $11,423 of equity-based compensation in 2018 and 2019, respectively) | 9,560 | 19,809 | |||||
Depreciation | — | 7,650 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | 1,049 | |||||
Accretion of asset retirement obligations | — | 10 | |||||
Total operating expenses | 9,560 | 43,500 | |||||
Operating income (loss) | (9,560) | 10,608 | |||||
Interest expense, net | — | (6,217) | |||||
Equity in earnings of unconsolidated affiliates | 28,453 | 2,880 | |||||
Income before taxes | 18,893 | 7,271 | |||||
Provision for income tax benefit (expense) | (6,088) | 2,377 | |||||
Net income and comprehensive income | 12,805 | 9,648 | |||||
Net income attributable to vested Series B Units | (413) | — | |||||
Limited partners' and common stockholders' interest in net income | $ | 12,392 | 9,648 | ||||
Net income per share–basic and diluted | $ | 0.07 | 0.04 | ||||
Weighted average common shares outstanding: | |||||||
Basic | 186,188 | 253,877 | |||||
Diluted | 186,188 | 254,903 |
ANTERO MIDSTREAM CORPORATION | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
Three Months Ended March 31, 2018 and 2019 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2018 | 2019 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net income | $ | 12,805 | 9,648 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Distributions received from Antero Midstream Partners LP | 23,772 | 43,492 | |||||
Depreciation | — | 7,650 | |||||
Accretion and change in fair value of contingent acquisition consideration | — | 1,049 | |||||
Accretion of asset retirement obligations | — | 10 | |||||
Deferred income tax benefit | — | (2,377) | |||||
Equity-based compensation | 8,635 | 11,423 | |||||
Equity in earnings of unconsolidated affiliates | (28,453) | (2,880) | |||||
Distributions from unconsolidated affiliates | — | 4,775 | |||||
Amortization of customer relationships | — | 1,781 | |||||
Amortization of deferred financing costs | — | 251 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | — | 31,331 | |||||
Accounts receivable–third party | — | (18) | |||||
Other current assets | (155) | (2,361) | |||||
Accounts payable–Antero Resources | (15) | (444) | |||||
Accounts payable–third party | — | (1,454) | |||||
Accrued liabilities | 565 | (32,289) | |||||
Income taxes payable | 6,088 | — | |||||
Net cash provided by operating activities | 23,242 | 69,587 | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to gathering systems and facilities | — | (7,677) | |||||
Additions to water handling and treatment systems | — | (8,328) | |||||
Investments in unconsolidated affiliates | — | (65,729) | |||||
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) | |||||
Net cash used in investing activities | — | (61,178) | |||||
Cash flows provided by (used in) financing activities: | |||||||
Distributions to shareholders | (13,964) | (30,543) | |||||
Distributions to Series B unitholders | (783) | (3,720) | |||||
Borrowings on bank credit facilities, net | — | 25,000 | |||||
Net cash used in financing activities | (14,747) | (9,263) | |||||
Net increase (decrease) in cash and cash equivalents | 8,495 | (854) | |||||
Cash and cash equivalents, beginning of period | 5,987 | 2,822 | |||||
Cash and cash equivalents, end of period | $ | 14,482 | 1,968 | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | — | 19,250 | ||||
Increase in accrued capital expenditures and accounts payable for property and equipment | $ | — | 11,933 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | |||||||||||||
Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Income | |||||||||||||
Three Months Ended March 31, 2018 | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
Pro Forma | |||||||||||||
Antero | Antero | Antero | |||||||||||
Midstream | Midstream | Pro Forma | Midstream | ||||||||||
GP LP | Partners LP | Adjustments | Corporation | ||||||||||
Revenues: | |||||||||||||
Equity in earnings of Antero Midstream Partners LP | $ | 28,453 | — | (28,453) | — | ||||||||
Gathering and compression–Antero Resources | — | 108,177 | — | 108,177 | |||||||||
Water handling and treatment–Antero Resources | — | 120,889 | — | 120,889 | |||||||||
Water handling and treatment–third party | — | 525 | — | 525 | |||||||||
Amortization of customer relationships | — | — | (8,440) | (8,440) | |||||||||
Total revenues | 28,453 | 229,591 | (36,893) | 221,151 | |||||||||
Operating expenses: | |||||||||||||
Direct operating | — | 67,256 | — | 67,256 | |||||||||
General and administrative (excluding equity-based compensation) | 925 | 8,244 | — | 9,169 | |||||||||
Equity-based compensation | 8,635 | 6,211 | — | 14,846 | |||||||||
Depreciation | — | 32,432 | 11,925 | 44,357 | |||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 3,874 | — | 3,874 | |||||||||
Accretion of asset retirement obligations | — | 34 | — | 34 | |||||||||
Total operating expenses | 9,560 | 118,051 | 11,925 | 139,536 | |||||||||
Operating income | 18,893 | 111,540 | (48,818) | 81,615 | |||||||||
Other income (expenses) | |||||||||||||
Interest expense, net | — | (11,297) | (5,441) | (16,738) | |||||||||
Equity in earnings of unconsolidated affiliates | — | 7,862 | (2,959) | 4,903 | |||||||||
Income before income taxes | 18,893 | 108,105 | (57,218) | 69,780 | |||||||||
Provision for income taxes (expense) benefit: | |||||||||||||
Current | (6,088) | — | 6,088 | — | |||||||||
Deferred | — | — | (18,810) | (18,810) | |||||||||
Total income taxes | (6,088) | — | (12,722) | (18,810) | |||||||||
Net income attributable to incentive distribution rights | — | (28,453) | 28,453 | — | |||||||||
Net income and comprehensive income | 12,805 | 79,652 | (41,487) | 50,970 | |||||||||
Net income attributable to vested Series B units | (413) | — | 413 | — | |||||||||
Net income attributable to common shareholders or unitholders | $ | 12,392 | 79,652 | (41,074) | 50,970 | ||||||||
Net income per common share or unit–basic | $ | 0.07 | 0.43 | 0.10 | |||||||||
Net income per common share or unit–diluted | $ | 0.07 | 0.43 | 0.10 | |||||||||
Weighted average number of common shares or units outstanding–basic | 186,188 | 186,934 | 314,655 | 500,843 | |||||||||
Weighted average number of common shares or units outstanding–diluted | 186,188 | 187,173 | 321,544 | 507,732 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | |||||||||||||
Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Income | |||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
Pro Forma | |||||||||||||
Antero | Antero | Antero | |||||||||||
Midstream | Midstream | Pro Forma | Midstream | ||||||||||
Corporation | Partners LP | Adjustments | Corporation | ||||||||||
Revenues: | |||||||||||||
Equity in earnings of Antero Midstream Partners LP | $ | — | — | — | — | ||||||||
Gathering and compression–Antero Resources | 33,534 | 124,773 | — | 158,307 | |||||||||
Water handling and treatment–Antero Resources | 22,351 | 93,537 | — | 115,888 | |||||||||
Water handling and treatment–third party | 4 | 51 | — | 55 | |||||||||
Amortization of customer relationships | (1,781) | — | (6,659) | (8,440) | |||||||||
Total revenues | 54,108 | 218,361 | (6,659) | 265,810 | |||||||||
Operating expenses: | |||||||||||||
Direct operating | 14,982 | 64,818 | — | 79,800 | |||||||||
General and administrative (excluding equity-based compensation) | 8,386 | 16,316 | (15,345) | 9,357 | |||||||||
Equity-based compensation | 11,423 | 2,477 | — | 13,900 | |||||||||
Impairment of property and equipment | — | 6,982 | — | 6,982 | |||||||||
Depreciation | 7,650 | 21,707 | 9,408 | 38,765 | |||||||||
Accretion and change in fair value of contingent acquisition consideration | 1,049 | 1,928 | — | 2,977 | |||||||||
Accretion of asset retirement obligations | 10 | 63 | — | 73 | |||||||||
Total operating expenses | 43,500 | 114,291 | (5,937) | 151,854 | |||||||||
Operating income | 10,608 | 104,070 | (722) | 113,956 | |||||||||
Other income (expenses) | |||||||||||||
Interest expense, net | (6,217) | (16,815) | 171 | (22,861) | |||||||||
Equity in earnings of unconsolidated affiliates | 2,880 | 12,264 | (2,335) | 12,809 | |||||||||
Income before income taxes | 7,271 | 99,519 | (2,886) | 103,904 | |||||||||
Provision for income taxes (expense) benefit: | |||||||||||||
Current | — | — | — | — | |||||||||
Deferred | 2,377 | — | (24,158) | (21,781) | |||||||||
Total income taxes | 2,377 | — | (24,158) | (21,781) | |||||||||
Net income attributable to incentive distribution rights | — | — | — | — | |||||||||
Net income and comprehensive income | 9,648 | 99,519 | (27,044) | 82,123 | |||||||||
Net income attributable to vested Series B units | — | — | — | — | |||||||||
Net income attributable to common shareholders or unitholders | $ | 9,648 | 99,519 | (27,044) | 82,123 | ||||||||
Net income per common share or unit–basic | $ | 0.04 | 0.16 | ||||||||||
Net income per common share or unit–diluted | $ | 0.04 | 0.16 | ||||||||||
Weighted average number of common shares or units outstanding–basic | 253,877 | 246,966 | 500,843 | ||||||||||
Weighted average number of common shares or units outstanding–diluted | 254,903 | 252,829 | 507,732 |
PRO FORMA ANTERO MIDSTREAM CORPORATION | |||||||||||||
Selected Operating Data | |||||||||||||
Three Months Ended March 31, 2018 and 2019 | |||||||||||||
(Unaudited) | |||||||||||||
Amount of | |||||||||||||
Three Months Ended March 31, | Increase | Percentage | |||||||||||
2018 | 2019 | or Decrease | Change | ||||||||||
Pro Forma Operating Data: | |||||||||||||
Gathering—low pressure (MMcf) | 165,192 | 230,540 | 65,348 | 40 | % | ||||||||
Gathering—high pressure (MMcf) | 158,862 | 224,786 | 65,924 | 41 | % | ||||||||
Compression (MMcf) | 127,195 | 202,938 | 75,743 | 60 | % | ||||||||
Fresh water delivery (MBbl) | 19,915 | 13,732 | (6,183) | (31) | % | ||||||||
Treated water (MBbl) | — | 2,147 | 2,147 | * | |||||||||
Other fluid handling (MBbl) | 3,979 | 5,066 | 1,087 | 27 | % | ||||||||
Wells serviced by fresh water delivery | 46 | 31 | (15) | (33) | % | ||||||||
Gathering—low pressure (MMcf/d) | 1,835 | 2,562 | 727 | 40 | % | ||||||||
Gathering—high pressure (MMcf/d) | 1,765 | 2,498 | 733 | 42 | % | ||||||||
Compression (MMcf/d) | 1,413 | 2,255 | 842 | 60 | % | ||||||||
Fresh water delivery (MBbl/d) | 221 | 153 | (68) | (31) | % | ||||||||
Treated water (MBbl/d) | — | 24 | 24 | * | |||||||||
Other fluid handling (MBbl/d) | 44 | 56 | 12 | 27 | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering—low pressure fee ($/Mcf) | $ | 0.32 | 0.33 | 0.01 | 3 | % | |||||||
Average gathering—high pressure fee ($/Mcf) | $ | 0.19 | 0.20 | 0.01 | 5 | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.78 | 3.89 | 0.11 | 3 | % | |||||||
Average treatment fee ($/Bbl) | $ | — | 4.48 | 4.48 | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing—Joint Venture (MMcf) | 46,726 | 89,652 | 42,926 | 92 | % | ||||||||
Fractionation—Joint Venture (MBbl) | 555 | 1,981 | 1,426 | 257 | % | ||||||||
Processing—Joint Venture (MMcf/d) | 519 | 996 | 477 | 92 | % | ||||||||
Fractionation—Joint Venture (MBbl/d) | 6 | 22 | 16 | 267 | % |
______________________ |
* Not meaningful or applicable. |
PRO FORMA ANTERO MIDSTREAM CORPORATION | ||||||||||||||||
Condensed Consolidated Results of Segment Operations | ||||||||||||||||
Three Months Ended March 31, 2018 and 2019 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Water | Pro Forma | |||||||||||||||
Gathering and | Handling and | Pro Forma | Consolidated | |||||||||||||
Processing | Treatment | Adjustments | Unallocated (1) | Total | ||||||||||||
Three months ended March 31, 2018 | ||||||||||||||||
Revenues: | ||||||||||||||||
Revenue–Antero Resources | $ | 108,177 | 120,889 | — | — | 229,066 | ||||||||||
Revenue–third-party | — | 525 | — | — | 525 | |||||||||||
Amortization of customer contracts | — | — | (8,440) | — | (8,440) | |||||||||||
Total revenues | 108,177 | 121,414 | (8,440) | — | 221,151 | |||||||||||
Operating expenses: | ||||||||||||||||
Direct operating | 11,382 | 55,874 | — | — | 67,256 | |||||||||||
General and administrative (excluding equity-based compensation) | 5,704 | 2,540 | — | 925 | 9,169 | |||||||||||
Equity-based compensation | 4,658 | 1,553 | — | 8,635 | 14,846 | |||||||||||
Depreciation | 23,414 | 9,018 | 11,925 | — | 44,357 | |||||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 3,874 | — | — | 3,874 | |||||||||||
Accretion of asset retirement obligations | — | 34 | — | — | 34 | |||||||||||
Total expenses | 45,158 | 72,893 | 11,925 | 9,560 | 139,536 | |||||||||||
Operating income | $ | 63,019 | 48,521 | (20,365) | (9,560) | 81,615 | ||||||||||
Interest expense, net | $ | (14,394) | 3,097 | (5,441) | — | $ | (16,738) | |||||||||
Equity in earnings of unconsolidated affiliates | $ | 7,862 | — | (2,959) | — | $ | 4,903 | |||||||||
Pro Forma Adjusted EBITDA | $ | 160,251 | ||||||||||||||
Three months ended March 31, 2019 | ||||||||||||||||
Revenues: | ||||||||||||||||
Revenue–Antero Resources | $ | 158,307 | 115,888 | — | — | 274,195 | ||||||||||
Revenue–third-party | — | 55 | — | — | 55 | |||||||||||
Amortization of customer contracts | — | — | (8,440) | — | (8,440) | |||||||||||
Total revenues | 158,307 | 115,943 | (8,440) | — | 265,810 | |||||||||||
Operating expenses: | ||||||||||||||||
Direct operating | 14,108 | 65,692 | — | — | 79,800 | |||||||||||
General and administrative (excluding equity-based compensation) | 10,912 | 6,998 | (15,345) | 6,792 | 9,357 | |||||||||||
Equity-based compensation | 1,963 | 1,104 | — | 10,833 | 13,900 | |||||||||||
Impairment of property and equipment | 6,590 | 392 | — | — | 6,982 | |||||||||||
Depreciation | 10,882 | 18,475 | 9,408 | — | 38,765 | |||||||||||
Accretion and change in fair value of contingent acquisition consideration | — | 2,977 | — | — | 2,977 | |||||||||||
Accretion of asset retirement obligations | — | 73 | — | — | 73 | |||||||||||
Total expenses | 44,455 | 95,711 | (5,937) | 17,625 | 151,854 | |||||||||||
Operating income | $ | 113,852 | 20,232 | (2,503) | (17,625) | 113,956 | ||||||||||
Interest expense, net | $ | (23,000) | — | 171 | (32) | (22,861) | ||||||||||
Equity in earnings of unconsolidated affiliates | $ | 15,144 | — | (2,335) | — | 12,809 | ||||||||||
Pro Forma Adjusted EBITDA | $ | 202,473 |
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SOURCE Antero Midstream Corporation
DENVER, April 11, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced its first dividend since it converted to a corporation and closed the acquisition of Antero Midstream Partners LP.
The Board of Directors of Antero Midstream declared a cash dividend of $0.3025 per share ($1.21 per share annualized) for the first quarter of 2019. The dividend represents a 180% increase as compared to Antero Midstream GP LP's ("AMGP") first quarter 2018 distribution and an 84% increase sequentially. The dividend will be payable on May 8, 2019 to stockholders of record as of April 26, 2019.
The dividend also represents a 47% increase compared to Antero Midstream Partners LP's first quarter 2018 distribution and a 22% increase sequentially, each adjusted for the 1.8926 exchange ratio for unitholders who elected to receive stock in the recently closed simplification transaction. This represents the seventeenth consecutive quarterly dividend or distribution increase since Antero Midstream Partners LP's initial public offering in November 2014.
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.
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SOURCE Antero Midstream
DENVER, April 11, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") today announced plans to issue their first quarter 2019 earnings on Wednesday, May 1, 2019 after the close of trading on the New York Stock Exchange.
A conference call for Antero Midstream is scheduled on Thursday, May 2, 2019 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 9, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) 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 9, 2019 at 10:00 am MT.
Antero Midstream owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Antero Midstream's website is located at www.anteromidstream.com
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SOURCE Antero Midstream
DENVER, April 8, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today announced that David H. Keyte has been appointed to its board of directors (the "Board"), as a Class III director, effective as of April 5, 2019. Mr. Keyte is an independent director under the director independence standards set forth in the rules and regulations of the Securities and Exchange Commission and the applicable listing standards of the New York Stock Exchange.
Mr. Keyte is the Chairman of the board and Chief Executive Officer of Caerus Oil and Gas LLC, which he co-founded in November 2009. Prior to that, Mr. Keyte held senior executive positions at Forest Oil Corporation from November 1997 until November 2009, including the positions of Chief Financial Officer, Executive Vice President and Chief Accounting officer. Mr. Keyte served on the board of Regal Entertainment Group, a publicly held movie exhibition company, from 2006 until the company was sold in 2018. Mr. Keyte holds a B.S. degree in economics from the University of Pennsylvania's Wharton School of Finance.
Paul M. Rady, Chairman and CEO of Antero Midstream commented, "We are very excited to add Dave to the Board of Antero Midstream. Dave's extensive background in the oil and gas industry and his strong financial expertise will be a valuable asset to Antero Midstream and to our shareholders. Adding another independent director to the Board with Dave's credentials further strengthens our commitment to strong corporate governance at Antero Midstream, something we highly value as evidenced by the simplification transaction."
"I am excited to join the Board of Antero Midstream, a leading midstream services provider in Appalachia with an integrated business model and a forward-thinking management team. Antero Midstream's leading infrastructure position in one of the lowest cost oil and gas basins in the world provides a tremendous opportunity to continue to generate attractive growth and returns. I look forward to representing the shareholders and working with the Board to oversee the execution of the company's business plan," said Keyte.
Mr. Keyte's appointment increases the size of the Board to ten directors, eight of whom are independent directors under the director independence standards of the NYSE. Mr. Keyte will be a member of the Board's Nominating & Corporate Governance Committee, Conflicts Committee, and will serve as Chairman of the Compensation Committee.
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, 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. 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, most of which are difficult to predict and many of which are beyond Antero Midstream's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, 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, 2018.
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. For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream
DENVER, March 13, 2019 /PRNewswire/ -- Antero Resources (NYSE: AR) ("Antero Resources", or "AR") today announced receipt of consideration in connection with the closing of the previously announced simplification transaction between Antero Midstream GP LP (NYSE: AMGP) ("AMGP") and Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream Partners" or "AM"). At closing, AMGP was converted from a Limited Partnership to a Corporation and was renamed Antero Midstream Corporation ("New AM"). Beginning on March 13, 2019, New AM's common stock will trade on the NYSE under the ticker symbol AM. With the closing of this transaction, Antero Resources will no longer consolidate Antero Midstream Partners' financial and operating results in Antero Resources' consolidated financial statements. Antero Resources will account for its interest in New AM under the equity method of accounting. This new financial statement presentation will be substantially the same as the previously categorized "Stand-alone" data that was historically reported. Please see the accompanying presentation on our website titled "Simplification and Deconsolidation: Catalyst for Outperformance" for supplemental details.
Highlights Include:
Paul Rady, Chairman and CEO commented, "This improved visibility and simplified corporate structure, alongside a diversified production mix and industry-leading hedge book, result in a low-risk E&P profile positioned to maximize returns across the commodity price cycles. We remain committed to our long-term strategy of spending within cash flow, continuing to delever our already strong balance sheet and then returning free cash flow to shareholders. We project 2019 capital to be at the low end of the guidance range, with a continued focus on keeping capital spending within cash flow."
Glen Warren, President, and Chief Financial Officer added, "With the simplification of our midstream structure and the deconsolidation of our financial statements, we have made significant progress in improving Antero's financial transparency. We believe the deconsolidation showcases the strength of our balance sheet and highlights the independence of the two companies. As of year-end 2018, we have reduced leverage to 2.1x leverage on a pro forma basis, while growing to become the 4th largest natural gas producer and the largest NGL producer in the U.S. today. This was achieved only nine years after placing our first well online."
2019 Capital Budget and Guidance
The following is a summary of Antero Resources' 2019 capital budget for drilling and completion and land capital as previously announced on January 8, 2019, and previously categorized as Stand-alone. As a result of the deconsolidation, all previously communicated consolidated guidance and targets should no longer be relied upon. All other guidance items are unchanged, as detailed in the Form 8-K filed today.
Capital Budget ($ in MM) | ||||||
Low | High | |||||
Drilling & Completion | $1,300 | $1,450 | ||||
Land Capital | $75 | $100 | ||||
Total Capital | $1,375 | $1,550 | ||||
The following is a summary of Antero Resources' 2019 production guidance as previously announced on January 8, 2019. | ||||||
Production Guidance | ||||||
Low | High | |||||
Net Daily Production (MMcfe/d) | 3,150 | 3,250 | ||||
The following is a summary of Antero Resources' 2019 expense guidance as previously announced on January 8, 2019. | ||||||
Cash Expense Guidance | Low | High | ||||
Cash Production Expense ($/Mcfe)(1) | $2.15 | $2.25 | ||||
G&A Expense ($/Mcfe) (2) | $0.10 | $0.14 | ||||
(1) | Includes lease operating expenses, gathering, compression, processing, transportation expenses and production and ad valorem taxes. |
(2) | Excludes equity-based compensation. |
Total Debt and Net Debt
Net Debt is calculated as total debt less cash and cash equivalents. Management uses Net Debt to evaluate its financial position, including its ability to service its debt obligations.
The following table reconciles pro form Net Debt as used in this release (in thousands):
December 31, | |||||||
2018 | |||||||
AR bank credit facility | 405,000 | ||||||
5.375% AR senior notes due 2021 | 1,000,000 | ||||||
5.125% AR senior notes due 2022 | 1,100,000 | ||||||
5.625% AR senior notes due 2023 | 750,000 | ||||||
5.000% AR senior notes due 2025 | 600,000 | ||||||
Net unamortized premium | 1,241 | ||||||
Net unamortized debt issuance costs | (26,700) | ||||||
Total debt | 3,829,541 | ||||||
Less: AR cash and cash equivalents | — | ||||||
Debt | 3,829,541 | ||||||
Less: Proceeds from Antero Midstream Simplification | 297,000 | ||||||
Pro Forma Net Debt | 3,532,541 |
The following table reconciles Net Income as reported in the Parent column of Antero's guarantor footnote to its financial statements to Adjusted EBITDAX for the twelve months ended December 31, 2018, as used in this release (in thousands):
Twelve months ended | |||||||
(in thousands) | December 31, 2018 | ||||||
Net (loss) and comprehensive (loss) attributable to Antero Resources Corporation | $ | (397,517) | |||||
Commodity derivative fair value losses | 87,594 | ||||||
Gains on settled commodity derivatives | 243,112 | ||||||
Marketing derivative fair value gains | (94,081) | ||||||
Gains on settled marketing derivatives | 72,687 | ||||||
Interest expense | 224,977 | ||||||
Income tax benefit | (128,857) | ||||||
Depletion, depreciation, amortization, and accretion | 845,136 | ||||||
Impairment of unproved properties | 549,437 | ||||||
Impairment of gathering systems and facilities | 4,470 | ||||||
Exploration expense | 4,958 | ||||||
Gain on change in fair value of contingent acquisition consideration | 93,019 | ||||||
Equity-based compensation expense | 49,341 | ||||||
Equity in loss of Antero Midstream Partners LP | 3,664 | ||||||
Distributions from Antero Midstream Partners LP | 159,181 | ||||||
Adjusted EBITDAX | $ | 1,717,121 |
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are Antero Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as those regarding future commodity prices, future production targets, future capital spending plans, estimated realized natural gas, natural gas liquids and oil prices, acreage quality and expected drilling and development plans (including the number, type, lateral length and location of wells to be drilled, the number and type of drilling rigs and the number of wells per pad), 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 Resources 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. Antero expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Antero Resources' control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, the expected timing and likelihood of completion of the simplification transaction, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2018.
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SOURCE Antero Resources Corporation
DENVER, March 12, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") announced today the closing of the previously announced simplification transaction between Antero Midstream and AMGP.
On October 9, 2018, Antero Midstream and AMGP announced that they entered into a definitive agreement for AMGP to acquire all outstanding AM common units, both those held by the public and those held by Antero Resources Corporation (NYSE: AR), in a stock and cash transaction. In connection with this transaction, AMGP converted into a corporation and was renamed Antero Midstream Corporation.
On March 13, 2019, Antero Midstream Corporation's common stock will begin trading on the New York Stock Exchange under the ticker symbol "AM". Antero Midstream common units and AMGP common shares will no longer be publicly traded.
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' properties.
Antero Midstream is a limited partnership 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. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units during the period of 2019 that preceded the closing of the simplification transaction. Holders of Antero Midstream common units who receive Antero Midstream Corporation common stock will receive a Form 1099 with respect to any dividends they receive on such Antero Midstream Corporation common stock following the closing of the simplification transaction.
For more information, contact Michael Kennedy — CFO of Antero Midstream Corporation at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, March 11, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("AM," "Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") announced today that at special meetings of Antero Midstream common unitholders and AMGP shareholders, Antero Midstream's unitholders and AMGP's shareholders voted to approve the previously announced simplification transaction between Antero Midstream and AMGP. In addition, Antero Midstream and AMGP have received the merger consideration proration results from American Stock Transfer & Trust Company, LLC.
The previously announced simplification transaction was subject to, among other things, the approval of holders of a majority of the shares held by AMGP Shareholders and the approval of holders of a majority of the AMGP shares held by AMGP's shareholders excluding the original private equity sponsors, Series B holders, and affiliates of AMGP's general partner. The transaction was also subject to the approval of holders of a majority of the AM units held by AM unitholders and the approval of holders of a majority of the AM units held by AM unitholders other than Antero Resources Corporation ("Antero Resources"), the original private equity sponsors, the Series B holders and affiliates of AM's general partner. The simplification transaction is expected to close on March 12, 2019. In connection with closing, AMGP will change its name to "Antero Midstream Corporation" ("New AM") and its common stock is expected to begin trading on the New York Stock Exchange under the "AM" ticker symbol on March 13, 2019. Antero Midstream common units and AMGP common shares will no longer be publicly traded after the completion of the simplification transaction.
Special Meetings Voting Results
Based on the results from Antero Midstream's special meeting to approve the simplification agreement and the related transactions, approximately 93.9% of the outstanding AM common units were voted in person or by proxy. Approximately 93.8% of the outstanding AM common units voted to approve the simplification agreement and related transactions, including 86.8% of the outstanding AM common units held by AM unitholders other than Antero Resources, the original private equity sponsors, the Series B holders and affiliates of AM's general partner.
Based on the results from AMGP's special meeting to approve the simplification agreement and the related transactions, approximately 91.9% of the outstanding AMGP common shares were voted in person or by proxy. Approximately 80.0% of the outstanding AMGP common shares held by AMGP shareholders other than the original private equity sponsors, the Series B holders and affiliates of AMGP's general partner voted to approve the simplification agreement and related transactions.
Commenting on the results, Paul Rady, Chairman and CEO, said, "Today's voting results from AM unitholders and AMGP shareholders reaffirm the benefits of the simplification transaction and demonstrate strong support for New AM's outlook. Structured as a C-Corp for both governance and tax purposes, we believe New AM will be a best-in-class midstream infrastructure corporation with enhanced appeal to institutional investors and valuable shareholder rights."
Consideration Proration Results
Based upon the consideration elections made by AM unitholders other than Antero Resources ("AM public unitholders") pursuant to the simplification agreement, in exchange for each AM common unit held:
Investors with questions regarding these proration results should contact MacKenzie Partners, Inc. at (212) 929-5500.
Antero Midstream is a limited partnership 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' properties. Holders of AM Common Units will receive a Schedule K-1 with respect to distributions received on the AM Common Units during the period of 2019 that precedes the closing of the simplification transaction. Holders of AM Common Units who receive New AM common stock will receive a Form 1099 with respect to any dividends they receive on such New AM common stock following the closing of the simplification transaction.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares receive a Form 1099 with respect to distributions received on their common shares and on any dividends they receive on New AM common stock following the closing of the simplification transaction. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the timing of consummation of the proposed simplification transaction, if at all, and statements regarding the transaction. Although Antero Midstream and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the proposed simplification transaction, including the satisfaction of the conditions to the consummation of the proposed simplification transaction, risks that the proposed simplification transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute Antero Midstream's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2018.
No Offer or Solicitation
This communication includes a discussion of a proposed business combination between Antero Midstream and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
For more information, contact Michael Kennedy — CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DALLAS, March 7, 2019 /PRNewswire/ -- Alerian announced today that Antero Midstream Partners (NYSE: AM) and Antero Midstream GP (NYSE: AMGP) are expected to be removed from the Alerian MLP Index (AMZ) and Alerian MLP Equal Weight Index (AMZE) in a special rebalancing. Additionally, Antero Midstream Partners is expected to be removed from the Alerian Midstream Energy Index (AMNA), Alerian US Midstream Energy Index (AMUS), Alerian MLP Infrastructure Index (AMZI), and Alerian Natural Gas MLP Index (ANGI).
Special rebalancings are triggered by corporate actions such as mergers, bankruptcies, and liquidations. Pending unitholder approval, Antero Midstream Partners will cease to trade due to its merger with Antero Midstream GP. If approved, the rebalancing will take place after market close on Monday, March 11.
In connection with the merger, Antero Midstream GP will convert into a corporation and the combined entity will be renamed Antero Midstream Corporation. The shares of the new corporation are expected to trade under the AM ticker symbol.
Each index will be rebalanced in accordance with its existing methodology. Constituent additions to and deletions from an index do not reflect an opinion by Alerian on the investment merits of the respective securities.
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of February 28, 2019, over $13 billion is directly tied to the Alerian Index Series through exchange traded funds and notes, separately managed accounts, and structured products. Visit alerian.com to learn more.
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SOURCE Alerian
DALLAS, March 1, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce an upcoming interim change to constituents of The Cushing® MLP High Income Index (the "Index"). On October 9, 2018, Index constituent Antero Midstream Partners LP (NYSE: AM) entered into a Simplification Agreement with Antero Midstream GP LP (NYSE: AMGP) and affiliated entities wherein AMGP would acquire AM, subject to the approval of AM unitholders and AMGP shareholders. Special meetings of AM unitholders and AMGP shareholders are scheduled for March 8, 2019, for the purpose of voting on the Simplification Agreement and related matters. Per the Index's methodology guide, after the market closes on March 8, 2019, and effective on March 11, 2019, ONEOK, Inc. (NYSE: OKE) will replace AM as a constituent of the Index at AM's then-current weight.
There will be no changes to the remaining constituents of the Index due to this event.
ABOUT THE CUSHING® MLP HIGH INCOME INDEX
The Cushing® MLP High Income Index provides a benchmark that is designed to track the performance of 30 higher-yielding publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" and collectively, "Midstream Companies"). Constituents are chosen according to a three-tiered proprietary weighting system developed by Cushing® Asset Management, LP. The Cushing® MLP High Income Index is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPY".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of Midstream Companies and other natural resource companies.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® MLP High Income Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing® Asset Management, LP, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to maintain and calculate the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Swank Capital, LLC, and Cushing® Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones S&P nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-MLPY
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SOURCE Cushing® Asset Management, LP and Swank Capital, LLC
DENVER, Feb. 20, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today the pricing of its private placement to eligible purchasers of $650 million in aggregate principal amount of 5.75% senior unsecured notes due 2027 at par. The offering is expected to close on February 25, 2019, subject to customary closing conditions.
Antero Midstream estimates that it will receive net proceeds of approximately $641 million, after deducting the initial purchasers' discounts and estimated expenses, which it intends to use to repay a portion of the outstanding borrowings under its credit facility.
The securities to be offered have not been registered under the Securities Act of 1933 as amended, (the "Securities Act"), or any state securities laws; and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. 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 the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the proposed simplification transaction, including the ability to obtain requisite unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources Corporation's expected future growth, Antero Resources Corporation's ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2018.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Feb. 20, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today that, subject to market conditions, it intends to offer $600 million in aggregate principal amount of senior unsecured notes due 2027 (the "Notes") in a private placement to eligible purchasers.
Antero Midstream intends to use the net proceeds of the offering to repay a portion of the outstanding borrowings under its credit facility. The securities to be offered have not been registered under the Securities Act of 1933 as amended, (the "Securities Act"), or any state securities laws; and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. 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 the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the proposed simplification transaction, including the ability to obtain requisite unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources Corporation's expected future growth, Antero Resources Corporation's ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2018.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Feb. 13, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their fourth quarter and full year 2018 financial and operating results. The relevant consolidated financial statements are included in Antero Midstream's and AMGP's Annual Reports on Form 10-K for the year ended December 31, 2018, which have been filed with the Securities and Exchange Commission.
Antero Midstream Fourth Quarter 2018 Highlights Include:
Antero Midstream Full Year 2018 Highlights Include:
Antero Midstream GP LP Fourth Quarter 2018 Highlights Include:
Commenting on the 2018 results and outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream delivered another successful year in 2018, achieving record gathering, compression, processing, fractionation, and fresh water delivery volumes. These record volumes drove a 36% year over year increase in Adjusted EBITDA and a 42% year-over-year increase in Distributable Cash Flow, resulting in strong DCF coverage of 1.3x."
Mr. Rady further added, "We also had a successful year in terms of infrastructure buildout, adding 760 MMcf/d of compression capacity and 600 MMcf/d of processing capacity, respectively. The significant capacity and throughput growth during the fourth quarter provides tremendous momentum to deliver on our 2019 organic infrastructure plan, in turn supporting Antero Resources' development."
For a discussion of the non-GAAP financial measures adjusted net income, Adjusted EBITDA, Distributable Cash Flow, and net debt please see "Non-GAAP Financial Measures."
Recent Developments
Antero Midstream and AMGP previously announced that AMGP's Registration Statement on Form S-4 relating to the simplification transaction between the two companies and certain of their affiliates has become effective under the Securities Act of 1933 as of January 30, 2019. AMGP and Antero Midstream have each filed a definitive proxy statement with the U.S. Securities and Exchange Commission ("SEC") for the separate special meetings of the AMGP shareholders and Antero Midstream unitholders to vote on the transaction on March 8, 2019. The special meeting of AMGP shareholders will be held on March 8, 2019, at 9:00 a.m. local time, at 1615 Wynkoop Street, Denver, Colorado 80202. The special meeting of Antero Midstream unitholders will be held on March 8, 2019, at 10:00 a.m. local time, at 1615 Wynkoop Street, Denver, Colorado 80202. All AMGP shareholders and Antero Midstream unitholders of record as of the close of business on January 11, 2019, which is the record date for the special meetings, will be entitled to vote the AMGP common shares and Antero Midstream common units, respectively, owned by them on the record date.
Under the terms of the documents governing the simplification transaction, each Antero Midstream unitholder, other than Antero Resources, has the opportunity to receive as consideration for each Antero Midstream common unit owned, at its election and subject to proration, one of (i) $3.415 in cash without interest and 1.6350 shares of New AM common stock, (ii) 1.6350 shares of New AM common stock plus an additional number of shares of New AM common stock equal to the quotient of (A) $3.415 and (B) the average of the 20-day volume-weighted average price per AMGP share prior to the Election Deadline (the "AMGP VWAP") or (iii) $3.415 in cash without interest plus an additional amount of cash without interest equal to the product of (A) 1.6350 and (B) the AMGP VWAP. In order for an election to be properly made and effective, American Stock Transfer & Trust Company, LLC (the exchange agent in connection with the transaction) must receive a completed and signed election form and I.R.S. Form W-9 (or Form W-8, as applicable) no later than 5:00 p.m., New York City time, on March 4, 2019 (the "Election Deadline").
Antero Midstream Fourth Quarter Financial Results
Low pressure gathering volumes for the fourth quarter of 2018 averaged 2,602 MMcf/d, a 52% increase as compared to the fourth quarter of 2017 and a 20% increase sequentially. Compression volumes for the fourth quarter of 2018 averaged 2,215 MMcf/d, a 63% increase as compared to the fourth quarter of 2017 and 26% increase sequentially. Compression capacity was 93% utilized during the fourth quarter of 2018. High pressure gathering volumes for the fourth quarter of 2018 averaged 2,569 MMcf/d, a 39% increase from the fourth quarter of 2017 and 18% increase sequentially. The increase in gathering and compression volume was driven by Antero Midstream connecting 73 wells and 38 wells to the gathering system in the third and fourth quarter of 2018, respectively. Low pressure gathering, compression, and high pressure gathering volumes for the fourth quarter of 2018 all were Antero Midstream records. Fresh water delivery volumes averaged 136 MBbl/d during the quarter, a 9% decrease as compared to the fourth quarter of 2017 due to fewer completions during the quarter as anticipated.
Gross processing volumes from our processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture"), averaged 796 MMcf/d, for the fourth quarter of 2018, an increase of 87% compared to the fourth quarter of 2017 and 31% increase sequentially. Gross Joint Venture fractionation volumes averaged 18,672 Bbl/d, a 105% increase compared to the fourth quarter of 2017 and 8% increase sequentially.
Average Daily Volumes: | Three months ended | Years ended | |||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2018 | % | 2017 | 2018 | % | ||||||||||
Low Pressure Gathering (MMcf/d) | 1,711 | 2,602 | 52% | 1,660 | 2,148 | 29% | |||||||||
Compression (MMcf/d) | 1,355 | 2,215 | 63% | 1,196 | 1,738 | 45% | |||||||||
High Pressure Gathering (MMcf/d) | 1,842 | 2,569 | 39% | 1,770 | 2,112 | 19% | |||||||||
Fresh Water Delivery (MBbl/d) | 149 | 136 | (9)% | 153 | 195 | 27% | |||||||||
Clearwater Treatment Volumes (MBbl/d) | — | 9 | * | — | 7 | * | |||||||||
Gross Joint Venture Processing (MMcf/d) | 425 | 796 | 87% | 267 | 622 | 133% | |||||||||
Gross Joint Venture Fractionation (Bbl/d) | 9,096 | 18,672 | 105% | 5,099 | 13,107 | 157% |
________________________ |
* Not meaningful or applicable. |
For the three months ended December 31, 2018, the Partnership reported revenues of $282 million, comprised of $161 million from the Gathering and Processing segment and $121 million from the Water Handling and Treatment segment. Revenues increased 34% compared to the prior year quarter, driven by growth in throughput volumes. Water Handling and Treatment segment revenues include $70 million from wastewater handling and high rate water transfer services provided to Antero Resources, which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing, and Water Handling and Treatment segments were $13 million and $79 million, respectively, for a total of $92 million compared to $70 million in direct operating expenses in the prior year quarter. The increase in operating expenses was driven primarily by an increase in throughput volumes. Water Handling and Treatment direct operating expenses include $67 million from wastewater handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $17 million, a $2 million increase compared to the fourth quarter of 2017. General and administrative expenses excluding equity-based compensation were $12 million during the fourth quarter of 2018, a $4 million increase as compared to the fourth quarter of 2017. The increase in general and administrative expenses was driven primarily by financial and legal fees incurred during the fourth quarter of 2018 related to the midstream simplification transaction. Total operating expenses were $27 million, including $23 million of depreciation, $106 million decrease from the change in fair value of contingent acquisition consideration related to the second earn-out payment, and $1 million of accretion of contingent acquisition consideration. Depreciation decreased by $8 million as compared to the fourth quarter of 2017 driven by a change in the estimated useful lives of the gathering systems and facilities. The change in fair value of contingent acquisition consideration is related to the second freshwater earn-out payment not anticipated to be achieved based on Antero Resource's current development plan.
Net income for the fourth quarter of 2018 was $249 million. The increase in net income was driven by an increase in natural gas gathering and compression volumes and a $105 million non-cash change in fair value of the contingent acquisition consideration related to the water drop-down transaction. Net income was $1.09 per diluted limited partner unit. Adjusted net income excluding the impact from the non-cash change in fair value of the contingent acquisition consideration was $143 million, a 63% increase compared to the prior year quarter. Adjusted EBITDA was $194 million, a 36% increase compared to the prior year quarter. The increase in Adjusted EBITDA was primarily driven by increased natural gas throughput volumes and contribution from the Joint Venture. Adjusted EBITDA for the quarter included $17 million in distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $9 million. Cash reserved for bond interest during the quarter increased $9 million and income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $1 million. Maintenance capital expenditures during the quarter totaled $8 million and Distributable Cash Flow was $167 million, resulting in a DCF coverage ratio of 1.3x.
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 | Years ended | ||||||||||
December 31, | December 31, | ||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||
Net income | $ | 64,155 | $ | 248,609 | $ | 307,315 | $ | 585,944 | |||
Impairment of property and equipment | 23,431 | — | 23,431 | 5,771 | |||||||
Change in fair value of contingent acquisition consideration | — | (105,872) | — | (105,872) | |||||||
Adjusted Net Income | $ | 87,586 | $ | 142,737 | $ | 330,746 | $ | 485,843 | |||
Interest expense, net | 10,395 | 18,993 | 37,557 | 61,906 | |||||||
Depreciation | 30,958 | 22,692 | 119,562 | 130,013 | |||||||
Accretion of contingent acquisition consideration | 3,804 | 1,012 | 13,476 | 12,853 | |||||||
Accretion of asset retirement obligation | — | 34 | 135 | ||||||||
Equity-based compensation | 6,847 | 4,467 | 27,283 | 21,073 | |||||||
Equity in earnings of unconsolidated affiliates | (7,307) | (12,448) | (20,194) | (40,280) | |||||||
Distributions from unconsolidated affiliates | 10,075 | 16,755 | 20,195 | 46,415 | |||||||
Gain on sale of assets – Antero Resources | — | — | — | (583) | |||||||
Adjusted EBITDA | $ | 142,358 | $ | 194,242 | $ | 528,625 | $ | 717,375 | |||
Interest paid | (4,136) | (9,268) | (46,666) | (62,844) | |||||||
Decrease (increase) in cash reserved for bond interest (1) | (8,734) | (8,734) | 291 | — | |||||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards | (514) | (1,029) | (5,945) | (5,529) | |||||||
Maintenance capital expenditures(2) | (12,063) | (7,988) | (55,159) | (52,729) | |||||||
Distributable Cash Flow | $ | 116,911 | $ | 167,223 | $ | 421,146 | $ | 596,273 | |||
Distributions Declared to Antero Midstream Holders | |||||||||||
Limited partners | 68,231 | 88,045 | 247,132 | 320,915 | |||||||
Incentive distribution rights | 23,772 | 43,492 | 69,720 | 142,906 | |||||||
Total Aggregate Distributions | $ | 92,003 | $ | 131,537 | $ | 316,852 | $ | 463,821 | |||
DCF coverage ratio | 1.27x | 1.27x | 1.33x | 1.29x |
1) | Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) | 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 — Antero Midstream placed online the 240 MMcf/d East Mountain compressor station in the Marcellus during the fourth quarter of 2018. For the full year 2018, Antero Midstream increased its compression capacity by 760 MMcf/d to a total of 2.5 Bcf/d in the Marcellus and Utica combined. Antero Midstream connected 38 wells to its gathering system during the fourth quarter of 2018 and 168 wells during the full year. Antero Resources is currently operating five drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 30 well completions during the fourth quarter of 2018, a 7% decrease from the prior year quarter. Antero Resources is currently operating four completion crews on Antero Midstream dedicated acreage.
Balance Sheet and Liquidity
As of December 31, 2018, Antero Midstream had $990 million drawn on its $2.0 billion bank credit facility, resulting in approximately $1.0 billion of liquidity. Antero Midstream's total debt and net debt to trailing twelve months Adjusted EBITDA was 2.3x as of December 31, 2018. For a reconciliation of net debt to total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Commenting on the balance sheet and credit strength, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream's organic growth investments continued to generate peer leading Distributable Cash Flow growth and resulted in 1.3x DCF coverage for the fourth quarter and full year 2018. In addition, Antero Midstream's strong balance sheet with debt to trailing twelve months Adjusted EBITDA of 2.3x at year-end 2018 positions it to deliver on its organic growth investment opportunity set without the need for external equity financing."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $129 million in the fourth quarter of 2018 as compared to $143 million in the fourth quarter of 2017. Capital invested in gathering systems and related facilities was $109 million and capital invested in water handling and treatment assets was $20 million. Investments in unconsolidated affiliates for the Joint Venture were $45 million during the quarter.
AMGP Fourth Quarter 2018 Financial Results
AMGP's equity in earnings from Antero Midstream, which reflects the cash distributions from Antero Midstream, was $43 million for the fourth quarter of 2018. Net income for the quarter was $21 million. AMGP's cash distributions from Antero Midstream were $41 million, net of $2 million of total cash reserved for and distributed to holders of Series B units of Antero IDR Holdings LLC. General and administrative expenses were $3 million, including $3 million of special committee and legal advisory fees. The provision and reserve for income taxes was $10 million, resulting in cash available for distribution of $31 million.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months | |||
Cash distributions from Antero Midstream Partners LP | $ | 43,492 | |
Cash reserved for distributions to unvested Series B units of IDR LLC | (710) | ||
Cash distribution to vested Series B units of IDR LLC | (1,419) | ||
Cash distributions to Antero Midstream GP LP | $ | 41,363 | |
General and administrative expenses | (3,184) | ||
Interest expense, net | (55) | ||
Provision and reserve for income taxes | (10,240) | ||
Conflicts committee legal and advisory fees included in G&A expense(1) | 2,753 | ||
Cash available for distribution | $ | 30,637 | |
DCF coverage ratio | 1.0x | ||
Common shares outstanding | 186,236 | ||
Cash distribution per common share | $ | 0.164 |
1. | Represents non-recurring accrued legal and advisory fees associated with the ongoing conflicts committee process as disclosed on February 26, 2018. |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, February 14, 2019 at 10:00 am MT to discuss the quarterly and full year 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, February 21, 2019 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10114473.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Wednesday, February 21, 2019 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Investor Access to 2018 10-K
Pursuant to Section 203.01 of the New York Stock Exchange Listed Company Manual, Antero Midstream and AMGP today announced that their respective Annual Reports on Form 10-K (the "10-Ks") for the fiscal year ended December 31, 2018, were filed with the Securities and Exchange Commission on February 13, 2019. A copy of Antero Midstream's 10-K, which includes the Partnership's complete audited financial statements, may be found on Antero Midstream's website, www.anteromidstream.com, by selecting the "Investors" tab, then "SEC Filings." A copy of AMGP's 10-K, which includes AMGP's complete audited financial statements, may be found on AMGP's website, www.anteromidstreamgp.com, by selecting the "Investors" tab, then "SEC Filings." Antero Midstream unitholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado, 80202. AMGP's shareholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado, 80202.
Non-GAAP Financial Measures and Definitions
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, gain on sale of assets, depreciation expense, impairment expense, accretion and change in fair value of contingent acquisition consideration, accretion of asset retirement obligations, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The Partnership defines adjusted net income as net income plus impairment expense and change in fair value of contingent acquisition consideration. The Partnership believes that adjusted net income is useful to investors in evaluating operational trends of the Partnership and its performance relative to other partnerships. Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.
The Partnership defines net debt as total debt less cash and cash equivalents. Antero Midstream views net debt as an important indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to net debt as used in this release (in thousands):
December 31, | |||
2018 | |||
Bank credit facility | $ | 990,000 | |
5.375% AM senior notes due 2024 | 650,000 | ||
Net unamortized debt issuance costs | (7,853) | ||
Total debt | $ | 1,632,147 | |
Cash and cash equivalents | — | ||
Net debt | $ | 1,632,147 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the timing of consummation of the proposed simplification transaction, if at all, and statements regarding the transaction. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the proposed simplification transaction, including the ability to obtain requisite unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2018.
No Offer or Solicitation
This communication includes a discussion of a proposed business combination transaction between Antero Midstream and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP has filed with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that includes a joint proxy statement of Antero Midstream and AMGP and a prospectus of AMGP. The transaction will be submitted to Antero Midstream unitholders and AMGP shareholders for their consideration. Antero Midstream and AMGP may also file other documents with the SEC regarding the transaction. The registration statement on Form S-4 became effective on January 30, 2019, and the definitive joint proxy statement/prospectus is being sent to the shareholders of AMGP and unitholders of Antero Midstream of record as of January 11, 2019. This document is not a substitute for the registration statement and joint proxy statement/prospectus that has been filed with the SEC or any other documents that AMGP or Antero Midstream may file with the SEC or send to shareholders of AMGP or unitholders of Antero Midstream in connection with the transaction. INVESTORS AND SECURITY HOLDERS OF ANTERO MIDSTREAM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders are able to obtain free copies of the registration statement and the joint proxy statement/prospectus and all other documents filed or that will be filed with the SEC by AMGP or Antero Midstream through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Antero Midstream will be made available free of charge on Antero Midstream's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 80202, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 80202, Tel. No. (303) 357-7310.
ANTERO MIDSTREAM PARTNERS LP | |||||||
Consolidated Balance Sheets | |||||||
December 31, 2017 and 2018 | |||||||
(In thousands) | |||||||
December 31, | |||||||
2017 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,363 | — | ||||
Accounts receivable–Antero Resources | 110,182 | 115,378 | |||||
Accounts receivable–third party | 1,170 | 1,544 | |||||
Other current assets | 670 | 21,513 | |||||
Total current assets | 120,385 | 138,435 | |||||
Property and equipment, net | 2,605,602 | 2,958,415 | |||||
Investments in unconsolidated affiliates | 303,302 | 433,642 | |||||
Other assets, net | 12,920 | 15,925 | |||||
Total assets | $ | 3,042,209 | 3,546,417 | ||||
Liabilities and Partners' Capital | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | 6,459 | 4,141 | ||||
Accounts payable–third party | 8,642 | 21,372 | |||||
Accrued liabilities | 106,006 | 72,121 | |||||
Asset retirement obligations | — | 1,817 | |||||
Other current liabilities | 209 | 235 | |||||
Total current liabilities | 121,316 | 99,686 | |||||
Long-term liabilities: | |||||||
Long-term debt | 1,196,000 | 1,632,147 | |||||
Contingent acquisition consideration | 208,014 | 114,995 | |||||
Asset retirement obligations | — | 5,791 | |||||
Other | 410 | 2,290 | |||||
Total liabilities | 1,525,740 | 1,854,909 | |||||
Partners' capital: | |||||||
Common unitholders–public (88,059 and 88,452 units issued and outstanding at December 31, 2017 and 2018 respectively) | 1,708,379 | 1,792,011 | |||||
Common unitholder–Antero Resources (98,870 units issued and outstanding at December 31, 2017 and 2018) | (215,682) | (143,995) | |||||
General partner | 23,772 | 43,492 | |||||
Total partners' capital | 1,516,469 | 1,691,508 | |||||
Total liabilities and partners' capital | $ | 3,042,209 | 3,546,417 |
ANTERO MIDSTREAM PARTNERS LP | |||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||
Three Months Ended December 31, 2017 and 2018 | |||||||
(In thousands, except per unit amounts) | |||||||
Three months ended December 31, | |||||||
2017 | 2018 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | 105,527 | 161,051 | ||||
Water handling and treatment–Antero Resources | 104,805 | 120,431 | |||||
Water handling and treatment–third party | — | 269 | |||||
Total revenue | 210,332 | 281,751 | |||||
Operating expenses: | |||||||
Direct operating | 69,646 | 92,069 | |||||
General and administrative (including $6,847 and $4,467 of equity-based compensation in 2017 and 2018, respectively) | 15,250 | 16,662 | |||||
Impairment of property and equipment | 23,431 | — | |||||
Depreciation | 30,958 | 22,692 | |||||
Accretion and change in fair value of contingent acquisition consideration | 3,804 | (104,860) | |||||
Accretion of asset retirement obligations | — | 34 | |||||
Total operating expenses | 143,089 | 26,597 | |||||
Operating income | 67,243 | 255,154 | |||||
Interest expense, net | (10,395) | (18,993) | |||||
Equity in earnings of unconsolidated affiliates | 7,307 | 12,448 | |||||
Net income and comprehensive income | 64,155 | 248,609 | |||||
Net income attributable to incentive distribution rights | (23,772) | (43,492) | |||||
Limited partners' interest in net income | $ | 40,383 | 205,117 | ||||
Net income per limited partner unit–basic | $ | 0.22 | 1.10 | ||||
Net income per limited partner unit–diluted | $ | 0.22 | 1.09 | ||||
Weighted average limited partner units outstanding: | |||||||
Basic | 186,788 | 187,194 | |||||
Diluted | 187,122 | 187,525 |
ANTERO MIDSTREAM PARTNERS LP | |||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||
Years Ended December 31, 2017 and 2018 | |||||||
(In thousands, except per unit amounts) | |||||||
Year Ended December 31, | |||||||
2017 | 2018 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | 396,202 | 520,566 | ||||
Water handling and treatment–Antero Resources | 376,031 | 506,449 | |||||
Gathering and compression–third party | 264 | — | |||||
Water handling and treatment–third party | — | 924 | |||||
Gain on sale of assets–Antero Resources | — | 583 | |||||
Total revenue | 772,497 | 1,028,522 | |||||
Operating expenses: | |||||||
Direct operating | 232,538 | 316,423 | |||||
General and administrative (including $27,283 and $21,073 of equity-based compensation in 2017 and 2018, respectively) | 58,812 | 61,629 | |||||
Impairment of property and equipment | 23,431 | 5,771 | |||||
Depreciation | 119,562 | 130,013 | |||||
Accretion and change in fair value of contingent acquisition consideration | 13,476 | (93,019) | |||||
Accretion of asset retirement obligations | — | 135 | |||||
Total operating expenses | 447,819 | 420,952 | |||||
Operating income | 324,678 | 607,570 | |||||
Interest expense, net | (37,557) | (61,906) | |||||
Equity in earnings of unconsolidated affiliates | 20,194 | 40,280 | |||||
Net income and comprehensive income | 307,315 | 585,944 | |||||
Net income attributable to incentive distribution rights | (69,720) | (142,906) | |||||
Limited partners' interest in net income | $ | 237,595 | 443,038 | ||||
Net income per limited partner unit–basic | $ | 1.28 | 2.37 | ||||
Net income per limited partner unit–diluted | $ | 1.28 | 2.36 | ||||
Weighted average limited partner units outstanding: | |||||||
Basic | 185,630 | 187,048 | |||||
Diluted | 186,083 | 187,398 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||
Consolidated Results of Segment Operations | ||||||||||
Three Months Ended December 31, 2017 and 2018 | ||||||||||
(In thousands) | ||||||||||
Water | ||||||||||
Gathering and | Handling and | Consolidated | ||||||||
(in thousands) | Processing | Treatment | Total | |||||||
Three months ended December 31, 2017 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 105,527 | 104,805 | 210,332 | ||||||
Total revenues | 105,527 | 104,805 | 210,332 | |||||||
Operating expenses: | ||||||||||
Direct operating | 10,655 | 58,991 | 69,646 | |||||||
General and administrative (excluding equity-based compensation) | 5,365 | 3,038 | 8,403 | |||||||
Equity-based compensation | 4,793 | 2,054 | 6,847 | |||||||
Impairment of property and equipment | 23,431 | — | 23,431 | |||||||
Depreciation | 22,599 | 8,359 | 30,958 | |||||||
Accretion and change in fair value of contingent acquisition consideration | — | 3,804 | 3,804 | |||||||
Total expenses | 66,843 | 76,246 | 143,089 | |||||||
Operating income | $ | 38,684 | 28,559 | 67,243 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 99,582 | 42,776 | 142,358 | ||||||
Three months ended December 31, 2018 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 161,051 | 120,431 | 281,482 | ||||||
Revenue–third-party | — | 269 | 269 | |||||||
Total revenues | 161,051 | 120,700 | 281,751 | |||||||
Operating expenses: | ||||||||||
Direct operating | 13,153 | 78,916 | 92,069 | |||||||
General and administrative (excluding equity-based compensation) | 9,029 | 3,166 | 12,195 | |||||||
Equity-based compensation | 3,440 | 1,027 | 4,467 | |||||||
Depreciation | 9,748 | 12,944 | 22,692 | |||||||
Accretion and change in fair value of contingent acquisition consideration | — | (104,860) | (104,860) | |||||||
Accretion of asset retirement obligations | — | 34 | 34 | |||||||
Total expenses | 35,370 | (8,773) | 26,597 | |||||||
Operating income | $ | 125,681 | 129,473 | 255,154 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 155,624 | 38,618 | 194,242 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||
Consolidated Results of Segment Operations | ||||||||||
Years Ended December 31, 2017 and 2018 | ||||||||||
(In thousands) | ||||||||||
Water | ||||||||||
Gathering and | Handling and | Consolidated | ||||||||
(in thousands) | Processing | Treatment | Total | |||||||
Year ended December 31, 2017 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 396,202 | 376,031 | 772,233 | ||||||
Revenue–third-party | 264 | — | 264 | |||||||
Total revenues | 396,466 | 376,031 | 772,497 | |||||||
Operating expenses: | ||||||||||
Direct operating | 39,251 | 193,287 | 232,538 | |||||||
General and administrative (excluding equity-based compensation) | 20,607 | 10,922 | 31,529 | |||||||
Equity-based compensation | 19,730 | 7,553 | 27,283 | |||||||
Impairment of property and equipment | 23,431 | — | 23,431 | |||||||
Depreciation | 86,372 | 33,190 | 119,562 | |||||||
Accretion and change in fair value of contingent acquisition consideration | — | 13,476 | 13,476 | |||||||
Total expenses | 189,391 | 258,428 | 447,819 | |||||||
Operating income | $ | 207,075 | 117,603 | 324,678 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 356,803 | 171,822 | 528,625 | ||||||
Year ended December 31, 2018 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 520,566 | 506,449 | 1,027,015 | ||||||
Revenue–third-party | — | 924 | 924 | |||||||
Gain on sale of assets–Antero Resources | 583 | — | 583 | |||||||
Total revenues | 521,149 | 507,373 | 1,028,522 | |||||||
Operating expenses: | ||||||||||
Direct operating | 49,256 | 267,167 | 316,423 | |||||||
General and administrative (excluding equity-based compensation) | 30,091 | 10,465 | 40,556 | |||||||
Equity-based compensation | 16,518 | 4,555 | 21,073 | |||||||
Impairment of property and equipment | 5,771 | — | 5,771 | |||||||
Depreciation | 83,250 | 46,763 | 130,013 | |||||||
Accretion and change in fair value of contingent acquisition consideration | — | (93,019) | (93,019) | |||||||
Accretion of asset retirement obligations | — | 135 | 135 | |||||||
Total expenses | 184,886 | 236,066 | 420,952 | |||||||
Operating income | $ | 336,263 | 271,307 | 607,570 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 487,634 | 229,741 | 717,375 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Selected Operating Data | |||||||||||||
Three Months Ended December 31, 2017 and 2018 | |||||||||||||
(In thousands) | |||||||||||||
Three Months Ended December 31, | Amount of | Percentage | |||||||||||
($ in thousands, except realized fees) | 2017 | 2018 | or Decrease | Change | |||||||||
Revenue: | |||||||||||||
Revenue–Antero Resources | $ | 210,332 | 281,482 | 71,150 | 34 | % | |||||||
Revenue–third-party | — | 269 | 269 | * | |||||||||
Total revenue | 210,332 | 281,751 | 71,419 | 34 | % | ||||||||
Operating expenses: | |||||||||||||
Direct operating | 69,646 | 92,069 | 22,423 | 32 | % | ||||||||
General and administrative (excluding equity-based compensation) | 8,403 | 12,195 | 3,792 | 45 | % | ||||||||
Equity-based compensation | 6,847 | 4,467 | (2,380) | (35) | % | ||||||||
Impairment of property and equipment | 23,431 | — | (23,431) | * | |||||||||
Depreciation | 30,958 | 22,692 | (8,266) | (27) | % | ||||||||
Accretion and change in fair value of contingent acquisition consideration | 3,804 | (104,860) | (108,664) | * | |||||||||
Accretion of asset retirement obligations | — | 34 | 34 | * | |||||||||
Total operating expenses | 143,089 | 26,597 | (116,492) | (81) | % | ||||||||
Operating income | 67,243 | 255,154 | 187,911 | 279 | % | ||||||||
Interest expense | (10,395) | (18,993) | (8,598) | 83 | % | ||||||||
Equity in earnings of unconsolidated affiliates | 7,307 | 12,448 | 5,141 | 70 | % | ||||||||
Net income | $ | 64,155 | 248,609 | 184,454 | 288 | % | |||||||
Adjusted EBITDA | $ | 142,358 | 194,242 | 51,884 | 36 | % | |||||||
Operating Data: | |||||||||||||
Gathering–low pressure (MMcf) | 157,373 | 239,392 | 82,019 | 52 | % | ||||||||
Gathering–high pressure (MMcf) | 169,464 | 236,332 | 66,868 | 39 | % | ||||||||
Compression (MMcf) | 124,654 | 203,740 | 79,086 | 63 | % | ||||||||
Fresh water delivery (MBbl) | 13,745 | 12,514 | (1,231) | (9) | % | ||||||||
Treated water (MBbl) | — | 782 | 782 | * | |||||||||
Other fluid handling (MBbl) | 4,227 | 5,406 | 1,179 | 28 | % | ||||||||
Wells serviced by fresh water delivery | 32 | 30 | (2) | (6) | % | ||||||||
Gathering–low pressure (MMcf/d) | 1,711 | 2,602 | 891 | 52 | % | ||||||||
Gathering–high pressure (MMcf/d) | 1,842 | 2,569 | 727 | 39 | % | ||||||||
Compression (MMcf/d) | 1,355 | 2,215 | 860 | 63 | % | ||||||||
Fresh water delivery (MBbl/d) | 149 | 136 | (13) | (9) | % | ||||||||
Treated water (MBbl/d) | — | 9 | 9 | * | |||||||||
Other fluid handling (MBbl/d) | 46 | 59 | 13 | 28 | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering–low pressure fee ($/Mcf) | $ | 0.32 | 0.32 | — | — | % | |||||||
Average gathering–high pressure fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.71 | 3.78 | — | — | % | |||||||
Average treated water fee ($/Bbl) | $ | — | 4.64 | 4.64 | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing–Joint Venture (MMcf) | 39,124 | 73,260 | 34,136 | 87 | % | ||||||||
Fractionation–Joint Venture (MBbl) | 837 | 1,718 | 881 | 105 | % | ||||||||
Processing–Joint Venture (MMcf/d) | 425 | 796 | 371 | 87 | % | ||||||||
Fractionation–Joint Venture (MBbl/d) | 9 | 19 | 10 | 111 | % |
_________________________ |
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Selected Operating Data | |||||||||||||
Years Ended December 31, 2017 and 2018 | |||||||||||||
(In thousands) | |||||||||||||
Year Ended December 31, | Amount of | Percentage | |||||||||||
($ in thousands, except realized fees) | 2017 | 2018 | or Decrease | Change | |||||||||
Revenue: | |||||||||||||
Revenue–Antero Resources | $ | 772,233 | 1,027,015 | 254,782 | 33 | % | |||||||
Revenue–third-party | 264 | 924 | 660 | 250 | % | ||||||||
Gain on sale of assets–Antero Resources | — | 583 | 583 | * | |||||||||
Total revenue | 772,497 | 1,028,522 | 256,025 | 33 | % | ||||||||
Operating expenses: | |||||||||||||
Direct operating | 232,538 | 316,423 | 83,885 | 36 | % | ||||||||
General and administrative (excluding equity-based compensation) | 31,529 | 40,556 | 9,027 | 29 | % | ||||||||
Equity-based compensation | 27,283 | 21,073 | (6,210) | (23) | % | ||||||||
Impairment of property and equipment | 23,431 | 5,771 | (17,660) | (75) | % | ||||||||
Depreciation | 119,562 | 130,013 | 10,451 | 9 | % | ||||||||
Accretion and change in fair value of contingent acquisition consideration | 13,476 | (93,019) | (106,495) | * | |||||||||
Accretion of asset retirement obligations | — | 135 | 135 | * | |||||||||
Total operating expenses | 447,819 | 420,952 | (26,867) | (6) | % | ||||||||
Operating income | 324,678 | 607,570 | 282,892 | 87 | % | ||||||||
Interest expense | (37,557) | (61,906) | (24,349) | 65 | % | ||||||||
Equity in earnings of unconsolidated affiliates | 20,194 | 40,280 | 20,086 | 99 | % | ||||||||
Net income | $ | 307,315 | 585,944 | 278,629 | 91 | % | |||||||
Adjusted EBITDA(1) | $ | 528,625 | 717,375 | 188,750 | 36 | % | |||||||
Operating Data: | |||||||||||||
Gathering–low pressure (MMcf) | 605,719 | 784,079 | 178,360 | 29 | % | ||||||||
Gathering–high pressure (MMcf) | 646,054 | 770,910 | 124,856 | 19 | % | ||||||||
Compression (MMcf) | 436,695 | 634,303 | 197,608 | 45 | % | ||||||||
Fresh water delivery (MBbl) | 55,892 | 71,180 | 15,288 | 27 | % | ||||||||
Treated water (MBbl) | — | 2,544 | 2,544 | * | |||||||||
Other fluid handling (MBbl) | 14,549 | 18,848 | 4,299 | 30 | % | ||||||||
Wells serviced by fresh water delivery | 142 | 162 | 20 | 14 | % | ||||||||
Gathering–low pressure (MMcf/d) | 1,660 | 2,148 | 488 | 29 | % | ||||||||
Gathering–high pressure (MMcf/d) | 1,770 | 2,112 | 342 | 19 | % | ||||||||
Compression (MMcf/d) | 1,196 | 1,738 | 542 | 45 | % | ||||||||
Fresh water delivery (MBbl/d) | 153 | 195 | 42 | 27 | % | ||||||||
Treated water (MBbl/d) | — | 7 | 7 | * | |||||||||
Other fluid handling (MBbl/d) | 40 | 52 | 12 | 30 | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering–low pressure fee ($/Mcf) | $ | 0.32 | 0.32 | — | — | % | |||||||
Average gathering–high pressure fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.71 | 3.78 | 0.07 | 2 | % | |||||||
Average treated water fee ($/Bbl) | $ | — | 4.72 | 4.72 | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing–Joint Venture (MMcf) | 97,276 | 227,113 | 129,837 | 133 | % | ||||||||
Fractionation–Joint Venture (MBbl) | 1,861 | 4,784 | 2,923 | 157 | % | ||||||||
Processing–Joint Venture (MMcf/d) | 267 | 622 | 355 | 133 | % | ||||||||
Fractionation–Joint Venture (MBbl/d) | 5 | 13 | 8 | 160 | % |
________________________ |
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||
Consolidated Statements of Cash Flows | |||||||
Years Ended December 31, 2017 and 2018 | |||||||
(In thousands) | |||||||
Year Ended December 31, | |||||||
2017 | 2018 | ||||||
Cash flows provided by operating activities: | |||||||
Net income | $ | 307,315 | 585,944 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 119,562 | 130,013 | |||||
Accretion and change in fair value of contingent acquisition consideration | 13,476 | (93,019) | |||||
Accretion of asset retirement obligations | — | 135 | |||||
Impairment of property and equipment | 23,431 | 5,771 | |||||
Equity-based compensation | 27,283 | 21,073 | |||||
Equity in earnings of unconsolidated affiliates | (20,194) | (40,280) | |||||
Distributions from unconsolidated affiliates | 20,195 | 46,415 | |||||
Amortization of deferred financing costs | 2,888 | 2,879 | |||||
Gain on sale of assets–Antero Resources | — | (583) | |||||
Gain on sale of assets–third-party | — | — | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | (41,043) | (10,196) | |||||
Accounts receivable–third party | 70 | 648 | |||||
Prepaid expenses | (141) | (153) | |||||
Accounts payable–Antero Resources | 3,266 | (1,804) | |||||
Accounts payable–third party | 3,003 | 7,670 | |||||
Accrued liabilities | 16,685 | 3,047 | |||||
Net cash provided by operating activities | 475,796 | 657,560 | |||||
Cash flows used in investing activities: | |||||||
Additions to gathering systems and facilities | (346,217) | (446,270) | |||||
Additions to water handling and treatment systems | (195,162) | (88,674) | |||||
Investments in unconsolidated affiliates | (235,004) | (136,475) | |||||
Proceeds from sale of assets–Antero Resources | — | 4,470 | |||||
Proceeds from sale of assets–third party | — | 1,680 | |||||
Change in other assets | (3,435) | (3,591) | |||||
Change in other liabilities | — | 2,273 | |||||
Net cash used in investing activities | (779,818) | (666,587) | |||||
Cash flows provided by financing activities: | |||||||
Distributions to unitholders | (283,950) | (426,452) | |||||
Issuance of senior notes | — | — | |||||
Borrowings on bank credit facilities, net | 345,000 | 435,000 | |||||
Issuance of common units, net of offering costs | 248,956 | — | |||||
Payments of deferred financing costs | (5,520) | (2,169) | |||||
Employee tax withholding for settlement of equity compensation awards | (5,945) | (5,529) | |||||
Other | (198) | (186) | |||||
Net cash provided by financing activities | 298,343 | 664 | |||||
Net (decrease) in cash and cash equivalents | (5,679) | (8,363) | |||||
Cash and cash equivalents, beginning of period | 14,042 | 8,363 | |||||
Cash and cash equivalents, end of period | $ | 8,363 | — | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 46,666 | 62,844 | ||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment | $ | 16,338 | (32,563) |
ANTERO MIDSTREAM GP LP | |||||||
Consolidated Balance Sheets | |||||||
December 31, 2017 and 2018 | |||||||
(In thousands, except number of shares and units) | |||||||
December 31, | |||||||
2017 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 5,987 | 2,822 | ||||
Prepaid expenses and other current assets | — | 87 | |||||
Total current assets | 5,987 | 2,909 | |||||
Investment in Antero Midstream Partners LP | 23,772 | 43,492 | |||||
Deferred tax asset | — | 1,304 | |||||
Total assets | $ | 29,759 | 47,705 | ||||
Liabilities and Partners' Capital | |||||||
Current liabilities: | |||||||
Accounts payable–affiliate | 57 | 731 | |||||
Accounts payable and accrued liabilities | 236 | 435 | |||||
Taxes payable | 13,858 | 15,678 | |||||
Total current liabilities | 14,151 | 16,844 | |||||
Partners' capital: | |||||||
Common shareholders–public (186,181,975 shares and 186,219,438 shares issued and outstanding at December 31, 2017 and 2018, respectively) | (19,866) | (41,969) | |||||
IDR LLC Series B units (32,875 and 65,745 units vested at December 31, 2017 and 2018, respectively) | 35,474 | 72,830 | |||||
Total partners' capital | 15,608 | 30,861 | |||||
Total liabilities and partners' capital | $ | 29,759 | 47,705 |
ANTERO MIDSTREAM GP LP | |||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||
Three Months Ended December 31, 2017 and 2018 | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended December 31, | |||||||
2017 | 2018 | ||||||
Equity in earnings of Antero Midstream Partners LP | $ | 23,772 | 43,492 | ||||
Total income | 23,772 | 43,492 | |||||
General and administrative expense | 279 | 3,183 | |||||
Equity-based compensation | 8,662 | 8,792 | |||||
Total operating expenses | 8,941 | 11,975 | |||||
Operating income | 14,831 | 31,517 | |||||
Interest expense, net | — | (54) | |||||
Income before income taxes | 14,831 | 31,463 | |||||
Provision for income taxes | (8,924) | (10,075) | |||||
Net income and comprehensive income | 5,907 | 21,388 | |||||
Net income attributable to vested Series B units | (784) | (3,719) | |||||
Net income attributable to common shareholders | $ | 5,123 | 17,669 | ||||
Net income per common share–basic | $ | 0.03 | 0.10 | ||||
Weighted average number of common shares outstanding–basic and diluted | 186,181 | 186,218 |
ANTERO MIDSTREAM GP LP | |||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||
Years Ended December 31, 2017 and 2018 | |||||||
(In thousands, except per share amounts) | |||||||
Years ended December 31, | |||||||
2017 | 2018 | ||||||
Equity in earnings of Antero Midstream Partners LP | $ | 69,720 | 142,906 | ||||
Total income | 69,720 | 142,906 | |||||
General and administrative expense | 6,201 | 8,740 | |||||
Equity-based compensation | 34,933 | 35,111 | |||||
Total operating expenses | 41,134 | 43,851 | |||||
Operating income | 28,586 | 99,055 | |||||
Interest expense, net | — | (136) | |||||
Income before income taxes | 28,586 | 98,919 | |||||
Provision for income taxes | (26,261) | (32,311) | |||||
Net income and comprehensive income | 2,325 | 66,608 | |||||
Net income attributable to vested Series B units | (784) | (5,236) | |||||
Pre-IPO net income attributed to parent | 4,939 | — | |||||
Net income attributable to common shareholders | $ | 6,480 | 61,372 | ||||
Net income per common share–basic and diluted | $ | 0.03 | 0.33 | ||||
Weighted average number of common shares outstanding–basic and diluted | 186,176 | 186,203 |
ANTERO MIDSTREAM GP LP | |||||||
Consolidated Statements of Cash Flows | |||||||
Years Ended December 31, 2017 and 2018 | |||||||
(In thousands) | |||||||
Years Ended December 31, | |||||||
2017 | 2018 | ||||||
Cash flows provided by operating activities: | |||||||
Net income | $ | 2,325 | 66,608 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Equity in earnings of Antero Midstream Partners LP | (69,720) | (142,906) | |||||
Distributions received from Antero Midstream Partners LP | 53,491 | 123,186 | |||||
Amortization of deferred financing costs | — | 148 | |||||
Equity-based compensation | 34,933 | 35,111 | |||||
Deferred income taxes | — | (1,304) | |||||
Changes in current assets and liabilities: | |||||||
Prepaid expenses and other current assets | — | (5) | |||||
Accounts payable–affiliate | 57 | 674 | |||||
Accounts payable and accrued liabilities | (190) | 199 | |||||
Taxes payable | 7,184 | 1,820 | |||||
Net cash provided by operating activities | 28,080 | 83,531 | |||||
Cash flows from investing activities | |||||||
Net cash used in investing activities | — | — | |||||
Cash flows used in financing activities | |||||||
Distributions to Antero Resources Investment LLC | (15,691) | — | |||||
Distributions to shareholders | (16,011) | (84,166) | |||||
Distributions to Series B unitholders | — | (2,300) | |||||
Payments of deferred financing costs | — | (230) | |||||
Net cash used in financing activities | (31,702) | (86,696) | |||||
Net increase (decrease) in cash | (3,622) | (3,165) | |||||
Cash, beginning of period | 9,609 | 5,987 | |||||
Cash, end of period | $ | 5,987 | 2,822 | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for taxes | $ | (19,077) | $ | (31,795) |
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Jan. 31, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") announced today that AMGP's Registration Statement on Form S-4 relating to the previously announced simplification transaction between the two companies and certain of their affiliates has become effective under the Securities Act of 1933, as amended (the "Securities Act"), as of January 30, 2019, and that AMGP and Antero Midstream have each filed a definitive proxy statement with the U.S. Securities and Exchange Commission ("SEC") for the separate special meetings of the AMGP shareholders and Antero Midstream unitholders to vote on the transaction.
The special meeting of AMGP shareholders will be held on March 8, 2019, at 9:00 a.m. local time, at 1615 Wynkoop Street, Denver, Colorado 80202. The special meeting of Antero Midstream unitholders will be held on March 8, 2019, at 10:00 a.m. local time, at 1615 Wynkoop Street, Denver, Colorado 80202. All AMGP shareholders and Antero Midstream unitholders of record as of the close of business on January 11, 2019, which is the record date for the special meetings, will be entitled to vote the AMGP common shares and Antero Midstream common units, respectively, owned by them on the record date.
AMGP and Antero Midstream expect the transaction to close shortly after the special meeting date, subject to certain closing conditions under the documentation for the simplification transaction, including receipt of the required approvals by AMGP's shareholders and Antero Midstream's unitholders and the satisfaction of other closing conditions.
Important information about the simplification and the special meetings of AMGP shareholders and Antero Midstream unitholders is included in the joint proxy statement/prospectus, which has been filed with the SEC and which will be mailed on or about January 31, 2019 to all AMGP shareholders and Antero Midstream unitholders as of the record date. AMGP shareholders and Antero Midstream unitholders whose securities are held in "street name" by a bank, broker or other nominee will receive instructions from the bank, broker or other nominee that they must follow in order to have their securities voted. Most brokers offer the ability for shareholders and unitholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the internet. Any AMGP shareholders or Antero Midstream unitholders holding securities in "street name" should instruct their bank, broker or other nominee to vote their securities as soon as practicable to ensure that those securities are voted at the special meeting.
AMGP shareholders or Antero Midstream unitholders who have questions about the simplification or the special meetings, or desire additional copies of the joint proxy statement/prospectus or additional proxy cards or voting instruction forms should contact MacKenzie Partners, Inc., AMGP's and Antero Midstream's proxy solicitor, at:
MacKenzie Partners, Inc., Toll free: (800) 322-2885, Collect: (212) 929-5500.
About Antero Midstream and AMGP
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia and Ohio, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio. Holders of Antero Midstream Common Units receive a Schedule K-1 for the 2019 tax year with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
Forward-Looking Statements
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the timing of consummation of the transaction, if at all, and statements regarding the transaction. Although Antero Midstream and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond Antero Midstream's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the transaction, including the ability to obtain requisite unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute Antero Midstream's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017 and its subsequently filed Quarterly Reports on Form 10-Q.
No Offer or Solicitation
This communication includes a discussion of a proposed simplification transaction between Antero Midstream and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Additional Information And Where To Find It
In connection with the transaction, AMGP has filed with the SEC a registration statement on Form S-4, that includes a joint proxy statement of Antero Midstream and AMGP and a prospectus of AMGP. The transaction will be submitted to Antero Midstream's unitholders and AMGP's shareholders for their consideration. Antero Midstream and AMGP may also file other documents with the SEC regarding the transaction. The registration statement on Form S-4 became effective on January 30, 2019, and the definitive joint proxy statement/prospectus will be delivered to Antero Midstream unitholders and AMGP shareholders of record as of January 11, 2019. This document is not a substitute for the registration statement and joint proxy statement/prospectus that has been filed with the SEC or any other documents that AMGP or Antero Midstream may file with the SEC or send to shareholders of AMGP or unitholders of Antero Midstream in connection with the transaction. INVESTORS AND SECURITY HOLDERS OF ANTERO MIDSTREAM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders are able to obtain free copies of the registration statement and the joint proxy statement/prospectus and all other documents filed or that will be filed with the SEC by AMGP or Antero Midstream through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Antero Midstream will be made available free of charge on Antero Midstream's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 80202, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 80202, Tel. No. (303) 357-7310.
Participants In The Solicitation
Antero Resources, AMGP, Antero Midstream and the directors and executive officers of AMGP and Antero Midstream's respective general partners and of Antero Resources may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction.
Information regarding the directors and executive officers of Antero Midstream's general partner is contained in Antero Midstream's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing Antero Midstream's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AMGP's general partner is contained in AMGP's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of Antero Resources is contained in Antero Resources' 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http://www.anteroresources.com.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described above.
For more information, contact Michael Kennedy — CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Jan. 29, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced that Richard W. Connor has resigned from the board of directors of the general partner of Antero Midstream (the "Board") effective as of January 24, 2019 for personal reasons. The resignation was not the result of any disagreement with the Partnership or any of its affiliates on any matter relating to the Partnership's operations, policies or practices.
Paul M. Rady, Chairman and CEO of Antero Midstream commented, "I would like to thank Rick for his contribution to Antero Midstream's success through these past years. Rick joined the Board at the time of our initial public offering and has contributed significantly to the Partnership's progress during his tenure. We are grateful for his contributions to Antero Midstream and wish him the very best in the future."
On January 29, 2019, Antero Midstream also announced that Paul J. Korus has been appointed to the Board effective immediately and is expected to serve until the consummation of the previously announced simplification transaction. Mr. Korus is an independent director under the director independence standards set forth in the rules and regulations of the Securities and Exchange Commission and the applicable listing standards of the New York Stock Exchange, and is a member of the board of directors and audit committee of Antero Resources Corporation ("Antero Resources"). Mr. Korus will serve as the chairman of the Board's audit committee.
Mr. Korus was the Senior Vice President and Chief Financial Officer of Cimarex Energy from September 2002 until his retirement in 2015, and held the same positions with its predecessor, Key Production Company, from 1999 through 2002. Mr. Korus was a senior research analyst with Petrie Parkman & Co from 1995 through 1999. He also held positions in corporate planning and investor relations with Apache Corporation for thirteen years from 1982 to 1995. Mr. Korus graduated with a Bachelor of Science in Economics and a Master of Science in Accounting from the University of North Dakota.
In connection with Mr. Korus' appointment, Mr. Rady commented, "We are very excited for Paul to join the Board of Antero Midstream. Paul has already contributed significantly as a director of Antero Resources, and we are confident that his extensive background in the oil and gas industry and his strong financial expertise will be a valuable asset to Antero Midstream and its unitholders as well."
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
For more information, contact Michael Kennedy – CFO of Antero Midstream, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Jan. 17, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced plans to issue their fourth quarter and full year 2018 earnings release on Wednesday, February 13, 2019 after the close of trading on the New York Stock Exchange.
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, February 14, 2019 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Thursday, February 28, 2019 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10123142.
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay until Thursday, February 28, 2019 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-fourth-quarter-and-full-year-2018-earnings-release-date-and-joint-conference-call-300780557.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Jan. 16, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective fourth quarter 2018 distributions.
Antero Midstream Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.47 per unit ($1.88 per unit annualized) for the fourth quarter of 2018. The distribution represents a 29% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is Antero Midstream's sixteenth consecutive quarterly distribution increase, all of which represented 28% to 30% growth on an annualized basis, since its initial public offering in November 2014. The distribution will be payable on February 13, 2019 to unitholders of record as of February 1, 2019.
AMGP Increased Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a distribution of $0.164 per share ($0.656 per share annualized) for the fourth quarter of 2018. The distribution represents a 119% increase compared to the prior year quarter and a 14% increase sequentially. The distribution is AMGP's sixth consecutive quarterly distribution increase since its initial public offering in May 2017 and will be payable on February 21, 2019 to shareholders of record as of February 1, 2019.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DALLAS, Jan. 15, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce an upcoming interim change to constituents of The Cushing® MLP High Income Index (the "Index"). On October 21, 2018, Index constituent EnLink Midstream Partners, LP (NYSE: ENLK) entered into an Agreement and Plan of Merger ("Merger Agreement") with EnLink Midstream, LLC (NYSE: ENLC) and affiliated entities wherein ENLC would acquire ENLK, subject to the approval of ENLK unitholders. A special meeting of ENLK unitholders is scheduled for January 23, 2019, for the purpose of voting on the Merger Agreement. Per the Index's methodology guide, after the market closes on January 23, 2019, and effective on January 24, 2019, Antero Midstream Partners LP (NYSE: AM) will replace ENLK as a constituent of the Index at ENLK's then-current weight.
There will be no changes to the remaining constituents of the Index due to this event.
ABOUT THE CUSHING® MLP HIGH INCOME INDEX
The Cushing® MLP High Income Index provides a benchmark that is designed to track the performance of 30 higher-yielding publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" and collectively, "Midstream Companies"). Constituents are chosen according to a three-tiered proprietary weighting system developed by Cushing® Asset Management, LP. The Cushing® MLP High Income Index is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPY".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts which invest primarily in securities of Midstream Companies and other natural resource companies.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Judson Redmond
214-692-6334
www.cushingasset.com
Source: Cushing® Asset Management, LP and Swank Capital, LLC
The Cushing® MLP High Income Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing® Asset Management, LP, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to maintain and calculate the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Swank Capital, LLC, and Cushing® Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones S&P nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-MLPY
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SOURCE Cushing® Asset Management, LP; Swank Capital, LLC
DENVER, Jan. 8, 2019 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream Partners" or "the Partnership") today announced its 2019 capital budget and guidance. The dividend and DCF coverage ratio guidance included in this release assumes the simplification transaction between Antero Midstream Partners and Antero Midstream GP LP (NYSE: AMGP) ("AMGP"), pursuant to which Antero Midstream Partners will become an indirect, wholly owned subsidiary of Antero Midstream Corporation ("New AM" or "Antero Midstream"), closes during the first quarter of 2019, consistent with prior expectations. New AM will be the surviving publicly-traded midstream vehicle and will be listed on the New York Stock Exchange under the ticker symbol "AM".
New AM 2019 Capital Budget and Guidance Highlights:
(1) Based on the agreed exchange ratio of 1.635 shares of AMGP and $3.415 cash consideration per AM public unit. Assuming a mixed election, cash consideration is assumed to be reinvested into New AM shares at AMGP's closing price of $13.01 per share as of January 7, 2019.
Commenting on Antero Midstream's guidance, Paul Rady, Antero Midstream's CEO, said, "As a result of Antero Resources' double digit production growth guidance in 2019 and the assumed closing of our midstream simplification transaction, Antero Midstream expects to deliver peer-leading dividend growth of 37% in 2019 while maintaining DCF coverage in the 1.1x to 1.2x range. Antero Midstream will continue to invest "just-in-time" capital generating attractive rates of return and supporting the continued production growth of Antero Resources."
For a discussion of the non-GAAP financial measures Adjusted EBITDA and Distributable Cash Flow, please see "Non-GAAP Financial Measures."
The guidance and long-term outlook outlined herein reflects changes, and in some cases reductions, from information previously provided by the Partnership and AMGP in connection with the proposed simplification transaction to reflect the effects of changes in Antero Resources' 2019 drilling and completion capital budget in response to recent oil and NGL price declines and AR's long-term outlook.
2019 Guidance
Antero Midstream expects net income of $475 million to $525 million, Adjusted EBITDA of $870 million to $920 million and Distributable Cash Flow of $680 million to $730 million for 2019. New AM's 2019 guidance includes approximately $90 million of distributions from its interests in the processing and fractionation joint venture with an affiliate of MPLX, LP (the "Joint Venture") and in Stonewall Gathering LLC. As a result of the delay of full in-service capabilities at the Antero Clearwater Facility, Antero Midstream has risked the Adjusted EBITDA contribution from the Antero Clearwater Facility to $15 to $20 million in 2019 based on the assumption of treating approximately 25,000 Bbl/d in early 2019 increasing to 40,000 Bbl/d throughout the year.
New AM is forecasting a dividend of $1.23 to $1.25 per share in 2019, resulting in a DCF coverage ratio of 1.1x to 1.2x on an annual basis. This dividend per share range reflects growth of 128% to 131% from the midpoint of AMGP's 2018 distribution guidance and 36% to 38% growth compared to the midpoint of Antero Midstream Partners' 2018 distribution guidance, assuming AM unitholders receive 100% equity in the simplification transaction or unitholders receive mixed consideration and reinvest their cash in New AM units. Antero Midstream's 2019 guidance excludes any impact from potential third-party volumes or transactions, consistent with prior guidance.
Below is a summary of Antero Midstream's 2019 guidance:
2019 | |||||
Low | High | ||||
Net Income ($MM) | $475 | — | $525 | ||
Adjusted EBITDA ($MM) | $870 | — | $920 | ||
Distributable Cash Flow ($MM) | $680 | — | $730 | ||
Dividend Per Share | $1.23 | — | $1.25 | ||
DCF Coverage Ratio | 1.1x | — | 1.2x |
Antero Midstream 2019 Capital Budget
During 2019, Antero Midstream plans to expand its existing Marcellus and Ohio Utica Shale gathering, compression and fresh water delivery systems, and the processing and fractionation capabilities of the Joint Venture, to accommodate Antero Resources' development program. Today in a separate news release, Antero Resources announced its 2019 consolidated drilling and completion capital budget of $1.1 to $1.25 billion, which is forecast to generate production growth of approximately 17% to 20% over 2018 production guidance. Antero Resources' release can be found at www.anteroresources.com.
Antero Midstream has budgeted a 2019 capital investment of $750 million to $800 million, including $710 million in expansion capital and $65 million in maintenance capital, respectively, at the midpoint of the range. The capital budget includes approximately $400 million of investment in gathering and compression infrastructure primarily in the Marcellus Shale in West Virginia to support production growth in the liquids-rich regime. Antero Midstream has budgeted an investment of $135 million for fresh water delivery infrastructure, including expansion capital for an additional withdrawal point and associated trunklines to support Antero Resources' development in Tyler and Wetzel Counties, West Virginia.
Also included in the budget is an investment of $200 million for its 50% interest in the Joint Venture, primarily for the construction of two additional processing plants adding an additional 400 MMcf/d of processing capacity. The 2019 Joint Venture budget also includes the election to participate in the Hopedale 4 Fractionation Plant adding an additional 20,000 Bbl/d of capacity, originally budgeted for 2018. Antero Midstream's budget also includes approximately $35 million for the final milestone payments related to the completion of Antero Clearwater Facility initially budgeted for 2018. Antero Midstream expects to fund all 2019 capital expenditures through cash flow from operations and available borrowing capacity under its existing $2.0 billion bank credit facility.
Antero Midstream Long-term Outlook
Antero Resources intends to continue to focus its development on Antero Midstream-dedicated acreage and has a clear path to compound annual production growth ("CAGR") of 10% to 15% from 2020 to 2023. Antero Resources' activity level and production growth will vary on an annual basis depending on natural gas, oil and NGL prices with the objective of maintaining stand-alone drilling and completion capital spending within stand-alone adjusted operating cash flow and maintaining a strong balance sheet. The strength of Antero Resources will ultimately support growth at New AM following the completion of the simplification transaction. Assuming flat $50 per barrel WTI oil prices and $2.85 per MMBtu NYMEX natural gas prices from 2020 through 2023, Antero Resources expects to grow production at the lower end of the production growth range. Assuming Wall Street analyst consensus commodity pricing of flat $65 per barrel WTI oil and $3.15 per MMBtu NYMEX natural gas prices from 2020 through 2023, Antero Resources expects to grow production at the high end of its production growth range.
Based on Antero Resources' long-term outlook, New AM is targeting DCF growth at a CAGR range of 18% to 25% from 2020 to 2022. In addition, New AM expects a declining leverage profile into the mid 2x Net Debt to Adjusted EBITDA range by 2022. To the extent Antero's production growth is at the higher end of its long-term outlook, New AM's DCF CAGR is expected to be at the higher end of this range. Conversely, to the extent Antero's production growth is at the lower end of its long-term outlook, New AM's DCF CAGR is expected to be at the lower end of this range. This DCF growth and declining leverage profile has the ability to support the dividend growth targets previously communicated by Antero Midstream at the announcement of the simplification transaction, with reduced DCF coverage in the range of 1.0x to 1.2x over the corresponding period based on the DCF ranges. The actual DCF coverage and amount of future midstream dividends will be determined by New AM's board of directors based on market conditions and Antero Resources' development plan at that time.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses Adjusted EBITDA as an important indicator of performance. Antero Midstream defines Adjusted EBITDA as net income before interest expense, impairment expense, gain on sale of assets, 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:
Antero Midstream defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest 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 distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream has not included a reconciliation of Adjusted EBITDA and Distributable Cash Flow to the nearest GAAP financial measure for 2019 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 Adjusted EBITDA and Distributable Cash Flow and net income (in thousands):
Twelve Months Ending | |||||||
Low | High | ||||||
Depreciation expense | $ | 180,000 | — | $ | 185,000 | ||
Equity based compensation expense | 48,000 | — | 52,000 | ||||
Equity in earnings of unconsolidated affiliates | 68,000 | — | 73,000 | ||||
Distributions from unconsolidated affiliates | 87,000 | 92,000 |
Antero Midstream cannot forecast interest expense due to the timing and uncertainty of debt issuances and associated interest rates. Additionally, Antero Midstream cannot reasonably forecast impairment expense as it is driven by a number of factors that will be determined in the future and are beyond Antero Midstream's control.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the timing of consummation of the simplification transaction, if at all, statements regarding the transaction, future earnings, Adjusted EBITDA, dividends, DCF and future capital spending plans and expectations around the Antero Clearwater facility. Although Antero Midstream and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Antero Midstream and AMGP disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements, including statements set forth in guidance. Nothing in this release is intended to constitute guidance with respect to Antero Resources. To the extent a forward-looking statement contained in this release speaks as of a period covered by prior guidance, the information in this release is intended to supersede, and investors should not rely on, such prior guidance.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Antero Midstream's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the simplification, including the ability to obtain requisite unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute Antero Midstream's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017 and subsequent Quarterly Reports on Form 10-Q.
No Offer or Solicitation
This communication discusses a previously announced proposed business combination transaction between Antero Midstream and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP has filed with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that includes a joint proxy statement of Antero Midstream and AMGP and a prospectus of AMGP. The Transaction will be submitted to Antero Midstream's unitholders and AMGP's shareholders for their consideration. Antero Midstream and AMGP may also file other documents with the SEC regarding the transaction. The registration statement on Form S-4 has not been declared effective by the SEC, and the definitive joint proxy statement/prospectus has not yet been delivered to the shareholders of AMGP and unitholders of Antero Midstream. This communication is not a substitute for the registration statement and joint proxy statement/prospectus that has been filed with the SEC or any other documents that AMGP or Antero Midstream may file with the SEC or send to shareholders of AMGP or unitholders of Antero Midstream in connection with the transaction. INVESTORS AND SECURITY HOLDERS OF ANTERO MIDSTREAM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by AMGP or Antero Midstream through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Antero Midstream will be made available free of charge on Antero Midstream's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310.
Participants In The Solicitation
Antero Resources, AMGP, Antero Midstream and the directors and executive officers of AMGP and Antero Midstream's respective general partners and of Antero Resources may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction.
Information regarding the directors and executive officers of Antero Midstream's general partner is contained in Antero Midstream's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing Antero Midstream's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AMGP's general partner is contained in AMGP's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing AMGP's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of Antero Resources is contained in Antero Resources' 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing Antero Resources' website at http://www.anteroresources.com.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described above.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP; Antero Midstream GP
DENVER, Oct. 31, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their third quarter 2018 financial and operating results. The relevant condensed consolidated financial statements are included in Antero Midstream's and AMGP's Quarterly Reports on Form 10-Q for the quarter ended September 30, 2018, which have been filed with the Securities and Exchange Commission.
Antero Midstream Third Quarter 2018 Highlights Include:
AMGP Third Quarter 2018 Highlights Include:
Commenting on the third quarter 2018 results, Paul Rady, Chairman and CEO said, "Antero Midstream achieved another milestone during the quarter, with gathering volumes surpassing 2 Bcf/d for the first time in the Partnership's history. This is a particularly impressive achievement since commencing gathering operations in 2012 and is a testament to our organic growth strategy, as well as the consistent development and strength of our sponsor, Antero Resources."
Mr. Rady further added, "In addition to our operational success, we recently announced a transaction that simplifies the corporate structure of the midstream business in an immediately accretive transaction to both Antero Midstream and AMGP that we believe is a win-win-win across the Antero family. While the corporate structure is expected to change, our organic growth strategy and integration with Antero Resources remain unchanged. We believe this is the best way to continue delivering value to our equity holders and we remain focused on executing our five year development and infrastructure plans."
Recent Developments
Antero Midstream Simplification Transaction
On October 9, 2018, Antero Midstream and AMGP announced that they entered into a definitive agreement for AMGP to acquire all outstanding Antero Midstream common units in a stock and cash transaction. The transaction results in the elimination of the outstanding incentive distribution rights ("IDRs") and simplifies the structure of the midstream business into one publicly-traded corporation ("New AM"). New AM will be a corporation for both tax and governance purposes with a majority of independent directors upon closing. Importantly, the transaction is estimated to reduce AMGP's tax payments from 2019 through 2022 by approximately $375 million, with New AM not expected to pay material federal and state income taxes through at least 2024. These tax savings, combined with the elimination of the IDRs, is expected to result in double digit accretion for both AMGP and AM on a Distributable Cash Flow per share and per unit basis, respectively. In addition, AM public unitholders will receive a 3% increase on their existing per unit distribution targets and growth rates through 2022, assuming unitholders elect to receive all equity consideration. For further details and transaction merits, please visit the investor relations section of Antero Midstream's and AMGP's websites, which includes a press release and accompanying presentation relating to the transaction. Additionally, as part of the midstream simplification transaction, Antero Midstream exercised the accordion feature on its revolving credit facility, increasing total borrowing capacity from $1.5 billion to $2.0 billion.
For a discussion of the non-GAAP financial measures Adjusted EBITDA, Distributable Cash Flow, and Net Debt please see "Non-GAAP Financial Measures."
Antero Midstream Third Quarter Financial Results
Low pressure gathering volumes for the third quarter of 2018 averaged 2,166 MMcf/d, a 37% increase as compared to the prior year quarter. Compression volumes for the third quarter of 2018 averaged 1,756 MMcf/d, a 45% increase as compared to the third quarter of 2017. High pressure gathering volumes for the third quarter of 2018 averaged 2,173 MMcf/d, a 13% increase over the third quarter of 2017. The increase in gathering and compression volumes to Partnership record levels was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged a 195 MBbl/d during the quarter, a 37% increase compared to the third quarter of 2017, driven by increased completion stages. Antero Midstream treated 12 MBbl/d of wastewater at the Antero Clearwater Facility during the third quarter.
Gross processing volumes from the 50/50 processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 606 MMcf/d for the third quarter of 2018, an increase of 65% compared to the prior year quarter. The three Sherwood Joint Venture plants operated at over 100% utilization for the quarter. Gross Joint Venture fractionation volumes averaged 17,365 Bbl/d, a 170% increase compared to the prior year quarter. The increase in processing and fractionation volumes is primarily driven by an increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended September 30, | ||||||
% | ||||||
Average Daily Volumes: | 2017 | 2018 | Change | |||
Low Pressure Gathering (MMcf/d) | 1,586 | 2,166 | 37% | |||
Compression (MMcf/d) | 1,207 | 1,756 | 45% | |||
High Pressure Gathering (MMcf/d) | 1,918 | 2,173 | 13% | |||
Fresh Water Delivery (MBbl/d) | 142 | 195 | 37% | |||
Clearwater Treatment Volumes (MBbl/d) | — | 12 | * | |||
Gross Joint Venture Processing (MMcf/d) | 368 | 606 | 65% | |||
Gross Joint Venture Fractionation (Bbl/d) | 6,431 | 17,365 | 170% |
For the three months ended September 30, 2018, the Partnership reported revenues of $266 million, comprised of $133 million from the Gathering and Processing segment and $133 million from the Water Handling and Treatment segment. Revenues increased 37% compared to the prior year quarter, driven by growth in gathering, compression and fresh water delivery volumes. Water Handling and Treatment segment revenues include $5 million from wastewater treatment at the Antero Clearwater Facility and $60 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing, and Water Handling and Treatment segments were $12 million and $69 million, respectively, for a total of $81 million, compared to $63 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $58 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%. General and administrative expenses excluding equity-based compensation were $10 million during the third quarter of 2018, a 47% increase compared to the third quarter of 2017. The increase in general and administrative expenses was driven by fees incurred from the midstream simplification transaction and an increase in the number of employees needed to support growing operations. Total operating expenses were $140 million, including $38 million of depreciation, $1 million of impairment and $4 million of accretion of contingent acquisition consideration and asset retirement obligations.
Net income for the third quarter of 2018 was $120 million, a 48% increase compared to the prior year quarter. Net income per limited partner unit was $0.44 per unit, a 33% increase compared to the prior year quarter. Adjusted EBITDA was $186 million, a 46% increase compared to the prior year quarter. Adjusted EBITDA for the quarter included $12 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $25 million. The decrease in cash reserved for bond interest during the quarter was $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $11 million and Distributable Cash Flow was $157 million, a 52% increase over the prior year quarter, resulting in a DCF coverage ratio of 1.3x.
The following table reconciles net income to Adjusted EBITDA and Distributable Cash Flow as used in this release (in thousands):
Three Months Ended September 30, | ||||||||
2017 | 2018 | |||||||
Net income | $ | 80,893 | 119,764 | |||||
Interest expense | 9,311 | 16,988 | ||||||
Impairment of property and equipment expense | — | 1,157 | ||||||
Depreciation expense | 30,556 | 38,456 | ||||||
Accretion of contingent acquisition consideration | 2,556 | 4,020 | ||||||
Accretion of asset retirement obligations | — | 33 | ||||||
Equity-based compensation | 7,199 | 4,528 | ||||||
Equity in earnings of unconsolidated affiliates | (7,033) | (10,706) | ||||||
Distributions from unconsolidated affiliates | 4,300 | 11,765 | ||||||
Adjusted EBITDA | 127,782 | 186,005 | ||||||
Interest paid | (20,554) | (24,958) | ||||||
Decrease in cash reserved for bond interest (1) | 8,831 | 8,734 | ||||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards (2) | (1,500) | (1,500) | ||||||
Maintenance capital expenditures (3) | (10,771) | (10,964) | ||||||
Distributable Cash Flow | $ | 103,788 | 157,317 | |||||
Distributions Declared to Antero Midstream Holders | ||||||||
Limited Partners | $ | 63,454 | 82,302 | |||||
Incentive distribution rights | 19,067 | 37,815 | ||||||
Total Aggregate Distributions | $ | 82,521 | 120,117 | |||||
DCF coverage ratio | 1.3x | 1.3x |
1) | Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) | Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Gathering and Processing —During the third quarter, Antero Midstream connected 73 wells to its gathering system during the quarter. The Partnership's compression capacity was approximately 80% utilized throughout the quarter. Antero Resources is currently operating five drilling rigs on Antero Midstream dedicated acreage.
In addition, the Joint Venture with MPLX continued construction on Sherwood 10 and 11 processing plants, which are expected to be placed online during the fourth quarter of 2018. During the third quarter, the Joint Venture's 600MMcf/d of processing capacity was fully utilized. The Joint Venture also continued construction on the Hopedale 4 fractionation plant, which is expected to be placed online by the end of the fourth quarter of 2018. By year-end 2018, the Joint Venture expects to have 1.0 Bcf/d of gross processing capacity and 40 MBbl/d of gross fractionation capacity.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 38 well completions during the third quarter of 2018, a 19% increase from the prior year quarter. Antero Resources continued to improve completion efficiencies increasing from 5.0 stages per day in the prior quarter to 5.5 stages per day in the third quarter. During the month of September, Antero Resources averaged 6.0 stages per day. These efficiencies accelerated completions scheduled for the fourth quarter of 2018 into the third quarter and is expected to result in a sequential decrease in fresh water delivery volumes in the fourth quarter. Antero Resources operated four completion crews on Antero Midstream dedicated acreage in the third quarter of 2018 and has reduced its completion crews to three in the fourth quarter of 2018, driven by efficiency gains the first three quarters of 2018.
Balance Sheet and Liquidity
As of September 30, 2018, Antero Midstream had $875 million drawn on its $1.5 billion bank credit facility, resulting in $625 million of liquidity. Antero Midstream's Net Debt to trailing twelve months Adjusted EBITDA was 2.3x as of September 30, 2018. For a reconciliation of consolidated Net Debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Commenting on Antero Midstream's distribution growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream continued to deliver on its 2018 plan, growing Adjusted EBITDA and Distributable Cash Flow by 46% and 52%, respectively. This industry leading growth allowed AM to increase its distribution by 29% while maintaining strong DCF coverage of 1.3x and resulted in 144% year-over-year distribution growth at AMGP. Importantly, AM continues to maintain a strong balance sheet, with Net Debt to trailing twelve months Adjusted EBITDA of 2.3x."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $150 million in the third quarter of 2018 as compared to $147 million in the third quarter of 2017. Capital invested in gathering systems and related facilities was $131 million and capital invested in water handling and treatment assets was $19 million. Investments in unconsolidated affiliates for the Joint Venture were $35 million during the quarter.
AMGP Third Quarter 2018 Financial Results
AMGP's equity in earnings from Antero Midstream, which reflects the cash distributions from Antero Midstream, was $38 million for the third quarter of 2018. Net income for the quarter was $18 million. AMGP's cash distributions from Antero Midstream were $36 million, net of $2 million of total cash reserved and distributed to Series B units of Antero IDR Holdings LLC. General and administrative expenses were $2.3 million, including $1.8 million of special committee and legal advisory fees. The provision and reserve for income taxes was $8.9 million, resulting in cash available for distribution of $27 million. The 145% increase in cash available for distribution compared to the third quarter of 2017 is driven by an increase in cash distributions from Antero Midstream.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months September 30, 2018 | |||||||
Cash distributions from Antero Midstream Partners LP | $ | 37,816 | |||||
Cash reserved for distributions to unvested Series B units of IDR LLC | (1,195) | ||||||
Cash distribution to vested Series B units of IDR LLC | (598) | ||||||
Cash distributions to Antero Midstream GP LP | $ | 36,023 | |||||
General and administrative expenses | (2,229) | ||||||
Interest expense | (68) | ||||||
Conflicts committee legal and advisory fees included in G&A expense(1) | 1,826 | ||||||
Provision and reserve for income taxes | (8,906) | ||||||
Cash available for distribution | $ | 26,646 | |||||
DCF coverage ratio | 1.0x | ||||||
Common shares outstanding | 186,219 | ||||||
Cash distribution per common share | $ | 0.144 | |||||
1) | Represents non-recurring accrued legal and advisory fees associated with the ongoing conflicts committee process as disclosed on February 26, 2018. |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, November 1, 2018 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Thursday, November 8, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10123142.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Thursday, November 8, 2018 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as net income before interest expense, impairment expense, gain on sale of assets, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
"Segment Adjusted EBITDA" is also used by our management team for various purposes, including as a measure of operating performance and as a basis for strategic planning and forecasting. Segment Adjusted EBITDA is a non-GAAP financial measure that we define as operating income before equity-based compensation expense, interest expense, depreciation expense, gain on sale of assets, impairment expense, accretion, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates. Operating income is the most directly comparable GAAP financial measure to Segment Adjusted EBITDA because we do not account for interest expense on a segment basis.
The Partnership defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
September 30, 2018 | |||
Bank credit facility | $ | 875,000 | |
5.375% AM senior notes due 2024 | 650,000 | ||
Net unamortized debt issuance costs | (8,146) | ||
Consolidated total debt | $ | 1,516,854 | |
Cash and cash equivalents | — | ||
Consolidated net debt | $ | 1,516,854 |
The following table reconciles net income to Adjusted EBITDA for the twelve months ended September 30, 2018 as used in this release (in thousands):
Twelve Months Ended September 30, 2018 | ||
Net income | $ | 401,491 |
Interest expense | 53,307 | |
Impairment of property and equipment expense | 29,202 | |
Depreciation expense | 138,279 | |
Accretion of contingent acquisition consideration | 15,644 | |
Accretion of asset retirement obligations | 101 | |
Equity-based compensation | 23,453 | |
Equity in earnings of unconsolidated affiliate | (35,139) | |
Distributions from unconsolidated affiliates | 39,735 | |
Gain on sale of asset – Antero Resources | (583) | |
Adjusted EBITDA | $ | 665,490 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the timing of consummation of the simplification transaction, if at all, statements regarding the transaction, the extent of the accretion, if any, to AMGP shareholders and AM unitholders, that the transaction will reduce AMGP's tax payments from 2019 through 2022 and that New AM does not expect to pay material cash taxes through at least 2024. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the transaction, including the ability to obtain requisite regulatory, unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017.
No Offer or Solicitation
This communication discusses a previously announced proposed business combination transaction between Antero Midstream and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP will file with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that will include a joint proxy statement of Antero Midstream and AMGP and a prospectus of AMGP. The transaction will be submitted to Antero Midstream unitholders and AMGP shareholders for their consideration. Antero Midstream and AMGP may also file other documents with the SEC regarding the transaction. The definitive joint proxy statement/prospectus will be sent to the shareholders of AMGP and unitholders of Antero Midstream. This document is not a substitute for the registration statement and joint proxy statement/prospectus that will be filed with the SEC or any other documents that AMGP or Antero Midstream may file with the SEC or send to shareholders of AMGP or unitholders of Antero Midstream in connection with the transaction. INVESTORS AND SECURITY HOLDERS OF ANTERO MIDSTREAM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by AMGP or Antero Midstream through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Antero Midstream will be made available free of charge on Antero Midstream's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310.
Participants In The Solicitation
Antero Resources, AMGP, Antero Midstream and the directors and executive officers of AMGP and Antero Midstream's respective general partners and of Antero Resources may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction.
Information regarding the directors and executive officers of Antero Midstream's general partner is contained in Antero Midstream's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing Antero Midstream's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AMGP's general partner is contained in AMGP's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing AMGP's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of Antero Resources is contained in Antero Resources' 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing Antero Resources' website at http://www.anteroresources.com.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described above.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||||
Condensed Consolidated Balance Sheets | |||||||
December 31, 2017 and September 30, 2018 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
December 31, 2017 | September 30, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,363 | — | ||||
Accounts receivable–Antero Resources | 110,182 | 115,905 | |||||
Accounts receivable–third party | 1,170 | 16,586 | |||||
Prepaid expenses | 670 | 1,474 | |||||
Total current assets | 120,385 | 133,965 | |||||
Property and equipment, net | 2,605,602 | 2,873,874 | |||||
Investments in unconsolidated affiliates | 303,302 | 392,893 | |||||
Other assets, net | 12,920 | 14,096 | |||||
Total assets | $ | 3,042,209 | 3,414,828 | ||||
Liabilities and Partners' Capital | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | 6,459 | 3,758 | ||||
Accounts payable–third party | 8,642 | 15,656 | |||||
Accrued liabilities | 106,006 | 88,258 | |||||
Other current liabilities | 209 | 215 | |||||
Total current liabilities | 121,316 | 107,887 | |||||
Long-term liabilities: | |||||||
Long-term debt | 1,196,000 | 1,516,854 | |||||
Contingent acquisition consideration | 208,014 | 219,855 | |||||
Asset retirement obligations | — | 3,148 | |||||
Other | 410 | 2,522 | |||||
Total liabilities | 1,525,740 | 1,850,266 | |||||
Partners' capital: | |||||||
Common unitholders - public (88,059 and 88,175 units issued and outstanding at December 31, 2017 and September 30, 2018, respectively) | 1,708,379 | 1,726,112 | |||||
Common unitholder - Antero Resources (98,870 units issued and outstanding at December 31, 2017 and September 30, 2018) | (215,682) | (199,365) | |||||
General partner | 23,772 | 37,815 | |||||
Total partners' capital | 1,516,469 | 1,564,562 | |||||
Total liabilities and partners' capital | $ | 3,042,209 | 3,414,828 |
ANTERO MIDSTREAM PARTNERS LP | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||||
Three Months Ended September 30, 2017 and 2018 | |||||||
(Unaudited) | |||||||
(In thousands, except per unit amounts) | |||||||
Three Months Ended September 30, | |||||||
2017 | 2018 | ||||||
Revenue: | |||||||
Gathering and compression–Antero Resources | $ | 100,518 | 133,202 | ||||
Water handling and treatment–Antero Resources | 93,111 | 132,898 | |||||
Water handling and treatment–third party | — | 105 | |||||
Total revenue | 193,629 | 266,205 | |||||
Operating expenses: | |||||||
Direct operating | 63,030 | 81,475 | |||||
General and administrative (including $7,199 and $4,528 of equity-based compensation in 2017 and 2018, respectively) | 14,316 | 15,018 | |||||
Impairment of property and equipment | — | 1,157 | |||||
Depreciation | 30,556 | 38,456 | |||||
Accretion of contingent acquisition consideration | 2,556 | 4,020 | |||||
Accretion of asset retirement obligations | — | 33 | |||||
Total operating expenses | 110,458 | 140,159 | |||||
Operating income | 83,171 | 126,046 | |||||
Interest expense, net | (9,311) | (16,988) | |||||
Equity in earnings of unconsolidated affiliates | 7,033 | 10,706 | |||||
Net income and comprehensive income | 80,893 | 119,764 | |||||
Net income attributable to incentive distribution rights | (19,067) | (37,816) | |||||
Limited partners' interest in net income | $ | 61,826 | 81,948 | ||||
Net income per limited partner unit–basic and diluted | $ | 0.33 | 0.44 | ||||
Weighted average limited partner units outstanding: | |||||||
Basic | 186,581 | 187,044 | |||||
Diluted | 187,145 | 187,502 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||
Condensed Consolidated Results of Segment Operations | ||||||||||
Three Months Ended September 30, 2017 and 2018 | ||||||||||
(Unaudited) | ||||||||||
(In thousands) | ||||||||||
Water | ||||||||||
Gathering and | Handling and | Consolidated | ||||||||
Processing | Treatment | Total | ||||||||
Three months ended September 30, 2017 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 100,518 | 93,111 | 193,629 | ||||||
Total revenues | 100,518 | 93,111 | 193,629 | |||||||
Operating expenses: | ||||||||||
Direct operating | 10,560 | 52,470 | 63,030 | |||||||
General and administrative (before equity-based compensation) | 4,225 | 2,892 | 7,117 | |||||||
Equity-based compensation | 5,111 | 2,088 | 7,199 | |||||||
Depreciation | 21,803 | 8,753 | 30,556 | |||||||
Accretion of contingent acquisition consideration | — | 2,556 | 2,556 | |||||||
Total expenses | 41,699 | 68,759 | 110,458 | |||||||
Operating income | $ | 58,819 | 24,352 | 83,171 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 90,033 | 37,749 | 127,782 | ||||||
Three months ended September 30, 2018 | ||||||||||
Revenues: | ||||||||||
Revenue–Antero Resources | $ | 133,202 | 132,898 | 266,100 | ||||||
Revenue–third-party | — | 105 | 105 | |||||||
Total revenues | 133,202 | 133,003 | 266,205 | |||||||
Operating expenses: | ||||||||||
Direct operating | 12,317 | 69,158 | 81,475 | |||||||
General and administrative (before equity-based compensation) | 8,117 | 2,373 | 10,490 | |||||||
Equity-based compensation | 3,666 | 862 | 4,528 | |||||||
Impairment of property and equipment | 1,157 | — | 1,157 | |||||||
Depreciation | 25,830 | 12,626 | 38,456 | |||||||
Accretion of contingent acquisition consideration | — | 4,020 | 4,020 | |||||||
Accretion of asset retirement obligations | — | 33 | 33 | |||||||
Total expenses | 51,087 | 89,072 | 140,159 | |||||||
Operating income | $ | 82,115 | 43,931 | 126,046 | ||||||
Segment and consolidated Adjusted EBITDA | $ | 124,533 | 61,472 | 186,005 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Selected Operating Data | |||||||||||||
Three Months Ended September 30, 2017 and 2018 | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Amount of | |||||||||||||
Three Months Ended September 30, | Increase | Percentage | |||||||||||
2017 | 2018 | (Decrease) | Change | ||||||||||
Revenue: | |||||||||||||
Revenue–Antero Resources | $ | 193,629 | 266,100 | 72,471 | 37 | % | |||||||
Revenue–third-party | — | 105 | 105 | * | |||||||||
Total revenue | 193,629 | 266,205 | 72,576 | 37 | % | ||||||||
Operating expenses: | |||||||||||||
Direct operating | 63,030 | 81,475 | 18,445 | 29 | % | ||||||||
General and administrative (before equity-based compensation) | 7,117 | 10,490 | 3,373 | 47 | % | ||||||||
Equity-based compensation | 7,199 | 4,528 | (2,671) | (37) | % | ||||||||
Impairment of property and equipment | — | 1,157 | 1,157 | * | |||||||||
Depreciation | 30,556 | 38,456 | 7,900 | 26 | % | ||||||||
Accretion of contingent acquisition consideration | 2,556 | 4,020 | 1,464 | 57 | % | ||||||||
Accretion of asset retirement obligations | — | 33 | 33 | * | |||||||||
Total operating expenses | 110,458 | 140,159 | 29,701 | 27 | % | ||||||||
Operating income | 83,171 | 126,046 | 42,875 | 52 | % | ||||||||
Interest expense | (9,311) | (16,988) | 7,677 | 82 | % | ||||||||
Equity in earnings of unconsolidated affiliates | 7,033 | 10,706 | 3,673 | 52 | % | ||||||||
Net income | $ | 80,893 | 119,764 | 38,871 | 48 | % | |||||||
Adjusted EBITDA | $ | 127,782 | 186,005 | 58,224 | 46 | % | |||||||
Operating Data: | |||||||||||||
Gathering–low pressure (MMcf) | 145,898 | 199,226 | 53,328 | 37 | % | ||||||||
Gathering–high pressure (MMcf) | 176,471 | 199,897 | 23,426 | 13 | % | ||||||||
Compression (MMcf) | 111,070 | 161,549 | 50,479 | 45 | % | ||||||||
Fresh water delivery (MBbl) | 13,022 | 17,984 | 4,962 | 38 | % | ||||||||
Treated water (MBbl) | — | 1,062 | 1,062 | * | |||||||||
Other fluid handling (MBbl) | 3,723 | 5,080 | 1,357 | 36 | % | ||||||||
Wells serviced by fresh water delivery | 32 | 38 | 6 | 19 | % | ||||||||
Gathering–low pressure (MMcf/d) | 1,586 | 2,166 | 580 | 37 | % | ||||||||
Gathering–high pressure (MMcf/d) | 1,918 | 2,173 | 255 | 13 | % | ||||||||
Compression (MMcf/d) | 1,207 | 1,756 | 549 | 45 | % | ||||||||
Fresh water delivery (MBbl/d) | 142 | 195 | 53 | 37 | % | ||||||||
Treated water (MBbl/d) | — | 12 | 12 | * | |||||||||
Other fluid handling (MBbl/d) | 40 | 55 | 15 | 36 | % | ||||||||
Average realized fees: | |||||||||||||
Average gathering–low pressure fee ($/Mcf) | $ | 0.32 | 0.32 | — | — | % | |||||||
Average gathering–high pressure fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average compression fee ($/Mcf) | $ | 0.19 | 0.19 | — | — | % | |||||||
Average fresh water delivery fee ($/Bbl) | $ | 3.71 | 3.78 | 0.07 | 2 | % | |||||||
Average treated water fee ($/Bbl) | $ | — | 4.92 | 4.92 | * | ||||||||
Joint Venture Operating Data: | |||||||||||||
Processing–Joint Venture (MMcf) | 33,841 | 55,720 | 21,879 | 65 | % | ||||||||
Fractionation–Joint Venture (MBbl) | 592 | 1,598 | 1,006 | 170 | % | ||||||||
Processing–Joint Venture (MMcf/d) | 368 | 606 | 238 | 65 | % | ||||||||
Fractionation–Joint Venture (MBbl/d) | 6 | 17 | 11 | 183 | % |
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
Nine Months Ended September 30, 2017 and 2018 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2018 | ||||||
Cash flows provided by (used in) operating activities: | |||||||
Net income | $ | 243,160 | 337,335 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||
Depreciation | 88,604 | 107,321 | |||||
Accretion of contingent acquisition consideration | 9,672 | 11,841 | |||||
Accretion of asset retirement obligations | — | 101 | |||||
Impairment of property and equipment | — | 5,771 | |||||
Equity-based compensation | 20,436 | 16,606 | |||||
Equity in earnings of unconsolidated affiliates | (12,887) | (27,832) | |||||
Distributions from unconsolidated affiliates | 10,120 | 29,660 | |||||
Amortization of deferred financing costs | 1,906 | 2,083 | |||||
Gain on sale of assets–Antero Resources | — | (583) | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | (19,985) | (10,723) | |||||
Accounts receivable–third party | 75 | 944 | |||||
Prepaid expenses | (484) | (804) | |||||
Accounts payable–Antero Resources | 857 | (2,009) | |||||
Accounts payable–third party | 1,181 | 4,221 | |||||
Accrued liabilities | 1,612 | (2,530) | |||||
Net cash provided by operating activities | 344,267 | 471,402 | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to gathering systems and facilities | (254,619) | (337,623) | |||||
Additions to water handling and treatment systems | (143,470) | (68,325) | |||||
Investments in unconsolidated affiliates | (216,776) | (91,419) | |||||
Proceeds from sale of assets–Antero Resources | — | 4,470 | |||||
Change in other assets | (5,877) | (3,138) | |||||
Change in other liabilities | — | 2,273 | |||||
Net cash (used in) investing activities | (620,742) | (493,762) | |||||
Cash flows provided by (used in) financing activities: | |||||||
Distributions to unitholders | (200,037) | (304,453) | |||||
Borrowings on bank credit facilities, net | 217,000 | 320,000 | |||||
Issuance of common units, net of offering costs | 248,949 | — | |||||
Employee tax withholding for settlement of equity compensation awards | (932) | (1,399) | |||||
Other | (52) | (151) | |||||
Net cash provided by financing activities | 264,928 | 13,997 | |||||
Net (decrease) in cash and cash equivalents | (11,547) | (8,363) | |||||
Cash and cash equivalents, beginning of period | 14,042 | 8,363 | |||||
Cash and cash equivalents, end of period | $ | 2,495 | — | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | 42,530 | 53,576 | ||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment | $ | 2,936 | (13,115) |
Antero Midstream GP LP | ||||||
Condensed Consolidated Balance Sheets | ||||||
December 31, 2017 and September 30, 2018 | ||||||
(Unaudited) | ||||||
(In thousands, except number of shares and units) | ||||||
December 31, | September 30, | |||||
2017 | 2018 | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 5,987 | 4,246 | |||
Prepaid expenses | — | 56 | ||||
Deferred financing costs | — | 140 | ||||
Total current assets | 5,987 | 4,442 | ||||
Investment in Antero Midstream Partners LP | 23,772 | 37,816 | ||||
Total assets | $ | 29,759 | 42,258 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | 293 | 939 | ||||
Income taxes payable | 13,858 | 13,223 | ||||
Total current liabilities | 14,151 | 14,162 | ||||
Non-current liability: | ||||||
Liability for equity-based compensation | — | 2,970 | ||||
Total liabilities | 14,151 | 17,132 | ||||
Partners' capital: | ||||||
Common shareholders - public (186,181,975 shares and 186,209,369 shares issued and outstanding at December 31, 2017 and September 30, 2018, respectively) | (19,866) | (10,163) | ||||
IDR LLC Series B units (32,875 units vested at December 31, 2017 and September 30, 2018) | 35,474 | 35,289 | ||||
Total partners' capital | 15,608 | 25,126 | ||||
Total liabilities and partners' capital | $ | 29,759 | 42,258 |
Antero Midstream GP LP | ||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||
Three Months Ended September 30, 2017 and 2018 | ||||||
(Unaudited) | ||||||
(In thousands, except per share amounts) | ||||||
Three Months Ended September 30, | ||||||
2017 | 2018 | |||||
Equity in earnings of Antero Midstream Partners LP | $ | 19,067 | 37,816 | |||
Total income | 19,067 | 37,816 | ||||
General and administrative expense | 615 | 2,229 | ||||
Equity-based compensation | 8,317 | 8,574 | ||||
Total operating expenses | 8,932 | 10,803 | ||||
Operating income | 10,135 | 27,013 | ||||
Interest Expense, net | — | 68 | ||||
Income before income taxes | 10,135 | 26,945 | ||||
Provision for income taxes | (7,157) | (8,917) | ||||
Net income (loss) and comprehensive income (loss) | 2,978 | 18,028 | ||||
Net income attributable to vested Series B units | — | (598) | ||||
Net income (loss) attributable to common shareholders | $ | 2,978 | 17,430 | |||
Net income (loss) per common share - basic and diluted | $ | 0.02 | 0.09 | |||
Weighted average number of common shares outstanding - basic | 186,173 | 186,208 | ||||
Weighted average number of common shares outstanding- diluted | 191,175 | 186,208 |
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-third-quarter-2018-financial-and-operating-results-300741612.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Oct. 17, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective third quarter 2018 distributions.
Antero Midstream Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.44 per unit ($1.76 per unit annualized) for the third quarter of 2018. The distribution represents a 29% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is Antero Midstream's fifteenth consecutive quarterly distribution increase, all of which represented 28% to 30% growth on an annualized basis, since its initial public offering in November 2014. The distribution will be payable on November 16, 2018 to unitholders of record as of November 2, 2018.
AMGP Increased Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a distribution of $0.144 per share ($0.576 per share annualized) for the third quarter of 2018. The distribution represents a 144% increase compared to the prior year quarter and a 15% increase sequentially. The distribution is AMGP's fifth consecutive quarterly distribution increase since its initial public offering in May 2017 and will be payable on November 21, 2018 to shareholders of record as of November 2, 2018.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-third-quarter-2018-distributions-300732988.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Oct. 16, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced plans to issue their third quarter 2018 earnings on Wednesday, October 31, 2018 after the close of trading on the New York Stock Exchange.
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, November 1, 2018 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Thursday, November 8, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10123142.
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay until Thursday, November 8, 2018 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-third-quarter-2018-earnings-release-date-and-joint-conference-call-300732212.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Oct. 9, 2018 /PRNewswire/ -- Antero Midstream GP LP (NYSE: AMGP) ("AMGP") and Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream Partners" or "AM") today announced that they have entered into a definitive agreement for AMGP to acquire all outstanding AM common units, both those held by the public and those held by Antero Resources (NYSE: AR) ("Antero Resources"), in a stock and cash transaction. In connection with the transaction, AMGP will convert into a corporation and the combined entity will be renamed Antero Midstream Corporation ("New AM"). Under the terms of the agreement, Antero Midstream Partners public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned, resulting in aggregate consideration valued at $31.41 per AM unit, based on the October 8, 2018 closing price. Antero Resources will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned, resulting in aggregate consideration valued at $30.43 per AM unit, based on the October 8, 2018 closing price. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock, or a combination of cash and stock, and AR will have the ability to elect to take a larger portion of its merger consideration in cash if the AM public unitholders elect to receive more stock than the mixed election consideration, in each case subject to pro ration to ensure that the aggregate amount of cash consideration paid to all AM unitholders equals approximately $598 million. The transaction has been negotiated and recommended by the Conflicts Committees of AMGP and Antero Midstream Partners and the Special Committee of Antero Resources and approved by all three Boards of Directors.
Transaction Highlights:
(1) Based on October 8, 2018 AMGP closing price.
(2) AM price per unit prior to the Special Committee announcement was $26.49 as of February 23, 2018.
Commenting on the simplification transaction, Paul Rady, Chairman and CEO said, "The transaction is a win-win-win for the Antero family and simplifies the midstream structure in an immediately accretive transaction. The traditional C-corp structure for both governance and tax purposes should further enhance New AM's appeal to institutional investors and for inclusion in major indices, and provides valuable shareholder rights to the public. Importantly, the long-term vision and integrated strategy for the Antero family remains unchanged and we continue to be excited about executing on the five year development and infrastructure plans communicated at our analyst day in January."
Glen Warren, President and CFO of Antero Resources and President of New AM added, "Today's announcement also enhances Antero Resources' ability to execute on its liquids focused integrated development program. The combination of cash consideration received in the simplification transaction and free cash flow generation is expected to fully fund Antero Resources' initial $600 million share repurchase program that was announced today. As a result, Antero Resources plans to opportunistically repurchase shares while not exceeding Stand-Alone Net Debt to Stand-Alone Adjusted EBITDAX of 2.25x by year-end 2018 and 2.0x by year-end 2019."
Midstream Simplification Transaction Details
Under the terms of the simplification agreement, AMGP will acquire 100% of Antero Midstream Partners' 188.1 million fully diluted common units outstanding, including 98.9 million common units owned by Antero Resources. AM public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned, resulting in aggregate consideration valued at $31.41 per AM unit, based on the October 8, 2018 closing price. The all-in consideration for AM public unitholders represents a premium of 7% based on the closing price as of October 8, 2018 and a premium of 19% based on closing prices as of February 23, 2018 prior to the announcement of the Special Committee formation. Antero Resources will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned, resulting in aggregate consideration valued at $30.43 per AM unit, based on the October 8, 2018 closing price. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock or a combination of cash and stock. AR will have the ability to elect to take a larger portion of its merger consideration in cash if the AM public unitholders elect to receive more stock consideration than outlined in the mixed election, subject to pro ration, to ensure that the aggregate amount of cash consideration paid to all AM unitholders equals approximately $598 million. Following the AM public unitholders' election of their consideration, Antero Resources' can elect additional cash consideration, if available, in lieu of stock consideration. Following the simplification, New AM will eliminate all IDRs in AM and the Series B units, which represent 10-year profits interests in Antero IDR Holdings ("IDR LLC"), the entity that holds all of the outstanding IDRs in AM.
In connection with the transaction, Series B unitholders agreed to terminate and exchange their Series B units for an aggregate of 17.35 million shares in New AM upon the closing of the simplification transaction. The 17.35 million New AM shares represent approximately 4.4% of the pro forma market capitalization of New AM in excess of $2.0 billion based on closing prices as of October 8, 2018. If the Series B units and the IDRs were not eliminated as part of the transaction, the Series B units would be entitled to receive up to 6% of the IDR cash flow stream above $7.5 million per quarter from Antero Midstream Partners and would be exchangeable, at the option of the holders, into up to 6% of the pro forma market capitalization of New AM in excess of $2.0 billion through the maturity date of December 31, 2026. The New AM shares issued in exchange for outstanding Series B units will be subject to the same vesting conditions to which the Series B units are currently subject, with one-third currently vested, another one-third vesting at December 31, 2018 and the final one-third vesting on December 31, 2019. Accordingly, a portion of the shares in New AM to be issued to the Series B unitholders will continue to be subject to vesting and forfeiture through December 31, 2019, and will not be entitled to receive any dividends from New AM prior to their vesting on December 31, 2019. The exchange of the Series B units in connection with the simplification transaction further aligns management, employees, financial sponsors and pro forma shareholders and lowers the cost of capital for future investment decisions. Following the simplification transaction and exchange of the Series B units, New AM will have approximately 508 million fully diluted shares outstanding.
The transaction will be fully taxable to both Antero Resources and Antero Midstream Partners' public unitholders, which will result in a tax basis step up with respect to the assets of Antero Midstream Partners for the pro forma entity. As a result, New AM does not expect to pay material cash taxes through at least 2024. The PV-10 of tax savings to New AM as a result of this transaction is approximately $800 million. Antero Resources expects to utilize a portion of its $3.0 billion of net operating loss carryforwards to substantially shield its gain from the transaction. Antero Midstream Partners' public unitholders should consult with their tax advisor regarding the tax impact from the transaction, but will have the ability to elect to receive all cash in the transaction, subject to pro ration, and regardless of pro ration will have the ability to receive at least $3.415 per unit in cash. The higher exchange ratio and cash consideration received by the AM public unitholders was designed to help offset potential tax impacts of the transaction.
The AMGP Conflicts Committee, consisting of directors not associated with management or the original financial sponsor groups, evaluated the transaction on behalf of the public shareholders and the AMGP board of directors. The AMGP Conflicts Committee recommended approval of the simplification transaction to the Board of Directors of AMGP. The Antero Midstream Partners Conflicts Committee, consisting of directors not associated with management or the original financial sponsor groups, evaluated the transaction on behalf of the AM board of directors and public unitholders and also recommended approval of the simplification transaction to the AM board of directors. The Antero Resources Special Committee, consisting of directors not associated with management or the financial sponsor groups that originally funded Antero Resources, evaluated the transaction on behalf of the public shareholders and the board of directors of Antero Resources, which currently owns approximately 53% of the Antero Midstream Partners units outstanding. The Antero Resources Special Committee recommended approval of the simplification transaction to the AR board of directors. The transaction was approved by the board of directors of each of AMGP, Antero Midstream Partners and Antero Resources.
The transaction is subject to the approval of holders of a majority of the shares held by AMGP's public shareholders excluding the original private equity sponsors, Series B holders, and affiliates of AMGP's general partner. The transaction is also subject to the approval of holders of a majority of the units held by AM unitholders, excluding Antero Resources, the original private equity sponsors, the Series B holders and affiliates of AM's general partner. The closing of the transaction is expected in the first quarter of 2019, subject to obtaining these approvals and customary regulatory approvals.
Financing & Balance Sheet
The cash consideration will be funded at closing by utilizing borrowings under an amended AM credit facility. AM is in the process of exercising the accordion feature on its credit facility, which would increase capacity from $1.5 billion to $2.0 billion. New AM expects to maintain a strong balance sheet flexing to just over 3.0x net debt to adjusted EBITDA post-closing at the end of the first quarter of 2019 and de-levering into the mid two-times range by 2020. Consistent with AM's previous outlook, New AM does not anticipate a need to access the public equity markets to fund its previously disclosed $2.7 billion in organic growth opportunities from 2018 through 2022.
Michael Kennedy, CFO of Antero Midstream Partners and AMGP commented, "The simplification transaction further reinforces Antero Midstream's position as a premier organic growth Appalachian midstream platform. From a position of strength, the transaction is expected to allow us to deliver DCF per unit accretion to both AM unitholders and AMGP shareholders, in addition to an up-front premium to AM unitholders. This accretion, along with the numerous structural and governance merits, delivers significant value to our unitholders and shareholders."
Mr. Kennedy further added, "The elimination of the IDRs is expected to reduce Antero Midstream's cost of capital which will broaden New AM's growth opportunities beyond the previously disclosed $2.7 billion organic opportunity set with attractive project and corporate level returns. The simplification also creates a unique C-corp security with top-tier dividend growth, low leverage and attractive return on invested capital."
Pro Forma Dividend and Coverage Policy
Assuming the simplification transaction closes in the first quarter of 2019 and subject to board approvals, New AM currently intends to target a dividend of $1.24 per share in 2019 representing the midpoint of our targeted dividend per share range for 2019. New AM intends to target dividend growth of 29% in 2020 and dividend growth of 20% in each of 2021 and 2022. Over the 2019 through 2022 period New AM intends to target an average DCF coverage ratio of 1.2-1.3x. Our targeted dividend growth rates are unchanged from Antero Midstream Partners' previously announced distribution growth targets through 2022. The majority of these pro forma dividends are expected to be treated as non-taxable return of capital with the remaining distributions being taxable dividend income under current U.S. federal tax regulations.
The following table illustrates the pro forma dividend for New AM:
2019 | 2020 | 2021 | 2022 | ||||||||||||
Long-term Targets | Low | High | Low | High | Low | High | Low | High | |||||||
Dividend Per Share | $1.23 | — | $1.25 | $1.57 | — | $1.63 | $1.89 | — | $1.95 | $2.27 | — | $2.34 | |||
Year-over-Year Growth | 128% | — | 131% | 28% | — | 30% | 20% | 20% | |||||||
Note: 2019 year-over-year dividend growth represents growth vs. AMGP's 2018 midpoint distribution of $0.54/share |
The following table illustrates the increase in targeted distributions per share for AMGP shareholders through 2022 comparing the pro forma dividend targets to the previously disclosed status quo distribution targets:
2019 | 2020 | 2021 | 2022 | ||||||||||||
Per Share | Low | High | Low | High | Low | High | Low | High | |||||||
Status Quo Distribution | $0.84 | — | $0.91 | $1.28 | — | $1.40 | $1.65 | — | $1.83 | $2.10 | — | $2.36 | |||
Pro Forma Dividend | $1.23 | — | $1.25 | $1.57 | — | $1.63 | $1.89 | — | $1.95 | $2.27 | — | $2.34 | |||
Accretion - $/Share | $0.39 | — | $0.34 | $0.29 | — | $0.23 | $0.24 | — | $0.12 | $0.17 | — | $(0.02) | |||
Accretion - % | 46% | — | 37% | 23% | — | 16% | 15% | — | 7% | 8% | — | (1%) |
The following table illustrates the increase in targeted distributions per unit for Antero Midstream Partners public unitholders through 2022 comparing the pro forma dividend targets to the previously disclosed status quo distribution targets on a pre-tax basis. The table below is based on a 100% equity consideration of 1.832 AMGP shares for each public AM unit. Public unitholders received a higher exchange ratio to help offset transaction taxes.
2019 | 2020 | 2021 | 2022 | ||||||||||||
Per Share | Low | High | Low | High | Low | High | Low | High | |||||||
Status Quo Distribution | $2.19 | — | $2.22 | $2.80 | — | $2.89 | $3.36 | — | $3.47 | $4.03 | — | $4.16 | |||
Pro Forma Dividend | $1.23 | — | $1.25 | $1.57 | — | $1.63 | $1.89 | — | $1.95 | $2.27 | — | $2.34 | |||
x 1.832 Shares Received | 1.832 | 1.832 | 1.832 | 1.832 | 1.832 | 1.832 | 1.832 | 1.832 | |||||||
Total Dividends | $2.25 | — | $2.29 | $2.88 | — | $2.99 | $3.46 | — | $3.57 | $4.16 | — | $4.29 | |||
Midpoint Variance - | $0.06 | $0.08 | $0.10 | $0.12 |
The following table illustrates the increase in targeted distributions per unit for Antero Midstream Partners units held by AR through 2022 comparing the pro forma dividend targets to the previously disclosed status quo distribution targets on a pre-tax basis. The table below is based on a 100% equity consideration of 1.776 AMGP shares for each AR-held AM unit:
2019 | 2020 | 2021 | 2022 | ||||||||||||
Per Share | Low | High | Low | High | Low | High | Low | High | |||||||
Status Quo Distribution | $2.19 | — | $2.22 | $2.80 | — | $2.89 | $3.36 | — | $3.47 | $4.03 | — | $4.16 | |||
Pro Forma Dividend | $1.23 | — | $1.25 | $1.57 | — | $1.63 | $1.89 | — | $1.95 | $2.27 | — | $2.34 | |||
x 1.776 Shares Received | 1.776 | 1.776 | 1.776 | 1.776 | 1.776 | 1.776 | 1.776 | 1.776 | |||||||
Total Dividends | $2.18 | — | $2.22 | $2.79 | — | $2.89 | $3.36 | — | $3.46 | $4.03 | — | $4.16 | |||
Midpoint Variance - | $0.00 | $0.00 | $0.00 | $0.00 |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Tuesday, October 9, 2018 at 10 am ET to discuss the transaction. To participate in the call, dial in at 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Tuesday, October 16, 2018 at 10am ET at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10125139.
Presentation
To access the live webcast and view the related transaction call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Tuesday, October 16, 2018 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Financial and Legal Advisors
Vinson & Elkins acted as legal advisor to AMGP, Antero Midstream Partners and Antero Resources. Goldman Sachs & Co. LLC and Hunton Andrews Kurth and Richards, Layton & Finger acted as financial and legal advisors, respectively, to the Conflicts Committee of AMGP. Morgan Stanley & Co. LLC acted as the financial advisor to Antero Midstream Partners. Tudor, Pickering, Holt & Co. and Gibson, Dunn & Crutcher LLP acted as financial and legal advisors, respectively to the Conflicts Committee of Antero Midstream Partners. Baird and Sidley Austin LLP acted as financial and legal advisors, respectively, to the Special Committee of AR. J.P. Morgan Securities LLC acted as financial advisor to Antero Resources.
Antero Midstream Partners is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream Partners common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream Partners and indirectly owns the incentive distribution rights in Antero Midstream Partners.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AM and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expected consideration to be received in connection with the closing of the transaction, the timing of consummation of the transaction, if at all, statements regarding the transaction, the extent of the accretion, if any, to AMGP shareholders and AM unitholders, the effect that the elimination of the IDRs and Series B Units will have on Antero Midstream's cost of capital, New AM's growth opportunities and increased trading liquidity following the consummation of the transaction, anticipated cost savings, the pro forma dividend and DCF coverage ratio targets for New AM, that the transaction will reduce AMGP's tax payments from 2019 through 2022 and that New AM does not expect to pay material cash taxes through at least 2024, the PV-10 tax savings expected to be realized as a result of the transaction, opportunities and anticipated future performance, and whether the structure resulting from the merger will be more appealing to a wider set of investors. Although AM and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream Partners and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the AM's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, the expected timing and likelihood of completion of the transaction, including the ability to obtain requisite regulatory, unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, risks that the proposed transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute AM's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017.
No Offer or Solicitation
This communication relates to a proposed business combination transaction between AM and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP will file with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that will include a joint proxy statement of AM and AMGP and a prospectus of AMGP. The transaction will be submitted to AM's unitholders and AMGP's shareholders for their consideration. AM and AMGP may also file other documents with the SEC regarding the transaction. The definitive joint proxy statement/prospectus will be sent to the shareholders of AMGP and unitholders of AM. This document is not a substitute for the registration statement and joint proxy statement/prospectus that will be filed with the SEC or any other documents that AMGP or AM may file with the SEC or send to shareholders of AMGP or unitholders of AM in connection with the Transaction. INVESTORS AND SECURITY HOLDERS OF AM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by AMGP or AM through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by AM will be made available free of charge on AM's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310.
Participants In The Solicitation
AR, AMGP, AM and the directors and executive officers of AMGP and AM's respective general partners and of AR may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction.
Information regarding the directors and executive officers of AM's general partner is contained in AM's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing AM's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AMGP's general partner is contained in AMGP's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AR is contained in AR 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http://www.anteroresources.com.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described above.
For more information, contact Michael Kennedy – CFO of Antero Midstream Partners and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream; Antero Midstream GP LP
DENVER, Oct. 9, 2018 /PRNewswire/ -- Antero Resources (NYSE: AR) ("Antero", the "Company" or "AR") today announced a simplified midstream corporate structure in which Antero Midstream GP LP (NYSE: AMGP) ("AMGP") and Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream Partners" or "AM") have entered into a definitive agreement for AMGP to acquire all outstanding AM common units in a stock and cash transaction. In connection with the transaction, AMGP will convert into a corporation and the combined entity will be renamed Antero Midstream Corporation ("New AM"). Additionally, Antero Resources board of directors approved a share repurchase program of up to $600 million.
Highlights Include:
Commenting on today's announcements, Paul Rady, Co-founder, Chairman and CEO said, "This is a "win-win-win" for the Antero family as it simplifies our corporate structure, returns capital to shareholders and better aligns shareholder interest. At the current AR share price, we believe an open market share repurchase program is an attractive way to deliver value to our shareholders. Additionally, by maintaining our integrated structure, we continue to hold a competitive advantage as we develop our core liquids Appalachian Basin assets in a coordinated effort alongside our midstream provider, New AM. We remain focused on executing on our five year development plan announced at the January analyst day as Antero joins an elite group of E&Ps with scale, attractive production growth, low leverage and free cash flow generation."
Midstream Simplification Transaction Details
Under the terms of the simplification agreement, AMGP will acquire 100% of Antero Midstream Partners' 188.1 million fully diluted common units outstanding, including 98.9 million common units owned by Antero Resources. Antero Resources will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned, resulting in aggregate consideration valued at $30.43 per AM unit, based on the October 8, 2018 closing price. The consideration to AR represents a premium of 3% based on the closing price as of October 8, 2018 and a premium of 15% based on closing prices as of February 23, 2018 prior to the announcement of the Special Committee formation. AM public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned, resulting in aggregate consideration valued at $31.41 per AM unit, based on the October 8, 2018 closing price. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock or a combination of cash and stock as outlined above. AR will have the ability to elect to take a larger portion of its merger consideration in cash if the AM public unitholders elect to receive more stock consideration, subject to pro ration, to ensure that the aggregate amount of cash consideration paid to all AM unitholders equals $598 million. Following the simplification, New AM will eliminate all incentive distribution rights in AM (the "IDRs") and the Series B units, which represent 10-year profits interests in Antero IDR Holdings ("IDR LLC"), the entity that holds all of the outstanding IDRs in AM.
In connection with the transaction, Series B unitholders agreed to an early termination to exchange their profits interests for an aggregate of 17.35 million shares in New AM upon the closing of the simplification transaction. The 17.35 million New AM shares represent approximately 4.4% of the pro forma market capitalization of New AM in excess of $2.0 billion based on closing prices as of October 8, 2018. If the Series B units and the IDRs were not eliminated as part of the transaction, the Series B units would be entitled to receive up to 6% of the IDR cash flow stream above $7.5 million per quarter from Antero Midstream Partners and would be exchangeable, at the option of the holders, into up to 6% of the pro forma market capitalization of New AM in excess of $2.0 billion through the maturity date of December 31, 2026. The New AM shares issued in exchange for outstanding Series B units will be subject to the same vesting conditions to which the Series B units are currently subject, with one-third currently vested, another one-third vesting at December 31, 2018 and the final one-third vesting on December 31, 2019. Accordingly, a portion of the shares in New AM to be issued to the Series B unitholders will continue to be subject to vesting and forfeiture through December 31, 2019, and will not be entitled to receive any dividends from New AM prior to their vesting on December 31, 2019. The exchange of the Series B units in connection with the simplification transaction further aligns management, employees, financial sponsors and pro forma shareholders and lowers the cost of capital for future investment decisions. Following the simplification transaction and exchange of the Series B units, New AM will have approximately 508 million fully diluted shares outstanding.
The Antero Resources Special Committee, consisting of directors not associated with management or the original financial sponsor groups, evaluated the transaction on behalf of the public shareholders and the board of directors of Antero Resources, which currently owns approximately 53% of the Antero Midstream Partners units outstanding. The Antero Resources Special Committee recommended approval of the simplification transaction to the AR board of directors. The AMGP Conflicts Committee, consisting of directors not associated with management or the original financial sponsor groups, evaluated the transaction on behalf of the public shareholders and the AMGP board of directors. The AMGP Conflicts Committee recommended approval of the simplification transaction to the board of directors of AMGP. The Antero Midstream Partners Conflicts Committee, consisting of directors not associated with management or the original financial sponsor groups, evaluated the transaction on behalf of the public unitholders and the AM board of directors, and also recommended approval of the simplification transaction to the AM board of directors. The transaction was approved by the board of directors of Antero Resources, AMGP and Antero Midstream Partners.
The transaction is subject to the approval of holders of a majority of the shares held by AMGP's public shareholders excluding the original private equity sponsors, Series B holders and affiliates of AMGP's general partner. The transaction is also subject to the approval of holders of a majority of the units held by AM unitholders, excluding Antero Resources, the original private equity sponsors, the Series B holders and affiliates of AM's general partner. The closing of the transaction is expected in the first quarter of 2019, subject to obtaining these approvals and customary regulatory approvals.
$600 Million Share Repurchase Program
The open market share repurchase program is expected to commence during the fourth quarter of 2018 and extend over the next 12 to 18 months, allowing the company to be opportunistic regarding the share repurchase price. However, leverage reduction remains a top priority for AR. Therefore, share repurchases will be executed only when leverage is expected to be at or below the 2.25x Stand-Alone Net Debt to Stand-Alone Adjusted EBITDAX target for year-end 2018 and at or below 2.0x for year-end 2019. This program is expected to be fully funded with cash proceeds from the following:
Cash Proceeds from AMGP Acquisition of AM
In connection with the simplification transaction, AR expects to elect to receive a minimum of approximately $300 million in cash proceeds, or $3.00 per unit for each AM unit held, as well as receive 158.4 million New AM shares. Depending on the cash election of AM unitholders other than AR, the cash consideration could increase up to the total cash pool in the simplification transaction of approximately $598 million and conversely the number of New AM shares could decrease depending on the outcome of the cash election. Upon completion of the transaction and assuming the $3.00 per unit is received in cash, AR will have a 31% ownership in the pro forma midstream entity. While the simplification transaction will be fully taxable to AR and the other AM unitholders, AR is expected to be substantially shielded from paying current tax on its gain with respect to the simplification transaction through the utilization of a portion of its $3.0 billion of NOLs held at December 31, 2017. Even with the utilization of NOLs in connection with the simplification transaction, AR does not expect to pay a material amount of cash taxes through at least 2022 based on the long-term development plan outlined at the 2018 analyst day.
Free Cash Flow
The remainder of the share repurchase program will be funded through free cash flow expected to be generated over the next 12 to 18 months.
Commenting on the share repurchase program, Glen Warren, Co-founder, President, and Chief Financial Officer of Antero Resources said, "Today's announcements provide Antero Resources an exciting opportunity to unlock shareholder value. We will remain disciplined in utilizing the share repurchase program along with our priority to reduce Stand-Alone leverage metrics to at or below 2.25x by year-end 2018 and at or below 2.0x by year-end 2019. If fully utilized at the current share price, this initial $600 million program would result in a reduction of more than 10% of the current shares outstanding. Additionally, we believe the midstream simplification will unlock shareholder value with a best-in-class midstream structure, a more liquid vehicle from a trading perspective and better alignment of interest between Antero entities, while also accelerating the return of capital to our shareholders."
Conference Call
A conference call for Antero Resources is scheduled on Tuesday, October 9th, 2018 at 9 am MT to discuss the details of today's announcement. A brief Q&A session for security analysts will immediately follow the discussion. To participate in the call, dial in at 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Resources". A telephone replay of the call will be available until October 16, 2018 at 9 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10125145.
Presentation
An updated presentation will be posted to the Company's website before the October 9, 2018 transaction conference call. The presentation can be found at www.anteroresources.com on the homepage. Information on the Company's website does not constitute a portion of this press release.
Financial and Legal Advisors
Vinson & Elkins acted as legal advisor to AMGP, Antero Midstream Partners and Antero Resources. J.P. Morgan Securities LLC acted as financial advisor to Antero Resources. Baird and Sidley Austin LLP acted as financial and legal advisors, respectively, to the Special Committee of AR. Goldman Sachs and Hunton Andrews Kurth acted as financial and legal advisors, respectively, to the Conflicts Committee of AMGP. Richards, Layton & Finger acted as Delaware counsel to the Conflicts Committee of AMGP. Morgan Stanley & Co. LLC acted as the financial advisor to Antero Midstream Partners. Tudor, Pickering, Holt & Co. and Gibson, Dunn & Crutcher LLP acted as financial and legal advisors, respectively to the Conflicts Committee of Antero Midstream Partners.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero expects, believes or anticipates will or may occur in the future, such as the expected sources of funding and timing for completion of the share repurchase program if at all, statements regarding the simplification transaction, the expected consideration to be received in connection with the closing of the simplification transaction, pro forma descriptions of the Company and its operations following the simplification transaction, the timing of the consummation of the simplification transaction, if at all, the extent to which AR will be shielded from tax payments associated with the simplification transactions, anticipated cost savings, AR's expected free cash flow generation, AR's targeted leverage metrics and opportunities and anticipated future performance, 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 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.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Antero's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, the expected timing and likelihood of completion of the simplification transaction, including the ability to obtain requisite regulatory, unitholder and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed simplification transaction, risks that the proposed simplification transaction may not be consummated or the benefits contemplated therefrom may not be realized, the cost savings, tax benefits and any other synergies from the simplification transaction may not be fully realized or may take longer to realize than expected, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2017.
No Offer or Solicitation
This communication relates to a proposed business combination transaction between AM and AMGP. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP will file with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that will include a joint proxy statement of AM and AMGP and a prospectus of AMGP. The transaction will be submitted to AM's unitholders and AMGP's shareholders for their consideration. AM and AMGP may also file other documents with the SEC regarding the transaction. The definitive joint proxy statement/prospectus will be sent to the shareholders of AMGP and unitholders of AM. This document is not a substitute for the registration statement and joint proxy statement/prospectus that will be filed with the SEC or any other documents that AMGP or AM may file with the SEC or send to shareholders of AMGP or unitholders of AM in connection with the Transaction. INVESTORS AND SECURITY HOLDERS OF AM AND AMGP ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by AMGP or AM through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by AM will be made available free of charge on AM's website at http://investors.anteromidstream.com/investor-relations/AM, under the heading "SEC Filings," or by directing a request to Investor Relations, Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310. Copies of documents filed with the SEC by AMGP will be made available free of charge on AMGP's website at http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or by directing a request to Investor Relations, Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado 75219, Tel. No. (303) 357-7310.
Participants In The Solicitation
AR, AMGP, AM and the directors and executive officers of AMGP and AM's respective general partners and of AR may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction.
Information regarding the directors and executive officers of AM's general partner is contained in AM's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing AM's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AMGP's general partner is contained in AMGP's 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http://www.anteromidstream.com. Information regarding the executive officers and directors of AR is contained in AR 2018 Annual Report on Form 10-K filed with the SEC on February 13, 2018 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at www.sec.gov or by accessing the AMGP's website at http:// www.anteroresources.com.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of this document as described above.
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SOURCE Antero Resources
DENVER, Aug. 1, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their second quarter 2018 financial and operating results. The relevant condensed consolidated financial statements are included in Antero Midstream's and AMGP's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2018, which have been filed with the Securities and Exchange Commission.
Antero Midstream Second Quarter 2018 Highlights Include:
AMGP Second Quarter 2018 Highlights Include:
Commenting on the second quarter 2018 results, Paul Rady, Chairman and CEO said, "Antero Midstream delivered another strong quarter with record gathering, compression, processing and fractionation volumes. Additionally, Antero Midstream reported record fresh water delivery volumes, driven by Antero Resource's increase in completion stages per day. Looking to the second half of 2018, we expect additional gathering and compression volume growth as Antero expects to turn 65 to 75 wells to sales in the third quarter as compared to 51 wells placed to sales in the first half of the year."
For a discussion of the non-GAAP financial measures Adjusted EBITDA, Distributable Cash Flow, and net debt please see "Non-GAAP Financial Measures."
Antero Midstream Second Quarter Financial Results
Low pressure gathering volumes for the second quarter of 2018 averaged 1,981 MMcf/d, an 18% increase as compared to the prior year quarter. Compression volumes for the second quarter of 2018 averaged 1,558 MMcf/d, a 31% increase as compared to the second quarter of 2017. High pressure gathering volumes for the second quarter of 2018 averaged 1,932 MMcf/d, an 11% increase over the second quarter of 2017. The increase in gathering and compression volumes to Partnership record levels was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged a record 228 MBbl/d during the quarter, driven by increased completion stages per day. Antero Midstream treated 8 Mbbl/d of wastewater at the Antero Clearwater Facility during the second quarter.
Gross processing volumes from the processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 571 MMcf/d for the second quarter of 2018, an increase of 164% compared to the prior year quarter. Gross Joint Venture fractionation volumes averaged 10,046 Bbl/d, a 148% increase compared to the prior year quarter. The increase in processing and fractionation volumes is driven by an increase in Antero Resources' rich gas and C3+ NGL production volumes.
Three Months Ended June 30, |
|||||
Average Daily Volumes: |
2017 |
2018 |
% | ||
Low Pressure Gathering (MMcf/d) |
1,683 |
1,981 |
18% | ||
Compression (MMcf/d) |
1,192 |
1,558 |
31% | ||
High Pressure Gathering (MMcf/d) |
1,734 |
1,932 |
11% | ||
Fresh Water Delivery (MBbl/d) |
173 |
228 |
32% | ||
Clearwater Treatment Volumes (MBbl/d) |
— |
8 |
* | ||
Gross Joint Venture Processing (MMcf/d) |
216 |
571 |
164% | ||
Gross Joint Venture Fractionation (Bbl/d) |
4,039 |
10,046 |
148% |
For the three months ended June 30, 2018, the Partnership reported revenues of $251 million, comprised of $119 million from the Gathering and Processing segment and $132 million from the Water Handling and Treatment segment. Revenues increased 30% compared to the prior year quarter, driven by growth in gathering, compression and fresh water delivery volumes. Water Handling and Treatment segment revenues include $3 million from wastewater treatment at the Antero Clearwater Facility and $51 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing, and Water Handling and Treatment segments were $13 million and $63 million, respectively, for a total of $76 million, compared to $52 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $49 million from wastewater handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $15 million, in line with the prior year quarter. General and administrative expenses excluding equity-based compensation were $10 million during the second quarter of 2018, a 23% increase compared to the second quarter of 2017. Total operating expenses were $136 million, including $36 million of depreciation, $5 million of impairment and $4 million of accretion of contingent acquisition consideration and asset retirement obligations.
Net income for the second quarter of 2018 was $109 million, a 26% increase compared to the prior year quarter. Net income per limited partner unit was $0.41 per unit, a 5% increase compared to the prior year quarter. Adjusted EBITDA was $176 million, a 26% increase compared to the prior year quarter. Adjusted EBITDA for the quarter included $11 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $6 million. Cash reserved for bond interest during the quarter was $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $17 million and Distributable Cash Flow was $142 million, a 30% increase over the prior year quarter, resulting in a DCF coverage ratio of 1.3x.
The following table reconciles net income to Adjusted EBITDA and Distributable Cash Flow as used in this release (in thousands):
Three Months Ended June 30, | |||||||
2017 |
2018 | ||||||
Net income |
$ |
87,175 |
109,466 | ||||
Interest expense |
9,015 |
14,628 | |||||
Impairment of property and equipment expense |
— |
4,614 | |||||
Depreciation expense |
30,512 |
36,433 | |||||
Accretion of contingent acquisition consideration |
3,590 |
3,947 | |||||
Accretion of asset retirement obligations |
— |
34 | |||||
Equity-based compensation |
6,951 |
5,867 | |||||
Equity in earnings of unconsolidated affiliates |
(3,623) |
(9,264) | |||||
Distributions from unconsolidated affiliates |
5,820 |
10,810 | |||||
Gain on sale of assets – Antero Resources |
— |
(583) | |||||
Adjusted EBITDA |
139,440 |
175,952 | |||||
Interest paid |
(2,308) |
(6,270) | |||||
Cash reserved for bond interest (1) |
(8,734) |
(8,734) | |||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards (2) |
(2,431) |
(1,500) | |||||
Maintenance capital expenditures (3) |
(16,422) |
(17,289) | |||||
Distributable Cash Flow |
$ |
109,545 |
142,159 | ||||
Distributions Declared to Antero Midstream Holders |
|||||||
Limited Partners |
$ |
59,695 |
77,624 | ||||
Incentive distribution rights |
15,328 |
33,137 | |||||
Total Aggregate Distributions |
$ |
75,023 |
110,761 | ||||
DCF coverage ratio |
1.5x |
1.3x |
1) |
Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Gathering and Processing —During the second quarter, Antero Midstream expanded one of its rich gas Marcellus compressor stations by 80 MMcf/d. Including the 440 MMcf/d of additions during the first quarter of 2018, Antero Midstream has expanded its compression capacity by 520 MMcf/d year-to-date. Antero Midstream's total compression capacity at the end of the second quarter of 2018 was over 2.2 Bcf/d in the Marcellus and Utica combined. Additionally, Antero Midstream connected 30 wells to its gathering system during the quarter. Antero Resources is currently operating five drilling rigs on Antero Midstream dedicated acreage.
The Joint Venture with MPLX continued construction on the Sherwood 10 and 11 Processing Plants, which are expected to be placed online by the end of the third quarter and fourth quarter of 2018, respectively. In addition, the Joint Venture commenced civil construction on its new processing site, "Smithburg", during the second quarter of 2018. The Smithburg Processing Site will initially have a footprint capable of supporting 1.2 Bcf/d of cryogenic processing facilities, or six 200 MMcf/d plants. Importantly, the Smithburg processing site is strategically located two miles west of the Sherwood Processing Facility and will connect to major long-haul pipelines and NGL infrastructure.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 48 well completions during the second quarter of 2018, a 29% increase from the prior year quarter. Antero Resources operated six completion crews on Antero Midstream dedicated acreage in the second quarter of 2018 but expects to reduce its completion crews to four in the second half of 2018.
During the second quarter of 2018, Antero Midstream placed in service the Antero Clearwater Facility, which is the largest advanced wastewater treatment facility for shale oil and gas operations in the world. The Antero Clearwater Facility was temporarily taken offline in June for maintenance and to install additional pretreatment facilities to improve operations. The facility was placed back into commercial service at the end of July.
Balance Sheet and Liquidity
As of June 30, 2018, Antero Midstream had $20 million in cash and $770 million drawn on its $1.5 billion bank credit facility, resulting in $750 million of liquidity. Antero Midstream's net debt to trailing twelve months Adjusted EBITDA was 2.3x as of June 30, 2018. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Commenting on Antero Midstream's distribution growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "The success of Antero Midstream's organic growth model is highlighted by the recent declaration of the Partnership's fourteenth consecutive distribution increase reflecting a 30% annualized growth rate since its IPO in 2014. Importantly, Antero Midstream has delivered this peer-leading growth while maintaining a DCF coverage ratio well in excess of its initial coverage ratio targets in every quarter, demonstrating the consistency of Antero's development plan and integrated midstream strategy. Additionally, Antero Midstream continues to maintain a strong balance sheet with leverage at 2.3x as of June 30, 2018."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $128 million in the second quarter of 2018 as compared to $147 million in the second quarter of 2017. Capital invested in gathering systems and related facilities was $113 million and capital invested in water handling and treatment assets was $15 million, including $5 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the Joint Venture were $39 million during the quarter.
AMGP Second Quarter 2018 Financial Results
AMGP's equity in earnings from Antero Midstream, which reflects the cash distributions from Antero Midstream, was $33 million for the second quarter of 2018. Net income for the quarter was $14 million. AMGP's cash distributions from Antero Midstream were $33 million, net of $1.5 million of total cash reserved and distributed to Series B units of Antero IDR Holdings LLC. General and administrative expenses were $2.4 million, including $1.8 million of special committee and legal advisory fees. The provision and reserve for income taxes was $8 million, resulting in cash available for distribution of $23 million. The 294% increase in cash available for distribution from the second quarter of 2017 is driven by an increase in cash distributions from Antero Midstream.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months | ||
Cash distributions from Antero Midstream Partners LP |
$ |
33,137 |
Cash reserved for distributions to unvested Series B units of IDR LLC |
(1,011) | |
Cash distribution to vested Series B units of IDR LLC |
(506) | |
Cash distributions to Antero Midstream GP LP |
$ |
31,620 |
General and administrative expenses |
(2,398) | |
Interest expense |
(18) | |
Special committee legal and advisory fees included in G&A expense(1) |
1,844 | |
Provision and reserve for income taxes |
(7,777) | |
Cash available for distribution |
$ |
23,271 |
DCF coverage ratio |
1.0x | |
Common shares outstanding |
186,209 | |
Cash distribution per common share |
$ |
0.125 |
1) |
Represents non-recurring accrued legal and advisory fees associated with the ongoing special committee process as disclosed on February 26, 2018. |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, August 2, 2018 at 10:00 am MT to discuss the quarterly 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Thursday, August 9, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10120012.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Thursday, August 9, 2018 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as net income before interest expense, impairment expense, gain on sale of assets, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
"Segment Adjusted EBITDA" is also used by our management team for various purposes, including as a measure of operating performance and as a basis for strategic planning and forecasting. Segment Adjusted EBITDA is a non-GAAP financial measure that we define as operating income before equity-based compensation expense, interest expense, depreciation expense, gain on sale of assets, impairment expense, accretion, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates. Operating income is the most directly comparable GAAP financial measure to Segment Adjusted EBITDA because we do not account for interest expense on a segment basis.
The Partnership defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):
June 30, 2018 | ||
Bank credit facility |
$ |
770,000 |
5.375% AM senior notes due 2024 |
650,000 | |
Net unamortized debt issuance costs |
(8,434) | |
Consolidated total debt |
$ |
1,411,566 |
Cash and cash equivalents |
(19,525) | |
Consolidated net debt |
$ |
1,392,041 |
The following table reconciles net income to Adjusted EBITDA for the twelve months ended June 30, 2018 as used in this release (in thousands):
Twelve Months Ended | ||
Net income |
$ |
362,620 |
Interest expense |
45,631 | |
Impairment of property and equipment expense |
28,045 | |
Depreciation expense |
130,379 | |
Accretion of contingent acquisition consideration |
14,180 | |
Accretion of asset retirement obligations |
68 | |
Equity-based compensation |
26,124 | |
Equity in earnings of unconsolidated affiliate |
(31,467) | |
Distributions from unconsolidated affiliates |
32,270 | |
Gain on sale of asset – Antero Resources |
(583) | |
Adjusted EBITDA |
$ |
607,267 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||
Condensed Consolidated Balance Sheets | |||||
December 31, 2017 and June 30, 2018 | |||||
(Unaudited) | |||||
(In thousands) | |||||
December 31, |
June 30, | ||||
2017 |
2018 | ||||
Assets | |||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
8,363 |
19,525 | ||
Accounts receivable–Antero Resources |
110,182 |
114,072 | |||
Accounts receivable–third party |
1,170 |
12,222 | |||
Prepaid expenses |
670 |
539 | |||
Total current assets |
120,385 |
146,358 | |||
Property and equipment, net |
2,605,602 |
2,770,311 | |||
Investments in unconsolidated affiliates |
303,302 |
358,830 | |||
Other assets, net |
12,920 |
20,730 | |||
Total assets |
$ |
3,042,209 |
3,296,229 | ||
Liabilities and Partners' Capital | |||||
Current liabilities: |
|||||
Accounts payable–Antero Resources |
$ |
6,459 |
3,856 | ||
Accounts payable–third party |
8,642 |
18,754 | |||
Accrued liabilities |
106,006 |
89,182 | |||
Other current liabilities |
209 |
213 | |||
Total current liabilities |
121,316 |
112,005 | |||
Long-term liabilities: |
|||||
Long-term debt |
1,196,000 |
1,411,566 | |||
Contingent acquisition consideration |
208,014 |
215,835 | |||
Asset retirement obligations |
— |
3,114 | |||
Other |
410 |
2,576 | |||
Total liabilities |
1,525,740 |
1,745,096 | |||
Partners' capital: |
|||||
Common unitholders - public (88,059 units and 88,164 units issued and outstanding at December 31, 2017 and June 30, 2018, respectively) |
1,708,379 |
1,722,315 | |||
Common unitholder - Antero Resources (98,870 units issued and outstanding at December 31, 2017 and June 30, 2018) |
(215,682) |
(204,319) | |||
General partner |
23,772 |
33,137 | |||
Total partners' capital |
1,516,469 |
1,551,133 | |||
Total liabilities and partners' capital |
$ |
3,042,209 |
3,296,229 |
ANTERO MIDSTREAM PARTNERS LP | |||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||
Three Months Ended June 30, 2017 and 2018 | |||||
(Unaudited) | |||||
(In thousands, except per unit amounts) | |||||
Three Months Ended June 30, | |||||
2017 |
2018 | ||||
Revenue: |
|||||
Gathering and compression–Antero Resources |
$ |
98,633 |
118,136 | ||
Water handling and treatment–Antero Resources |
95,004 |
132,231 | |||
Gathering and compression–third party |
129 |
— | |||
Water handling and treatment–third party |
— |
25 | |||
Gain on sale of assets – Antero Resources |
— |
583 | |||
Total revenue |
193,766 |
250,975 | |||
Operating expenses: |
|||||
Direct operating |
52,308 |
75,623 | |||
General and administrative (including $6,951 and $5,867 of equity-based compensation in 2017 and 2018, respectively) |
14,789 |
15,494 | |||
Impairment of property and equipment |
— |
4,614 | |||
Depreciation |
30,512 |
36,433 | |||
Accretion of contingent acquisition consideration |
3,590 |
3,947 | |||
Accretion of asset retirement obligations |
— |
34 | |||
Total operating expenses |
101,199 |
136,145 | |||
Operating income |
92,567 |
114,830 | |||
Interest expense, net |
(9,015) |
(14,628) | |||
Equity in earnings of unconsolidated affiliates |
3,623 |
9,264 | |||
Net income and comprehensive income |
87,175 |
109,466 | |||
Net income attributable to incentive distribution rights |
(15,328) |
(33,145) | |||
Limited partners' interest in net income |
$ |
71,847 |
76,321 | ||
Net income per limited partner unit - basic and diluted |
$ |
0.39 |
0.41 | ||
Weighted average limited partner units outstanding - basic |
186,065 |
187,018 | |||
Weighted average limited partner units outstanding - diluted |
186,533 |
187,318 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||
Condensed Consolidated Results of Segment Operations | ||||||||
Three Months Ended June 30, 2017 and 2018 | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Water |
||||||||
Gathering and |
Handling and |
Consolidated | ||||||
Processing |
Treatment |
Total | ||||||
Three months ended June 30, 2017 |
||||||||
Revenues: |
||||||||
Revenue - Antero Resources |
$ |
98,633 |
95,004 |
193,637 | ||||
Revenue - third-party |
129 |
- |
129 | |||||
Total revenues |
98,762 |
95,004 |
193,766 | |||||
Operating expenses: |
||||||||
Direct operating |
9,922 |
42,386 |
52,308 | |||||
General and administrative (before equity-based compensation) |
5,468 |
2,370 |
7,838 | |||||
Equity-based compensation |
5,237 |
1,714 |
6,951 | |||||
Depreciation |
22,271 |
8,241 |
30,512 | |||||
Accretion of contingent acquisition consideration |
- |
3,590 |
3,590 | |||||
Total expenses |
42,898 |
58,301 |
101,199 | |||||
Operating income |
$ |
55,864 |
36,703 |
92,567 | ||||
Segment and consolidated Adjusted EBITDA |
$ |
89,192 |
50,248 |
139,440 | ||||
Three months ended June 30, 2018 |
||||||||
Revenues: |
||||||||
Revenue - Antero Resources |
$ |
118,136 |
132,231 |
250,367 | ||||
Revenue - third-party |
- |
25 |
25 | |||||
Gain on sales of assets – Antero Resources |
583 |
- |
583 | |||||
Total revenues |
118,719 |
132,256 |
250,975 | |||||
Operating expenses: |
||||||||
Direct operating |
12,405 |
63,218 |
75,623 | |||||
General and administrative (before equity-based compensation) |
7,240 |
2,387 |
9,627 | |||||
Equity-based compensation |
4,754 |
1,113 |
5,867 | |||||
Impairment of property and equipment |
4,614 |
- |
4,614 | |||||
Depreciation |
24,258 |
12,175 |
36,433 | |||||
Accretion of contingent acquisition consideration |
- |
3,947 |
3,947 | |||||
Accretion of asset retirement obligations |
- |
34 |
34 | |||||
Total expenses |
53,271 |
82,874 |
136,145 | |||||
Operating income |
$ |
65,448 |
49,382 |
114,830 | ||||
Segment and consolidated Adjusted EBITDA |
$ |
109,301 |
66,651 |
175,952 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||
Selected Operating Data | |||||||||||
Three Months Ended June 30, 2017 and 2018 | |||||||||||
(Unaudited) | |||||||||||
(In thousands) | |||||||||||
Amount of |
|||||||||||
Three Months Ended June 30, |
Increase |
Percentage | |||||||||
2017 |
2018 |
(Decrease) |
Change | ||||||||
Revenue: |
|||||||||||
Revenue - Antero Resources |
$ |
193,637 |
250,367 |
56,730 |
29 |
% | |||||
Revenue - third-party |
129 |
25 |
(104) |
(81) |
% | ||||||
Gain on sale of assets – Antero Resources |
— |
583 |
583 |
* |
% | ||||||
Total revenue |
193,766 |
250,975 |
57,209 |
30 |
% | ||||||
Operating expenses: |
|||||||||||
Direct operating |
52,308 |
75,623 |
23,315 |
45 |
% | ||||||
General and administrative (before equity-based compensation) |
7,838 |
9,627 |
1,789 |
23 |
% | ||||||
Equity-based compensation |
6,951 |
5,867 |
(1,084) |
(16) |
% | ||||||
Impairment of property and equipment |
— |
4,614 |
4,614 |
* |
|||||||
Depreciation |
30,512 |
36,433 |
5,921 |
19 |
% | ||||||
Accretion of contingent acquisition consideration |
3,590 |
3,947 |
357 |
10 |
% | ||||||
Accretion of asset retirement obligations |
— |
34 |
34 |
* |
|||||||
Total operating expenses |
101,199 |
136,145 |
34,946 |
35 |
% | ||||||
Operating income |
92,567 |
114,830 |
22,263 |
24 |
% | ||||||
Interest expense |
(9,015) |
(14,628) |
5,613 |
62 |
% | ||||||
Equity in earnings of unconsolidated affiliates |
3,623 |
9,264 |
5,641 |
156 |
% | ||||||
Net income |
$ |
87,175 |
109,466 |
22,291 |
26 |
% | |||||
Adjusted EBITDA |
$ |
139,440 |
175,952 |
36,512 |
26 |
% | |||||
Operating Data: |
|||||||||||
Gathering—low pressure (MMcf) |
153,180 |
180,268 |
27,088 |
18 |
% | ||||||
Gathering—high pressure (MMcf) |
157,806 |
175,818 |
18,012 |
11 |
% | ||||||
Compression (MMcf) |
108,451 |
141,819 |
33,368 |
31 |
% | ||||||
Fresh water delivery (MBbl) |
15,761 |
20,766 |
5,005 |
32 |
% | ||||||
Treated water (MBbl) |
— |
700 |
700 |
* |
|||||||
Other fluid handling (MBbl) |
3,400 |
4,382 |
982 |
29 |
% | ||||||
Wells serviced by fresh water delivery |
44 |
48 |
4 |
9 |
% | ||||||
Gathering—low pressure (MMcf/d) |
1,683 |
1,981 |
298 |
18 |
% | ||||||
Gathering—high pressure (MMcf/d) |
1,734 |
1,932 |
198 |
11 |
% | ||||||
Compression (MMcf/d) |
1,192 |
1,558 |
366 |
31 |
% | ||||||
Fresh water delivery (MBbl/d) |
173 |
228 |
55 |
32 |
% | ||||||
Treated water (MBbl/d) |
— |
8 |
8 |
* |
|||||||
Other fluid handling (MBbl/d) |
37 |
48 |
11 |
29 |
% | ||||||
Average realized fees: |
|||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.32 |
0.32 |
— |
* |
||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
||||||
Average fresh water delivery fee ($/Bbl) |
$ |
3.72 |
3.78 |
0.06 |
2 |
% | |||||
Average treated water fee ($/Bbl) |
$ |
— |
4.11 |
4.11 |
* |
||||||
Joint Venture Operating Data: |
|||||||||||
Processing - Joint Venture (MMcf) |
19,662 |
51,921 |
32,259 |
164 |
% | ||||||
Fractionation - Joint Venture (MBbl) |
368 |
914 |
546 |
148 |
% | ||||||
Processing - Joint Venture (MMcf/d) |
216 |
571 |
355 |
164 |
% | ||||||
Fractionation - Joint Venture (MBbl/d) |
4 |
10 |
6 |
148 |
% |
___________________________ | |
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||
Condensed Consolidated Statements of Cash Flows | |||||
Six Months Ended June 30, 2017 and 2018 | |||||
(Unaudited) | |||||
(In thousands) | |||||
Six Months Ended June 30, | |||||
2017 |
2018 | ||||
Cash flows provided by (used in) operating activities: |
|||||
Net income |
$ |
162,267 |
217,571 | ||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation |
58,048 |
68,865 | |||
Accretion of contingent acquisition consideration |
7,116 |
7,821 | |||
Accretion of asset retirement obligations |
— |
68 | |||
Impairment of property and equipment |
— |
4,614 | |||
Equity-based compensation |
13,237 |
12,078 | |||
Equity in earnings of unconsolidated affiliates |
(5,854) |
(17,126) | |||
Distributions from unconsolidated affiliates |
5,820 |
17,895 | |||
Amortization of deferred financing costs |
1,267 |
1,385 | |||
Gain on sale of assets – Antero Resources |
— |
(583) | |||
Changes in assets and liabilities: |
|||||
Accounts receivable–Antero Resources |
(14,923) |
(2,147) | |||
Accounts receivable–third party |
3 |
(36) | |||
Prepaid expenses |
235 |
131 | |||
Accounts payable–Antero Resources |
(204) |
(1,912) | |||
Accounts payable–third party |
(523) |
1,856 | |||
Accrued liabilities |
8,449 |
1,951 | |||
Net cash provided by operating activities |
234,938 |
312,431 | |||
Cash flows used in investing activities: |
|||||
Additions to gathering systems and facilities |
(155,365) |
(206,753) | |||
Additions to water handling and treatment systems |
(95,451) |
(49,054) | |||
Investments in unconsolidated affiliates |
(191,364) |
(56,297) | |||
Change in other assets |
(4,804) |
(9,077) | |||
Net cash used in investing activities |
(446,984) |
(321,181) | |||
Cash flows provided by (used in) financing activities: |
|||||
Distributions to unitholders |
(125,014) |
(193,670) | |||
Borrowings on bank credit facilities, net |
95,000 |
215,000 | |||
Issuance of common units, net of offering costs |
246,585 |
— | |||
Employee tax withholding for settlement of equity compensation awards |
(932) |
(1,318) | |||
Other |
(102) |
(100) | |||
Net cash provided by financing activities |
215,537 |
19,912 | |||
Net increase in cash and cash equivalents |
3,491 |
11,162 | |||
Cash and cash equivalents, beginning of period |
14,042 |
8,363 | |||
Cash and cash equivalents, end of period |
$ |
17,533 |
19,525 | ||
Supplemental disclosure of cash flow information: |
|||||
Cash paid during the period for interest |
$ |
21,976 |
28,618 | ||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
5,627 |
( 11,209) |
Antero Midstream GP LP | |||||
Condensed Consolidated Balance Sheets | |||||
December 31, 2017 and June 30, 2018 | |||||
(Unaudited) | |||||
(In thousands, except number of shares and units) | |||||
December 31, |
June 30, | ||||
2017 |
2018 | ||||
Assets | |||||
Current assets: |
|||||
Cash |
$ |
5,987 |
5,300 | ||
Prepaid expenses |
— |
867 | |||
Deferred financing costs |
— |
104 | |||
Total current assets |
5,987 |
6,271 | |||
Investment in Antero Midstream Partners LP |
23,772 |
33,137 | |||
Total assets |
$ |
29,759 |
39,408 | ||
Liabilities and Partners' Capital | |||||
Current liabilities: |
|||||
Accounts payable and accrued liabilities |
293 |
823 | |||
Income taxes payable |
13,858 |
13,310 | |||
Total current liabilities |
14,151 |
14,133 | |||
Non-current liability: |
|||||
Liability for equity-based compensation |
— |
2,191 | |||
Total liabilities |
14,151 |
16,324 | |||
Partners' capital: |
|||||
Common shareholders - public (186,181,975 shares and 186,199,995 shares issued and outstanding at December 31, 2017 and June 30, 2018, respectively) |
(19,866) |
(12,112) | |||
IDR LLC Series B units (32,875 units vested at December 31, 2017 and June 30, 2018) |
35,474 |
35,196 | |||
Total partners' capital |
15,608 |
23,084 | |||
Total liabilities and partners' capital |
$ |
29,759 |
39,408 |
Antero Midstream GP LP | |||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||
Three Months Ended June 30, 2017 and 2018 | |||||
(Unaudited) | |||||
(In thousands, except per share amounts) | |||||
Three Months Ended June 30, | |||||
2017 |
2018 | ||||
Equity in earnings of Antero Midstream Partners LP |
$ |
15,328 |
33,145 | ||
Total income |
15,328 |
33,145 | |||
General and administrative expense |
3,203 |
2,398 | |||
Equity-based compensation |
9,631 |
9,111 | |||
Total operating expenses |
12,834 |
11,509 | |||
Operating income |
2,494 |
21,636 | |||
Interest Expense, net |
— |
18 | |||
Income before income taxes |
2,494 |
21,618 | |||
Provision for income taxes |
(5,755) |
(7,231) | |||
Net income (loss) and comprehensive income (loss) |
(3,261) |
14,387 | |||
Net income attributable to vested Series B units |
— |
(506) | |||
Pre-IPO net income attributed to parent |
1,640 |
— | |||
Net income (loss) attributable to common shareholders |
$ |
(1,621) |
13,881 | ||
Net income (loss) per common share - basic and diluted |
$ |
(0.01) |
0.07 | ||
Weighted average number of common shares outstanding - basic and diluted |
186,170 |
186,199 |
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-second-quarter-2018-financial-and-operating-results-300690484.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DALLAS, Aug. 1, 2018 /PRNewswire/ -- Alerian reported index linked product positions of $15.0 billion as of June 30, 2018. Linked products include exchange-traded funds, exchange-traded notes, return of capital notes, variable insurance portfolios, and mutual funds.
Below is a full list of energy master limited partnership (MLP) positions, as of June 30, 2018, in products linked to the Alerian Index Series.
Ticker |
Exposure in |
Exposure in |
Ticker |
Exposure in |
Exposure in | |
AM |
305,257,484 |
10,340,701 |
HEP |
151,911,915 |
5,375,510 | |
AMGP |
1,164,270 |
61,732 |
MMP |
1,501,453,809 |
21,735,000 | |
ANDX |
446,822,576 |
10,506,056 |
MPLX |
1,162,174,520 |
34,041,433 | |
APU |
58,778,057 |
1,392,185 |
NBLX |
22,166,701 |
434,130 | |
ARLP |
25,591,033 |
1,394,607 |
NGL |
165,162,738 |
13,213,019 | |
BPL |
604,497,037 |
17,197,640 |
NS |
210,933,016 |
9,312,716 | |
BPMP |
20,189,424 |
961,859 |
NSH |
239,822 |
19,340 | |
BWP |
170,678,160 |
14,688,310 |
PAA |
1,177,071,579 |
49,791,522 | |
CEQP |
183,499,246 |
5,779,504 |
PAGP |
3,213,393 |
134,395 | |
CQP |
173,601,824 |
4,828,980 |
PSXP |
318,554,875 |
6,238,834 | |
CVRR |
20,028,626 |
896,135 |
RMP |
147,346,450 |
8,657,253 | |
DCP |
421,401,442 |
10,654,904 |
SEP |
341,382,494 |
9,638,128 | |
DM |
13,475,016 |
990,810 |
SHLX |
322,823,077 |
14,554,692 | |
EEP |
277,227,481 |
25,363,905 |
SMLP |
12,744,536 |
827,567 | |
ENBL |
176,973,526 |
10,343,280 |
SPH |
28,830,596 |
1,227,356 | |
ENLC |
853,859 |
51,906 |
SUN |
27,065,571 |
1,084,358 | |
ENLK |
303,905,691 |
19,568,943 |
TCP |
165,868,659 |
6,391,856 | |
EPD |
1,503,782,388 |
54,347,032 |
TEGP |
386,005,955 |
17,419,041 | |
EQGP |
355,540 |
15,123 |
TGP |
18,444,324 |
1,094,619 | |
EQM |
356,373,011 |
6,907,792 |
USAC |
16,751,289 |
995,323 | |
ETE |
6,023,303 |
349,177 |
VLP |
17,131,051 |
449,988 | |
ETP |
1,481,856,983 |
77,828,623 |
VNOM |
25,953,041 |
813,320 | |
GEL |
281,851,288 |
12,864,048 |
WES |
571,788,034 |
11,816,244 | |
GLOP |
14,609,467 |
612,556 |
WGP |
826,761 |
23,126 | |
GMLP |
15,169,006 |
981,178 |
WPZ |
1,218,967,796 |
30,031,234 | |
HCLP |
18,789,000 |
1,592,288 |
||||
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of June 30, 2018, over $15 billion is directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-june-30-2018-index-linked-product-positions-300690263.html
SOURCE Alerian
DENVER, April 25, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their first quarter 2018 financial and operating results. The relevant condensed consolidated financial statements are included in Antero Midstream's and AMGP's Quarterly Reports on Form 10-Q for the quarter ended March 31, 2018, which have been filed with the Securities and Exchange Commission.
Antero Midstream First Quarter 2018 Highlights Include:
AMGP First Quarter 2018 Highlights Include:
Commenting on the first quarter 2018 results and outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream reported record gathering, compression and fresh water delivery volumes for the quarter driven by the continued growth in production at Antero Resources. These record volumes increased our Adjusted EBITDA by 35% compared to last year, allowing us to raise distributions by 30% while maintaining a strong balance sheet and coverage profile. Importantly, the first quarter results generated significant momentum towards achieving our long term Adjusted EBITDA, distributable cash flow and distribution growth targets at AM and AMGP."
For a discussion of the non-GAAP financial measures Adjusted EBITDA, Distributable Cash Flow, and net debt please see "Non-GAAP Financial Measures."
Antero Midstream First Quarter Financial Results
Low pressure gathering volumes for the first quarter of 2018 averaged 1,835 MMcf/d, an 11% increase as compared to the prior year quarter and a Partnership record. Compression volumes for the first quarter of 2018 averaged 1,413 MMcf/d, a 37% increase as compared to the first quarter of 2017 and a Partnership record. High pressure gathering volumes for the first quarter of 2018 averaged 1,765 MMcf/d, a 12% increase over the first quarter of 2017. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged a record 221 MBbl/d during the quarter driven by increased completion activity by Antero Resources. During the quarter, Antero Midstream serviced 46 well completions with its fresh water delivery system, a 35% increase compared to the prior year quarter.
Gross processing volumes from our processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 519 MMcf/d for the first quarter of 2018, an increase of 905% compared to the prior year quarter. Gross Joint Venture fractionation volumes averaged 6,163 Bbl/d, a 754% increase compared to the prior year quarter. The increase in processing and fractionation volumes is driven by an increase in Antero Resources' rich gas and C3+ NGL volumes.
Three Months Ended March 31, |
||||||
Average Daily Volumes: |
2017 |
2018 |
% | |||
Low Pressure Gathering (MMcf/d) |
1,659 |
1,835 |
11% | |||
Compression (MMcf/d) |
1,028 |
1,413 |
37% | |||
High Pressure Gathering (MMcf/d) |
1,581 |
1,765 |
12% | |||
Fresh Water Delivery (MBbl/d) |
148 |
221 |
49% | |||
Gross Joint Venture Processing (MMcf/d) |
52 |
519 |
905% | |||
Gross Joint Venture Fractionation (Bbl/d) |
722 |
6,163 |
754% |
For the three months ended March 31, 2018, the Partnership reported revenues of $229 million, comprised of $108 million from the Gathering and Processing segment and $121 million from the Water Handling and Treatment segment. Revenues increased 31% compared to the prior year quarter, driven by growth in throughput and fresh water delivery volumes. Water Handling and Treatment segment revenues include $46 million from wastewater handling and high rate water transfer services provided to Antero Resources, which are billed at cost plus 3%. The Partnership did not report revenues related to water treatment at the Antero Clearwater Facility as ongoing commissioning costs are credited to capital expenditures, net of treatment fees charged to Antero Resources.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $11 million and $56 million, respectively, for a total of $67 million compared to $48 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $44 million from wastewater handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $14 million, in line with the prior year quarter. General and administrative expenses excluding equity-based compensation were $8 million during the first quarter of 2018, in line with the first quarter of 2017. Total operating expenses were $118 million, including $32 million of depreciation and $4 million of accretion of contingent acquisition consideration and asset retirement obligations.
Net income for the first quarter of 2018 was $108 million, a 44% increase compared to the prior year quarter. The increase in net income was driven by growth in throughput and fresh water delivery volumes. Net income per limited partner unit was $0.43 per unit, a 23% increase compared to the prior year quarter. Adjusted EBITDA was $161 million, a 35% increase compared to the prior year quarter. Adjusted EBITDA for the quarter included $7 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $22 million. Cash reserved for bond interest during the quarter increased $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $17 million. Distributable Cash Flow was $130 million, a 43% increase over the prior year quarter, resulting in a DCF coverage ratio of 1.3x.
The following table reconciles net income to Adjusted EBITDA and Distributable Cash Flow as used in this release (in thousands):
Three months ended | |||||
March 31, | |||||
2017 |
2018 | ||||
Net income |
$ |
75,091 |
$ |
108,105 | |
Interest expense |
8,836 |
11,297 | |||
Depreciation expense |
27,536 |
32,432 | |||
Accretion of contingent acquisition consideration |
3,526 |
3,874 | |||
Accretion of asset retirement obligations |
— |
34 | |||
Equity-based compensation |
6,286 |
6,211 | |||
Equity in earnings of unconsolidated affiliates |
(2,231) |
(7,862) | |||
Distributions from unconsolidated affiliates |
— |
7,085 | |||
Adjusted EBITDA |
119,044 |
161,176 | |||
Interest paid |
(19,668) |
(22,348) | |||
Decrease in cash reserved for bond interest (1) |
8,929 |
8,734 | |||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2) |
(1,500) |
(1,500) | |||
Maintenance capital expenditures(3) |
(15,903) |
(16,488) | |||
Distributable Cash Flow |
$ |
90,902 |
$ |
129,574 | |
Distributions Declared to Antero Midstream Holders |
|||||
Limited Partners |
55,753 |
72,923 | |||
Incentive distribution rights |
11,553 |
28,453 | |||
Total Aggregate Distributions |
$ |
67,306 |
$ |
101,376 | |
DCF coverage ratio |
1.35x |
1.28x |
1) |
Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Gathering and Processing — Antero Midstream placed in service its largest compressor station to-date, adding an additional 240 MMcf/d of rich gas compression in the Marcellus. Additionally, the Partnership placed in service its second compressor station in the Utica Shale, adding an additional 200 MMcf/d of capacity during the first quarter of 2018. Antero Midstream's total compression capacity at the end of the first quarter of 2018 was 2.15 Bcf/d in the Marcellus and Utica combined, with utilization averaging 73% for the quarter. Additionally, Antero Midstream connected 27 wells to its gathering system during the quarter. Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.
The Joint Venture brought online the Sherwood 9 processing plant, its third 200 MMcf/d cryogenic processing plant, during the quarter increasing the Joint Venture's total processing capacity to 600 MMcf/d. The Joint Venture plans to bring two more processing plants online by the end of 2018, bringing the Joint Venture's total processing capacity to 1.0 Bcf/d.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 46 well completions during the first quarter of 2018, a 35% increase from the prior year quarter. Antero Resources is currently operating five completion crews on Antero Midstream dedicated acreage. Antero Midstream continued the commissioning process for the Antero Clearwater Facility during the first quarter of 2018 and expects to place the facility into full commercial service in the second quarter of 2018.
Balance Sheet and Liquidity
As of March 31, 2018, Antero Midstream had $9 million in cash and $660 million drawn on its $1.5 billion bank credit facility, resulting in $850 million of liquidity. Antero Midstream's net debt to trailing twelve months Adjusted EBITDA was 2.3x as of March 31, 2018. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Commenting on Antero Midstream's balance sheet and liquidity, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream continues to maintain a strong balance sheet with leverage of 2.3x and DCF coverage of 1.3x, in line with our stated targets. Our attractive partnership-wide rates of return and excess distributable cash flow have allowed us to maintain this attractive leverage profile and deliver on our organic project backlog."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $128 million in the first quarter of 2018 as compared to $104 million in the first quarter of 2017. Capital invested in gathering systems and related facilities was $94 million and capital invested in water handling and treatment assets was $34 million, including $19 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the Joint Venture were $17 million during the quarter.
AMGP First Quarter 2018 Financial Results
AMGP's equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $28 million for the first quarter of 2018. Net income for the quarter was $13 million. AMGP's cash distributions from Antero Midstream were $27 million for first quarter of 2018, net of $0.8 million and $0.4 million of cash reserved and cash distributed to Series B units of IDR Holdings LLC, respectively. General and administrative expenses were $0.9 million, including $0.5 million of accrued special committee and legal advisory fees. The provision and reserve for income taxes was $7 million, resulting in cash available for distribution of $20 million. The increase in cash available for distribution is driven by an increase in cash distributions from Antero Midstream and the reduction in the U.S. federal tax rate.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months Ended | |||
Cash distributions from Antero Midstream Partners LP |
$ |
28,453 | |
Cash reserved for distributions to Series B units of IDR LLC |
(826) | ||
Cash distribution to Series B units of IDR LLC |
(413) | ||
Cash distributions to Antero Midstream GP LP |
$ |
27,214 | |
General and administrative expenses |
(925) | ||
Special committee legal and advisory fees accrued in G&A expense(1) |
491 | ||
Provision and reserve for income taxes |
(6,659) | ||
Cash available for distribution |
$ |
20,121 | |
DCF coverage ratio |
1.0x | ||
Common shares outstanding |
186,188 | ||
Cash distribution per common share |
$ |
0.108 |
1) |
Represents non-recurring accrued legal and advisory fees associated with the ongoing special committee process as disclosed on February 26, 2018. |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, April 26, 2018 at 10:00 am MT to discuss the quarterly 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Thursday, May 3, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10117427.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Thursday, May 3, 2018 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Non-GAAP Financial Measures and Definitions
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, accretion of contingent acquisition consideration, accretion of asset retirement obligations, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
"Segment Adjusted EBITDA" is also used by our management team for various purposes, including as a measure of operating performance and as a basis for strategic planning and forecasting. Segment Adjusted EBITDA is a non-GAAP financial measure that we define as operating income before equity-based compensation expense, interest expense, depreciation expense, accretion, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates. Operating income represents net income before interest expense and equity in earnings of unconsolidated affiliates, and is the most directly comparable GAAP financial measure to Segment Adjusted EBITDA because we do not account for interest expense on a segment basis.
The Partnership defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
March 31, | |||
2018 | |||
Bank credit facility |
$ |
660,000 | |
5.375% AM senior notes due 2024 |
650,000 | ||
Net unamortized debt issuance costs |
(8,720) | ||
Consolidated total debt |
$ |
1,301,280 | |
Cash and cash equivalents |
(8,714) | ||
Consolidated net debt |
$ |
1,292,566 |
The following table reconciles net income to Adjusted EBITDA for the twelve months ended March 31, 2018 as used in this release (in thousands):
Twelve Months March 31, | ||
2018 | ||
Net income |
$ |
340,328 |
Interest expense |
40,018 | |
Impairment of property and equipment expense |
23,431 | |
Depreciation expense |
124,458 | |
Accretion of contingent acquisition consideration |
13,824 | |
Accretion of asset retirement obligations |
34 | |
Equity-based compensation |
27,208 | |
Equity in earnings of unconsolidated affiliate |
(25,825) | |
Distributions from unconsolidated affiliates |
27,280 | |
Adjusted EBITDA |
$ |
570,756 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||||
Condensed Consolidated Balance Sheets | |||||||
December 31, 2017 and March 31, 2018 | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
December 31, |
March 31, |
||||||
2017 |
2018 |
||||||
Assets | |||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
8,363 |
8,714 |
||||
Accounts receivable–Antero Resources |
110,182 |
111,001 |
|||||
Accounts receivable–third party |
1,170 |
1,245 |
|||||
Prepaid expenses |
670 |
1,157 |
|||||
Total current assets |
120,385 |
122,117 |
|||||
Property and equipment, net |
2,605,602 |
2,678,725 |
|||||
Investments in unconsolidated affiliates |
303,302 |
321,468 |
|||||
Other assets, net |
12,920 |
13,792 |
|||||
Total assets |
$ |
3,042,209 |
3,136,102 |
||||
Liabilities and Partners' Capital | |||||||
Current liabilities: |
|||||||
Accounts payable–third party |
$ |
8,642 |
7,376 |
||||
Accounts payable–Antero Resources |
6,459 |
2,765 |
|||||
Accrued liabilities |
106,006 |
70,369 |
|||||
Other current liabilities |
209 |
228 |
|||||
Total current liabilities |
121,316 |
80,738 |
|||||
Long-term liabilities: |
|||||||
Long-term debt |
1,196,000 |
1,301,280 |
|||||
Contingent acquisition consideration |
208,014 |
211,888 |
|||||
Asset retirement obligations |
— |
3,080 |
|||||
Other |
410 |
357 |
|||||
Total liabilities |
1,525,740 |
1,597,343 |
|||||
Partners' capital: |
|||||||
Common unitholders - public (88,059 units and 88,064 units issued and outstanding at December 31, 2017 and March 31, 2018, respectively) |
1,708,379 |
1,716,141 |
|||||
Common unitholder - Antero Resources (98,870 units issued and outstanding at December 31, 2017 and March 31, 2018) |
(215,682) |
(205,835) |
|||||
General partner |
23,772 |
28,453 |
|||||
Total partners' capital |
1,516,469 |
1,538,759 |
|||||
Total liabilities and partners' capital |
$ |
3,042,209 |
3,136,102 |
ANTERO MIDSTREAM PARTNERS LP | ||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||
Three Months Ended March 31, 2017 and 2018 | ||||||
(Unaudited) | ||||||
(In thousands, except per unit amounts) | ||||||
Three Months Ended March 31, | ||||||
2017 |
2018 | |||||
Revenue: |
||||||
Gathering and compression–Antero Resources |
$ |
91,524 |
108,177 | |||
Water handling and treatment–Antero Resources |
83,110 |
120,889 | ||||
Gathering and compression–third party |
135 |
— | ||||
Water handling and treatment–third party |
— |
525 | ||||
Total revenue |
174,769 |
229,591 | ||||
Operating expenses: |
||||||
Direct operating |
47,554 |
67,256 | ||||
General and administrative (including $6,286 and $6,211 of equity-based compensation in 2017 and 2018, respectively) |
14,457 |
14,455 | ||||
Depreciation |
27,536 |
32,432 | ||||
Accretion of contingent acquisition consideration |
3,526 |
3,874 | ||||
Accretion of asset retirement obligations |
— |
34 | ||||
Total operating expenses |
93,073 |
118,051 | ||||
Operating income |
81,696 |
111,540 | ||||
Interest expense, net |
(8,836) |
(11,297) | ||||
Equity in earnings of unconsolidated affiliates |
2,231 |
7,862 | ||||
Net income and comprehensive income |
75,091 |
108,105 | ||||
Net income attributable to incentive distribution rights |
(11,553) |
(28,453) | ||||
Limited partners' interest in net income |
$ |
63,538 |
79,652 | |||
Net income per limited partner unit - basic and diluted |
$ |
0.35 |
0.43 | |||
Weighted average limited partner units outstanding - basic |
183,033 |
186,934 | ||||
Weighted average limited partner units outstanding - diluted |
183,447 |
187,173 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Results of Segment Operations | |||||||||
Three Months Ended March 31, 2017 and 2018 | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three months ended March 31, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
91,524 |
83,110 |
174,634 | |||||
Revenue - third-party |
135 |
— |
135 | ||||||
Total revenues |
91,659 |
83,110 |
174,769 | ||||||
Operating expenses: |
|||||||||
Direct operating |
8,114 |
39,440 |
47,554 | ||||||
General and administrative (before equity-based compensation) |
5,549 |
2,622 |
8,171 | ||||||
Equity-based compensation |
4,589 |
1,697 |
6,286 | ||||||
Depreciation |
19,700 |
7,836 |
27,536 | ||||||
Accretion of contingent acquisition consideration |
— |
3,526 |
3,526 | ||||||
Total expenses |
37,952 |
55,121 |
93,073 | ||||||
Operating income |
$ |
53,707 |
27,989 |
81,696 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
77,996 |
41,048 |
119,044 | |||||
Three months ended March 31, 2018 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
108,177 |
120,889 |
229,066 | |||||
Revenue - third-party |
— |
525.00 |
525.00 | ||||||
Total revenues |
108,177 |
121,414 |
229,591 | ||||||
Operating expenses: |
|||||||||
Direct operating |
11,382 |
55,874 |
67,256 | ||||||
General and administrative (before equity-based compensation) |
5,704 |
2,540 |
8,244 | ||||||
Equity-based compensation |
4,658 |
1,553 |
6,211 | ||||||
Depreciation |
23,414 |
9,018 |
32,432 | ||||||
Accretion of contingent acquisition consideration |
— |
3,874 |
3,874 | ||||||
Accretion of asset retirement obligations |
— |
34 |
34 | ||||||
Total expenses |
45,158 |
72,893 |
118,051 | ||||||
Operating income |
$ |
63,019 |
48,521 |
111,540 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
98,176 |
63,000 |
161,176 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Selected Operating Data | ||||||||||||
Three Months Ended March 31, 2017 and 2018 | ||||||||||||
(Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended March 31, |
Amount of Increase |
Percentage | ||||||||||
2017 |
2018 |
(Decrease) |
Change | |||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
174,634 |
229,066 |
54,432 |
31 |
% | ||||||
Revenue - third-party |
135 |
525 |
390 |
289 |
% | |||||||
Total revenue |
174,769 |
229,591 |
54,822 |
31 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
47,554 |
67,256 |
19,702 |
41 |
% | |||||||
General and administrative (before equity-based compensation) |
8,171 |
8,244 |
73 |
1 |
% | |||||||
Equity-based compensation |
6,286 |
6,211 |
(75) |
(1) |
% | |||||||
Depreciation |
27,536 |
32,432 |
4,896 |
18 |
% | |||||||
Accretion of contingent acquisition consideration |
3,526 |
3,874 |
348 |
10 |
% | |||||||
Accretion of asset retirement obligations |
— |
34 |
34 |
* |
||||||||
Total operating expenses |
93,073 |
118,051 |
24,978 |
27 |
% | |||||||
Operating income |
81,696 |
111,540 |
29,844 |
37 |
% | |||||||
Interest expense |
(8,836) |
(11,297) |
(2,461) |
28 |
% | |||||||
Equity in earnings of unconsolidated affiliates |
2,231 |
7,862 |
5,631 |
252 |
% | |||||||
Net income |
$ |
75,091 |
108,105 |
33,014 |
44 |
% | ||||||
Adjusted EBITDA |
$ |
119,044 |
161,176 |
42,132 |
35 |
% | ||||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
149,268 |
165,192 |
15,924 |
11 |
% | |||||||
Gathering—high pressure (MMcf) |
142,313 |
158,862 |
16,549 |
12 |
% | |||||||
Compression (MMcf) |
92,521 |
127,195 |
34,674 |
37 |
% | |||||||
Condensate gathering (MBbl) |
15 |
— |
(15) |
* |
||||||||
Fresh water delivery (MBbl) |
13,363 |
19,915 |
6,552 |
49 |
% | |||||||
Other fluid handling (MBbl) |
3,199 |
3,979 |
780 |
24 |
% | |||||||
Wells serviced by fresh water delivery |
34 |
46 |
12 |
35 |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,659 |
1,835 |
176 |
11 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,581 |
1,765 |
184 |
12 |
% | |||||||
Compression (MMcf/d) |
1,028 |
1,413 |
385 |
37 |
% | |||||||
Fresh water delivery (MBbl/d) |
148 |
221 |
73 |
49 |
% | |||||||
Other fluid handling (MBbl/d) |
36 |
44 |
8 |
24 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.32 |
0.32 |
— |
* |
|||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average fresh water delivery fee ($/Bbl) |
$ |
3.71 |
3.78 |
0.07 |
2 |
% | ||||||
Joint Venture Operating Data: |
||||||||||||
Processing - Joint Venture (MMcf) |
4,649 |
46,726 |
42,077 |
905 |
% | |||||||
Fractionation - Joint Venture (MBbl) |
65 |
557 |
490 |
754 |
% | |||||||
Processing - Joint Venture (MMcf/d) |
52 |
519 |
467 |
905 |
% | |||||||
Fractionation - Joint Venture (MBbl/d) |
1 |
6 |
5 |
754 |
% | |||||||
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||
Condensed Consolidated Statements of Cash Flows | |||||
Three Months Ended March 31, 2017 and 2018 | |||||
(Unaudited) | |||||
(In thousands) | |||||
Three Months Ended March 31, | |||||
2017 |
2018 | ||||
Cash flows provided by (used in) operating activities: |
|||||
Net income |
$ |
75,091 |
108,105 | ||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation |
27,536 |
32,432 | |||
Accretion of contingent acquisition consideration |
3,526 |
3,874 | |||
Accretion of asset retirement obligations |
— |
34 | |||
Equity-based compensation |
6,286 |
6,211 | |||
Equity in earnings of unconsolidated affiliates |
(2,231) |
(7,862) | |||
Distributions from unconsolidated affiliates |
— |
7,085 | |||
Amortization of deferred financing costs |
631 |
690 | |||
Changes in assets and liabilities: |
|||||
Accounts receivable–Antero Resources |
(7,361) |
(2,715) | |||
Accounts receivable–third party |
40 |
— | |||
Prepaid expenses |
31 |
(487) | |||
Accounts payable–third party |
2,504 |
(3,043) | |||
Accounts payable–Antero Resources |
(765) |
(3,380) | |||
Accrued liabilities |
(5,540) |
(6,894) | |||
Net cash provided by operating activities |
99,748 |
134,050 | |||
Cash flows used in investing activities: |
|||||
Additions to gathering systems and facilities |
(66,559) |
(93,774) | |||
Additions to water handling and treatment systems |
(36,954) |
(34,197) | |||
Investments in unconsolidated affiliates |
(159,889) |
(17,389) | |||
Change in other assets |
(5,874) |
(1,284) | |||
Net cash used in investing activities |
(269,276) |
(146,644) | |||
Cash flows provided by (used in) financing activities: |
|||||
Distributions to unitholders |
(57,633) |
(92,003) | |||
Borrowings (repayments) on bank credit facilities, net |
(10,000) |
105,000 | |||
Issuance of common units, net of offering costs |
223,119 |
— | |||
Employee tax withholding for settlement of equity compensation awards |
— |
(18) | |||
Other |
— |
(34) | |||
Net cash provided by financing activities |
155,486 |
12,945 | |||
Net increase (decrease) in cash and cash equivalents |
(14,042) |
351 | |||
Cash and cash equivalents, beginning of period |
14,042 |
8,363 | |||
Cash and cash equivalents, end of period |
$ |
— |
8,714 | ||
Supplemental disclosure of cash flow information: |
|||||
Cash paid during the period for interest |
$ |
19,668 |
22,348 | ||
Supplemental disclosure of noncash investing activities: |
|||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
14,989 |
(27,284) |
Antero Midstream GP LP | ||||||
Condensed Consolidated Balance Sheets | ||||||
December 31, 2017 and March 31, 2018 | ||||||
(Unaudited) | ||||||
(In thousands, except number of shares and units) | ||||||
December 31, |
March 31, | |||||
2017 |
2018 | |||||
Assets | ||||||
Current assets: |
||||||
Cash |
$ |
5,987 |
14,482 | |||
Prepaid expenses |
— |
155 | ||||
Total current assets |
5,987 |
14,637 | ||||
Investment in Antero Midstream Partners LP |
23,772 |
28,453 | ||||
Total assets |
$ |
29,759 |
43,090 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accounts payable and accrued liabilities |
293 |
843 | ||||
Income taxes payable |
13,858 |
19,946 | ||||
Total current liabilities |
14,151 |
20,789 | ||||
Non-current liability: |
||||||
Liability for equity-based compensation |
— |
858 | ||||
Total liabilities |
14,151 |
21,647 | ||||
Partners' capital: |
||||||
Common shareholders - public (186,181,975 shares and 186,189,699 shares issued and outstanding at December 31, 2017 and March 31, 2018, respectively) |
(19,866) |
(13,661) | ||||
IDR LLC Series B units (32,875 units vested at December 31, 2017 and March 31, 2018) |
35,474 |
35,104 | ||||
Total partners' capital |
15,608 |
21,443 | ||||
Total liabilities and partners' capital |
$ |
29,759 |
43,090 |
Antero Midstream GP LP | |||||
Condensed Consolidated Statements of Operations and Comprehensive Income | |||||
Three Months Ended March 31, 2017 and 2018 | |||||
(Unaudited) | |||||
(In thousands, except per share amounts) | |||||
Three Months Ended March 31, | |||||
2017 |
2018 | ||||
Equity in earnings of Antero Midstream Partners LP |
$ |
11,553 |
28,453 | ||
Total income |
11,553 |
28,453 | |||
General and administrative expense |
2,104 |
925 | |||
Equity-based compensation |
8,323 |
8,635 | |||
Total expenses |
10,427 |
9,560 | |||
Income before income taxes |
1,126 |
18,893 | |||
Provision for income taxes |
(4,425) |
(6,088) | |||
Net income (loss) and comprehensive income (loss) |
$ |
(3,299) |
12,805 | ||
Net income attributable to Series B units |
(413) | ||||
Net income attributable to common shareholders |
$ |
12,392 | |||
Net income per common share - basic and diluted |
$ |
0.07 | |||
Weighted average number of common shares outstanding - basic and diluted |
186,188 |
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-first-quarter-2018-financial-and-operating-results-300636686.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, April 18, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective first quarter 2018 distributions.
Antero Midstream Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.39 per unit ($1.56 per unit annualized) for the first quarter of 2018. The distribution represents a 30% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is Antero Midstream's thirteenth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on May 18, 2018 to unitholders of record as of May 3, 2018.
AMGP Increased Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a distribution of $0.108 per share ($0.432 per share annualized) for the first quarter of 2018. The distribution represents a 44% increase compared to the fourth quarter of 2017. The distribution is AMGP's third consecutive quarterly distribution increase since its initial public offering in May 2017 and will be payable on May 23, 2018 to shareholders of record as of May 3, 2018.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-first-quarter-2018-distributions-300632432.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Feb. 26, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") announced today that the Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, has formed a special committee comprised solely of independent directors (the "AM Special Committee") in conjunction with the formation of special committees at both Antero Resources Corporation ("Antero") and at Antero Midstream GP LP ("AMGP"). Antero's ongoing efforts to explore, review and evaluate potential measures related to its valuation may include transactions involving Antero Midstream, and the AM Special Committee is being established to consider any such transactions. The AM Special Committee is in the process of hiring financial and legal advisors to assist in its evaluation of potential measures that could involve Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's control. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017. All statements, other than historical facts included in this release, including potential measures involving Antero or AMGP, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources, Antero Midstream or AMGP.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-partners-announces-formation-of-special-committee-300603864.html
SOURCE Antero Midstream Partners LP
DALLAS, Feb. 21, 2018 /PRNewswire/ -- Alerian reported index linked product positions of $16.3 billion as of December 31, 2017. Linked products include exchange-traded funds, exchange-traded notes, return of capital notes, variable insurance portfolios, and mutual funds.
Below is a full list of energy master limited partnership (MLP) positions, as of December 31, 2017, in products linked to the Alerian Index Series.
Ticker |
Exposure in |
Exposure in |
Ticker |
Exposure in |
Exposure in | |
AM |
318,072,149 |
10,952,898 |
MMP |
1,644,568,414 |
23,182,526 | |
AMGP |
754,587 |
38,265 |
MPLX |
1,279,929,181 |
36,084,837 | |
ANDX |
516,099,522 |
11,173,404 |
NBLX |
21,404,873 |
428,097 | |
APU |
76,556,528 |
1,655,992 |
NGL |
195,952,022 |
13,946,763 | |
ARLP |
20,166,275 |
1,023,669 |
NS |
296,565,295 |
9,902,013 | |
BPL |
908,164,717 |
18,328,249 |
NSH |
236,356 |
15,055 | |
BWP |
201,509,203 |
15,608,769 |
PAA |
1,085,692,515 |
52,601,382 | |
CEQP |
30,317,020 |
1,175,078 |
PAGP |
3,567,709 |
162,538 | |
CQP |
30,774,953 |
1,038,291 |
PSXP |
303,822,210 |
5,803,672 | |
DCP |
411,714,791 |
11,332,639 |
RMP |
197,598,050 |
9,203,449 | |
DM |
186,044,367 |
6,109,831 |
SEP |
397,826,315 |
10,061,364 | |
EEP |
372,358,764 |
26,962,981 |
SHLX |
369,468,507 |
12,389,957 | |
ENBL |
30,305,242 |
2,131,170 |
SMLP |
20,113,987 |
981,170 | |
ENLC |
1,134,945 |
64,485 |
SPH |
35,347,307 |
1,459,426 | |
ENLK |
317,615,016 |
20,664,607 |
SUN |
36,559,156 |
1,287,294 | |
EPD |
1,672,410,145 |
63,086,011 |
TCP |
350,896,258 |
6,608,216 | |
EQGP |
315,059 |
11,712 |
TEGP |
1,533,669 |
59,583 | |
EQM |
536,502,790 |
7,339,299 |
TEP |
269,478,027 |
5,877,383 | |
ETE |
6,574,648 |
380,918 |
TGP |
26,220,374 |
1,301,259 | |
ETP |
1,669,396,449 |
93,158,284 |
VLP |
23,823,578 |
535,361 | |
GEL |
300,264,393 |
13,434,648 |
VNOM |
20,179,418 |
864,956 | |
GLOP |
17,814,465 |
719,776 |
WES |
604,184,334 |
12,563,617 | |
GMLP |
26,442,305 |
1,159,750 |
WGP |
664,201 |
17,874 | |
HEP |
168,157,229 |
5,175,661 |
WPZ |
1,231,920,496 |
31,766,903 |
About Alerian
Alerian equips investors to make informed decisions about Master Limited Partnerships (MLPs) and energy infrastructure. Its benchmarks, including the flagship Alerian MLP Index (AMZ), are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of December 31, 2017, over $16 billion was directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
View original content:http://www.prnewswire.com/news-releases/alerian-reports-december-31-2017-index-linked-product-positions-300602316.html
SOURCE Alerian
DENVER, Feb. 13, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their fourth quarter and full year 2017 financial and operating results. The relevant consolidated financial statements are included in Antero Midstream's and AMGP's Annual Reports on Form 10-K for the year ended December 31, 2017, which have been filed with the Securities and Exchange Commission.
Antero Midstream Fourth Quarter 2017 Highlights Include:
Antero Midstream Full Year 2017 Highlights Include:
Antero Midstream GP LP Fourth Quarter 2017 Highlights Include:
Commenting on the 2017 results and outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream had another successful year executing its organic growth strategy and expanding its operations downstream into processing and fractionation. We expect to continue this momentum into 2018 having recently brought online the Sherwood 9 processing plant, which expands the processing and fractionation Joint Venture's total processing capacity to 600 MMcf/d. This full midstream value chain strategy positions Antero Midstream to deliver on its attractive, peer-leading, long-term distribution growth targets supported by its five year organic project backlog of $2.7 billion."
Mr. Rady further added, "Antero Midstream continues to benefit from the improving financial strength of Antero Resources, which has taken significant steps over the last year to improve its balance sheet and free cash flow profile. Antero Resources is at an inflection point where going forward it is positioned to fully fund its five year development plan with operating cash flow, ultimately de-risking the growth profile of Antero Midstream."
For a discussion of the non-GAAP financial measures adjusted net income, Adjusted EBITDA, Distributable Cash Flow, and net debt please see "Non-GAAP Financial Measures."
Antero Midstream Fourth Quarter Financial Results
Low pressure gathering volumes for the fourth quarter of 2017 averaged 1,711 MMcf/d, a 12% increase as compared to the fourth quarter of 2016. Low pressure gathering volumes were negatively impacted by lower than expected production in the Utica due to the delayed in-service date of the Rover Pipeline. Compression volumes for the fourth quarter of 2017 averaged 1,355 MMcf/d, a 47% increase as compared to the fourth quarter of 2016 as a result of placing new compression stations in service throughout 2017 totaling approximately 600 MMcf/d of incremental capacity. High pressure gathering volumes for the fourth quarter of 2017 averaged 1,842 MMcf/d, a 28% increase from the fourth quarter of 2016. High pressure gathering volumes were in excess of low pressure gathering volumes due to Antero Resources' temporary use of an Antero Midstream owned high pressure line to avoid downstream pipeline constraints. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 149 MBbl/d during the quarter, in line with the fourth quarter of 2016.
Gross processing volumes from our processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture"), averaged 425 MMcf/d, for the fourth quarter of 2017, an increase of 16% compared to the third quarter of 2017. Gross Joint Venture fractionation volumes averaged 9,096 Bbl/d, a 41% increase sequentially.
Three Months Ended December 31, |
||||||
Average Daily Volumes: |
2016 |
2017 |
% Change | |||
Low Pressure Gathering (MMcf/d) |
1,522 |
1,711 |
12% | |||
Compression (MMcf/d) |
920 |
1,355 |
47% | |||
High Pressure Gathering (MMcf/d) |
1,437 |
1,842 |
28% | |||
Fresh Water Delivery (MBbl/d) |
150 |
149 |
(1)% | |||
Gross Joint Venture Processing (MMcf/d) |
— |
425 |
* | |||
Gross Joint Venture Fractionation (Bbl/d) |
— |
9,096 |
* |
______________________________ | |
* |
Not applicable. Antero Midstream has a 50% interest in the Joint Venture, which was formed in February 2017. |
For the three months ended December 31, 2017, the Partnership reported revenues of $210 million, comprised of $106 million from the Gathering and Processing segment and $104 million from the Water Handling and Treatment segment. Revenues increased 26% compared to the prior year quarter, driven by growth in throughput volumes. Water Handling and Treatment segment revenues include $54 million from wastewater handling and high rate water transfer services provided to Antero Resources, which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing, and Water Handling and Treatment segments were $11 million and $59 million, respectively, for a total of $70 million compared to $37 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $53 million from wastewater handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $15 million, a $1 million increase compared to the fourth quarter of 2016. General and administrative expenses excluding equity-based compensation were $8 million during the fourth quarter of 2017, in line with the fourth quarter of 2016. Total operating expenses were $143 million, including $31 million of depreciation, $23 million of impairment of property and equipment and $4 million of accretion of contingent acquisition consideration.
Net income for the fourth quarter of 2017 was $64 million, a 13% decrease compared to the prior year quarter. The decrease in net income was driven by a $23 million non-cash impairment expense of the condensate pipelines in the Utica that are not expected to be utilized in Antero Midstream's high-graded infrastructure plan. Net income per limited partner unit was $0.22 per unit, a 41% decrease compared to the prior year quarter. Adjusted net income was $88 million, a 19% increase compared to the prior year quarter. Adjusted EBITDA was $142 million, a 13% increase compared to the prior year quarter. The increase in Adjusted EBITDA was primarily driven by increased natural gas throughput volumes and contribution from the Joint Venture. Adjusted EBITDA for the quarter included $10 million in distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $4 million. Cash reserved for bond interest during the quarter increased $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $1 million. Maintenance capital expenditures during the quarter totaled $12 million and Distributable Cash Flow was $117 million, resulting in a DCF coverage ratio of 1.3x.
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 |
Years ended | ||||||||||
December 31, |
December 31, | ||||||||||
2016 |
2017 |
2016 |
2017 | ||||||||
Net income |
$ |
73,351 |
$ |
64,155 |
$ |
236,703 |
$ |
307,315 | |||
Impairment of property and equipment |
— |
23,431 |
— |
23,431 | |||||||
Adjusted net income |
$ |
73,351 |
$ |
87,586 |
$ |
236,703 |
$ |
330,746 | |||
Interest expense |
9,008 |
10,395 |
21,893 |
37,557 | |||||||
Depreciation expense |
25,761 |
30,958 |
99,861 |
119,562 | |||||||
Accretion of contingent acquisition consideration |
6,105 |
3,804 |
16,489 |
13,476 | |||||||
Equity-based compensation |
6,683 |
6,847 |
26,049 |
27,283 | |||||||
Equity in earnings of unconsolidated affiliates |
1,542 |
(7,307) |
(485) |
(20,194) | |||||||
Distributions from unconsolidated affiliates |
7,702 |
10,075 |
7,702 |
20,195 | |||||||
Gain on asset sale |
(3,859) |
— |
(3,859) |
— | |||||||
Adjusted EBITDA |
$ |
126,293 |
$ |
142,358 |
$ |
404,353 |
$ |
528,625 | |||
Interest paid |
(1,743) |
(4,136) |
(13,494) |
(46,666) | |||||||
Decrease (increase) in cash reserved for bond interest (1) |
(10,481) |
(8,734) |
(10,481) |
291 | |||||||
Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2) |
(2,636) |
(514) |
(5,636) |
(5,945) | |||||||
Cash distribution to be received from unconsolidated affiliate |
(2,998) |
— |
— |
— | |||||||
Maintenance capital expenditures(3) |
(5,466) |
(12,063) |
(21,622) |
(55,159) | |||||||
Distributable Cash Flow |
$ |
102,969 |
$ |
116,911 |
$ |
353,120 |
$ |
421,146 | |||
Distributions Declared to Antero Midstream Holders |
|||||||||||
Limited Partners |
50,090 |
68,231 |
182,559 |
247,132 | |||||||
Incentive distribution rights |
7,543 |
23,772 |
16,945 |
69,720 | |||||||
Total Aggregate Distributions |
$ |
57,633 |
$ |
92,003 |
$ |
199,504 |
$ |
316,852 | |||
DCF coverage ratio |
1.79x |
1.27x |
1.78x |
1.33x |
1) |
Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Gathering and Processing — Antero Midstream expanded one of its Marcellus compression stations, adding an additional 25 MMcf/d of capacity during the fourth quarter of 2017. Antero Midstream's total compression capacity at year-end 2017 was 1.7 Bcf/d in the Marcellus and Utica combined, with utilization averaging 81% during the fourth quarter. Additionally, Antero Midstream connected 35 wells to its gathering system during the quarter. Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 32 well completions during the fourth quarter of 2017, a 9% decrease from the prior year quarter. Antero Resources is currently operating five completion crews on Antero Midstream dedicated acreage. Antero Midstream continued the commissioning process for the Antero Clearwater Facility during the fourth quarter of 2017.
Balance Sheet and Liquidity
As of December 31, 2017, Antero Midstream had $8 million in cash and $555 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.0 billion of liquidity. Antero Midstream's total debt and net debt to trailing twelve months Adjusted EBITDA was 2.3x as of December 31, 2017. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Commenting on the balance sheet and credit strength, Michael Kennedy, CFO of Antero Midstream said, "Since its inception, Antero Midstream's strategy has always been to maintain a conservative leverage profile and strong distribution coverage. This is supported by the financial strength of our sponsor, long-term fee-based contracts and our just-in-time capital investment strategy. Recently, both Antero Resources and Antero Midstream were recently given a BBB- investment grade rating from Fitch and received an upgrade to BB+ from S&P Global. This further speaks to the Partnership's conservative financial profile and the confidence around the new five year infrastructure plan."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $143 million in the fourth quarter of 2017 as compared to $126 million in the fourth quarter of 2016. Capital invested in gathering systems and related facilities was $91 million and capital invested in water handling and treatment assets was $52 million, including $26 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the Joint Venture were $18 million during the quarter.
AMGP Fourth Quarter 2017 Financial Results
AMGP's equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $24 million for the fourth quarter of 2017. Net income for the fourth quarter of 2017 was $6 million. AMGP's cash distributions from Antero Midstream were $23 million for fourth quarter of 2017, net of $1 million of cash reserved for distributions on Series B units. General and administrative expenses were $0.3 million, provision for income taxes was $9 million, and tax benefit of cash reserved for distributions to Series B units was $0.4 million, resulting in cash available for distribution of $14 million.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months | |||
Cash distributions from Antero Midstream Partners LP |
$ |
23,772 | |
Cash reserved for distributions to Series B units of IDR LLC |
(963) | ||
Cash distributions to Antero Midstream GP LP |
$ |
22,809 | |
General and administrative expenses |
(279) | ||
Provision for income taxes |
(8,924) | ||
Tax benefit of cash reserved for distributions to Series B units of IDR LLC |
369 | ||
Cash available for distribution |
$ |
13,975 | |
DCF coverage ratio |
1.0x | ||
Common shares outstanding |
186,182 | ||
Cash distribution per common share |
$ |
0.075 |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Wednesday, February 14, 2018 at 10:00 am MT to discuss the quarterly and full year 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, February 21, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10114473.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Wednesday, February 21, 2018 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Investor Access to 2017 10-K
Pursuant to Section 203.01 of the New York Stock Exchange Listed Company Manual, Antero Midstream and AMGP today announced that their respective Annual Reports on Form 10-K (the "10-Ks") for the fiscal year ended December 31, 2017, were filed with the Securities and Exchange Commission on February 13, 2018. A copy of Antero Midstream's 10-K, which includes the Partnership's complete audited financial statements, may be found on Antero Midstream's website, www.anteromidstream.com, by selecting the "Investor Relations" tab, then "SEC Filings." A copy of AMGP's 10-K, which includes AMGP's complete audited financial statements, may be found on AMGP's website, www.anteromidstreamgp.com, by selecting the "Investor Relations" tab, then "SEC Filings." Antero Midstream unitholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado, 80202 AMGP's shareholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado, 80202.
Non-GAAP Financial Measures and Definitions
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, impairment expense, accretion of contingent acquisition consideration, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The Partnership defines adjusted net income as net income plus impairment expense. The Partnership believes that adjusted net income is useful to investors in evaluating operational trends of the Partnership and its performance relative to other partnerships. Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.
The Partnership defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
December 31, | |||
2017 | |||
Bank credit facility |
$ |
555,000 | |
5.375% AM senior notes due 2024 |
650,000 | ||
Net unamortized debt issuance costs |
(9,000) | ||
Consolidated total debt |
$ |
1,196,000 | |
Cash and cash equivalents |
(8,363) | ||
Consolidated net debt |
$ |
1,187,637 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2017.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP |
|||||||
Consolidated Balance Sheets |
|||||||
December 31, 2016 and 2017 |
|||||||
(In thousands) |
|||||||
December 31, |
|||||||
2016 |
2017 |
||||||
Assets | |||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
14,042 |
8,363 |
||||
Accounts receivable–Antero Resources |
64,139 |
110,182 |
|||||
Accounts receivable–third party |
1,240 |
1,170 |
|||||
Prepaid expenses |
529 |
670 |
|||||
Total current assets |
79,950 |
120,385 |
|||||
Property and equipment, net |
2,195,879 |
2,605,602 |
|||||
Investments in unconsolidated affiliates |
68,299 |
303,302 |
|||||
Other assets, net |
5,767 |
12,920 |
|||||
Total assets |
$ |
2,349,895 |
3,042,209 |
||||
Liabilities and Partners' Capital | |||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
16,979 |
8,642 |
||||
Accounts payable–Antero Resources |
3,193 |
6,459 |
|||||
Accrued liabilities |
61,641 |
106,006 |
|||||
Other current liabilities |
200 |
209 |
|||||
Total current liabilities |
82,013 |
121,316 |
|||||
Long-term liabilities: |
|||||||
Long-term debt |
849,914 |
1,196,000 |
|||||
Contingent acquisition consideration |
194,538 |
208,014 |
|||||
Other |
620 |
410 |
|||||
Total liabilities |
1,127,085 |
1,525,740 |
|||||
Partners' capital: |
|||||||
Common unitholders - public (70,020 units and 88,059 units issued and outstanding at December 31, 2016 and 2017, respectively) |
1,458,410 |
1,708,379 |
|||||
Common unitholder - Antero Resources (32,929 units and 98,870 units issued and outstanding at December 31, 2016 and 2017, respectively) |
26,820 |
(215,682) |
|||||
Subordinated unitholder - Antero Resources (75,941 issued and outstanding at December 31, 2016) |
(269,963) |
— |
|||||
General partner |
7,543 |
23,772 |
|||||
Total partners' capital |
1,222,810 |
1,516,469 |
|||||
Total liabilities and partners' capital |
$ |
2,349,895 |
3,042,209 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Consolidated Statements of Operations and Comprehensive Income | ||||||||||||
Three Months Ended December 31, 2016 and 2017 | ||||||||||||
(In thousands, except per unit amounts) | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2016 |
2017 | |||||||||||
Revenue: |
||||||||||||
Gathering and compression–Antero Resources |
$ |
84,312 |
105,527 | |||||||||
Water handling and treatment–Antero Resources |
78,517 |
104,805 | ||||||||||
Gathering and compression–third party |
166 |
— | ||||||||||
Gain on sale of assets |
3,859 |
— | ||||||||||
Total revenue |
166,854 |
210,332 | ||||||||||
Operating expenses: |
||||||||||||
Direct operating |
36,636 |
69,646 | ||||||||||
General and administrative (including $6,683 and $6,847 of equity-based compensation in 2016 and 2017, respectively) |
14,451 |
15,250 | ||||||||||
Impairment of property and equipment |
— |
23,431 | ||||||||||
Depreciation |
25,761 |
30,958 | ||||||||||
Accretion of contingent acquisition consideration |
6,105 |
3,804 | ||||||||||
Total operating expenses |
82,953 |
143,089 | ||||||||||
Operating income |
83,901 |
67,243 | ||||||||||
Interest expense, net |
(9,008) |
(10,395) | ||||||||||
Equity in earnings of unconsolidated affiliates |
(1,542) |
7,307 | ||||||||||
Net income and comprehensive income |
73,351 |
64,155 | ||||||||||
Net income attributable to incentive distribution rights |
(7,557) |
(23,772) | ||||||||||
Limited partners' interest in net income |
$ |
65,794 |
40,383 | |||||||||
Net income per limited partner unit - basic and diluted |
$ |
0.37 |
0.22 | |||||||||
Weighted average limited partner units outstanding - basic |
177,851 |
186,788 | ||||||||||
Weighted average limited partner units outstanding - diluted |
178,195 |
187,122 | ||||||||||
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Consolidated Statements of Operations and Comprehensive Income | ||||||||||||
Year Ended December 31, 2016 and 2017 | ||||||||||||
(In thousands, except per unit amounts) | ||||||||||||
Year Ended December 31, | ||||||||||||
2016 |
2017 | |||||||||||
Revenue: |
||||||||||||
Gathering and compression–Antero Resources |
$ |
303,250 |
396,202 | |||||||||
Water handling and treatment–Antero Resources |
282,267 |
376,031 | ||||||||||
Gathering and compression–third party |
835 |
264 | ||||||||||
Gain on sale of assets |
3,859 |
— | ||||||||||
Total revenue |
590,211 |
772,497 | ||||||||||
Operating expenses: |
||||||||||||
Direct operating |
161,587 |
232,538 | ||||||||||
General and administrative (including $26,049 and $27,283 of equity-based compensation in 2016 and 2017, respectively) |
54,163 |
58,812 | ||||||||||
Impairment of property and equipment |
— |
23,431 | ||||||||||
Depreciation |
99,861 |
119,562 | ||||||||||
Accretion of contingent acquisition consideration |
16,489 |
13,476 | ||||||||||
Total operating expenses |
332,100 |
447,819 | ||||||||||
Operating income |
258,111 |
324,678 | ||||||||||
Interest expense, net |
(21,893) |
(37,557) | ||||||||||
Equity in earnings of unconsolidated affiliates |
485 |
20,194 | ||||||||||
Net income and comprehensive income |
236,703 |
307,315 | ||||||||||
Net income attributable to incentive distribution rights |
(16,944) |
(69,720) | ||||||||||
Limited partners' interest in net income |
$ |
219,759 |
237,595 | |||||||||
Net income per limited partner unit - basic and diluted |
$ |
1.24 |
1.28 | |||||||||
Weighted average limited partner units outstanding - basic |
176,647 |
185,630 | ||||||||||
Weighted average limited partner units outstanding - diluted |
176,801 |
186,083 | ||||||||||
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Results of Segment Operations | |||||||||
Three Months Ended December 31, 2016 and 2017 | |||||||||
(In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three months ended December 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
84,312 |
78,517 |
162,829 | |||||
Revenue - third-party |
166 |
— |
166 | ||||||
Gain on sale of assets |
3,859 |
— |
3,859 | ||||||
Total revenues |
88,337 |
78,517 |
166,854 | ||||||
Operating expenses: |
|||||||||
Direct operating |
7,531 |
29,105 |
36,636 | ||||||
General and administrative (before equity-based compensation) |
5,265 |
2,503 |
7,768 | ||||||
Equity-based compensation |
4,812 |
1,871 |
6,683 | ||||||
Depreciation |
17,837 |
7,924 |
25,761 | ||||||
Accretion of contingent acquisition consideration |
— |
6,105 |
6,105 | ||||||
Total expenses |
35,445 |
47,508 |
82,953 | ||||||
Operating income |
$ |
52,892 |
31,009 |
83,901 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
79,384 |
46,909 |
126,293 | |||||
Three months ended December 31, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
105,527 |
104,805 |
210,332 | |||||
Total revenues |
105,527 |
104,805 |
210,332 | ||||||
Operating expenses: |
|||||||||
Direct operating |
10,655 |
58,991 |
69,646 | ||||||
General and administrative (before equity-based compensation) |
5,365 |
3,038 |
8,403 | ||||||
Equity-based compensation |
4,793 |
2,054 |
6,847 | ||||||
Impairment of property and equipment |
23,431 |
— |
23,431 | ||||||
Depreciation |
22,599 |
8,359 |
30,958 | ||||||
Accretion of contingent acquisition consideration |
— |
3,804 |
3,804 | ||||||
Total expenses |
66,843 |
76,246 |
143,089 | ||||||
Operating income |
$ |
38,684 |
28,559 |
67,243 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
99,582 |
42,776 |
142,358 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Results of Segment Operations | |||||||||
Year Ended December 31, 2016 and 2017 | |||||||||
(In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Year ended December 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
303,250 |
282,267 |
585,517 | |||||
Revenue - third-party |
835 |
— |
835 | ||||||
Gain on sale of assets |
3,859 |
— |
3,859 | ||||||
Total revenues |
307,944 |
282,267 |
590,211 | ||||||
Operating expenses: |
|||||||||
Direct operating |
27,289 |
134,298 |
161,587 | ||||||
General and administrative (before equity-based compensation) |
20,118 |
7,996 |
28,114 | ||||||
Equity-based compensation |
19,714 |
6,335 |
26,049 | ||||||
Depreciation |
69,962 |
29,899 |
99,861 | ||||||
Accretion of contingent acquisition consideration |
— |
16,489 |
16,489 | ||||||
Total expenses |
137,083 |
195,017 |
332,100 | ||||||
Operating income |
$ |
170,861 |
87,250 |
258,111 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
264,380 |
139,973 |
404,353 | |||||
Year ended December 31, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
396,202 |
376,031 |
772,233 | |||||
Revenue - third-party |
264 |
— |
264 | ||||||
Total revenues |
396,466 |
376,031 |
772,497 | ||||||
Operating expenses: |
|||||||||
Direct operating |
39,251 |
193,287 |
232,538 | ||||||
General and administrative (before equity-based compensation) |
20,607 |
10,922 |
31,529 | ||||||
Equity-based compensation |
19,730 |
7,553 |
27,283 | ||||||
Impairment of property and equipment |
23,431 |
— |
23,431 | ||||||
Depreciation |
86,372 |
33,190 |
119,562 | ||||||
Accretion of contingent acquisition consideration |
— |
13,476 |
13,476 | ||||||
Total expenses |
189,391 |
258,428 |
447,819 | ||||||
Operating income |
$ |
207,075 |
117,603 |
324,678 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
356,803 |
171,822 |
528,625 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Selected Operating Data | ||||||||||||
Three Months Ended December 31, 2016 and 2017 | ||||||||||||
(In thousands) | ||||||||||||
Amount of |
||||||||||||
Three Months Ended December 31, |
Increase |
Percentage | ||||||||||
2016 |
2017 |
(Decrease) |
Change | |||||||||
($ in thousands, except average realized fees) |
||||||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
162,829 |
210,332 |
47,503 |
29 |
% | ||||||
Revenue - third-party |
166 |
— |
(166) |
* |
||||||||
Gain on sale of assets |
3,859 |
— |
(3,859) |
* |
||||||||
Total revenue |
166,854 |
210,332 |
43,478 |
26 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
36,636 |
69,646 |
33,010 |
90 |
% | |||||||
General and administrative (before equity-based compensation) |
7,768 |
8,403 |
635 |
8 |
% | |||||||
Equity-based compensation |
6,683 |
6,847 |
164 |
2 |
% | |||||||
Impairment of property and equipment |
— |
23,431 |
23,431 |
* |
||||||||
Depreciation |
25,761 |
30,958 |
5,197 |
20 |
% | |||||||
Accretion of contingent acquisition consideration |
6,105 |
3,804 |
(2,301) |
(38) |
% | |||||||
Total operating expenses |
82,953 |
143,089 |
60,136 |
72 |
% | |||||||
Operating income |
83,901 |
67,243 |
(16,658) |
(20) |
% | |||||||
Interest expense |
(9,008) |
(10,395) |
(1,387) |
15 |
% | |||||||
Equity in earnings of unconsolidated affiliates |
(1,542) |
7,307 |
8,849 |
574 |
% | |||||||
Net income |
$ |
73,351 |
64,155 |
(9,196) |
(13) |
% | ||||||
Adjusted EBITDA |
$ |
126,293 |
142,358 |
16,065 |
13 |
% | ||||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
140,052 |
157,373 |
17,321 |
12 |
% | |||||||
Gathering—high pressure (MMcf) |
132,206 |
169,464 |
37,258 |
28 |
% | |||||||
Compression (MMcf) |
84,654 |
124,654 |
40,000 |
47 |
% | |||||||
Fresh water delivery (MBbl) |
13,771 |
13,745 |
(26) |
* |
||||||||
Wastewater handling (MBbl) |
2,981 |
4,227 |
1,246 |
42 |
% | |||||||
Wells serviced by fresh water delivery |
35 |
32 |
(3) |
(9) |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,522 |
1,711 |
189 |
12 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,437 |
1,842 |
405 |
28 |
% | |||||||
Compression (MMcf/d) |
920 |
1,355 |
435 |
47 |
% | |||||||
Fresh water delivery (MBbl/d) |
150 |
149 |
(1) |
(1) |
% | |||||||
Wastewater handling (MBbl/d) |
32 |
46 |
14 |
44 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
0.32 |
0.01 |
3 |
% | ||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average fresh water delivery fee ($/Bbl) |
$ |
3.68 |
3.71 |
0.03 |
1 |
% | ||||||
Joint Venture Operating Data: |
||||||||||||
Processing - Joint Venture (MMcf) |
— |
39,124 |
39,124 |
* |
||||||||
Fractionation - Joint Venture (MBbl) |
— |
837 |
837 |
* |
||||||||
Processing - Joint Venture (MMcf/d) |
— |
425 |
425 |
* |
||||||||
Fractionation - Joint Venture (MBbl/d) |
— |
9 |
9 |
* |
________________________ | |
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Selected Operating Data | ||||||||||||
Year Ended December 31, 2016 and 2017 | ||||||||||||
(In thousands) | ||||||||||||
Amount of |
||||||||||||
Year Ended December 31, |
Increase |
Percentage | ||||||||||
2016 |
2017 |
(Decrease) |
Change | |||||||||
($ in thousands, except average realized fees) |
||||||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
585,517 |
772,233 |
186,716 |
32 |
% | ||||||
Revenue - third-party |
835 |
264 |
(571) |
(68) |
% | |||||||
Gain on sale of assets |
3,859 |
— |
(3,859) |
* |
||||||||
Total revenue |
590,211 |
772,497 |
182,286 |
31 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
161,587 |
232,538 |
70,951 |
44 |
% | |||||||
General and administrative (before equity-based compensation) |
28,114 |
31,529 |
3,415 |
12 |
% | |||||||
Equity-based compensation |
26,049 |
27,283 |
1,234 |
5 |
% | |||||||
Impairment of property and equipment |
— |
23,431 |
23,431 |
* |
||||||||
Depreciation |
99,861 |
119,562 |
19,701 |
20 |
% | |||||||
Accretion of contingent acquisition consideration |
16,489 |
13,476 |
(3,013) |
(18) |
% | |||||||
Total operating expenses |
332,100 |
447,819 |
115,719 |
35 |
% | |||||||
Operating income |
258,111 |
324,678 |
66,567 |
26 |
% | |||||||
Interest expense |
(21,893) |
(37,557) |
(15,664) |
72 |
% | |||||||
Equity in earnings of unconsolidated affiliates |
485 |
20,194 |
19,709 |
4,064 |
% | |||||||
Net income |
$ |
236,703 |
307,315 |
70,612 |
30 |
% | ||||||
Adjusted EBITDA |
$ |
404,353 |
528,625 |
124,272 |
31 |
% | ||||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
513,390 |
605,719 |
92,329 |
18 |
% | |||||||
Gathering—high pressure (MMcf) |
481,646 |
646,054 |
164,408 |
34 |
% | |||||||
Compression (MMcf) |
271,060 |
436,695 |
165,635 |
61 |
% | |||||||
Fresh water delivery (MBbl) |
45,112 |
55,892 |
10,780 |
24 |
% | |||||||
Wastewater handling (MBbl) |
10,602 |
14,549 |
3,947 |
37 |
% | |||||||
Wells serviced by fresh water delivery |
131 |
142 |
11 |
8 |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,403 |
1,660 |
257 |
18 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,316 |
1,770 |
454 |
34 |
% | |||||||
Compression (MMcf/d) |
741 |
1,196 |
455 |
61 |
% | |||||||
Fresh water delivery (MBbl/d) |
123 |
153 |
30 |
24 |
% | |||||||
Wastewater handling (MBbl/d) |
29 |
40 |
11 |
37 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
0.32 |
0.01 |
3 |
% | ||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
* |
|||||||
Average fresh water delivery fee ($/Bbl) |
$ |
3.68 |
3.71 |
0.03 |
1 |
% | ||||||
Joint Venture Operating Data: |
||||||||||||
Processing - Joint Venture (MMcf) |
— |
97,276 |
97,276 |
* |
||||||||
Fractionation - Joint Venture (MBbl) |
— |
1,861 |
1,861 |
* |
||||||||
Processing - Joint Venture (MMcf/d) |
— |
267 |
267 |
* |
||||||||
Fractionation - Joint Venture (MBbl/d) |
— |
5 |
5 |
* |
_________________________ | |
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Statements of Cash Flows | |||||||||
Year Ended December 31, 2016 and 2017 | |||||||||
(In thousands) | |||||||||
Year Ended December 31, |
|||||||||
2016 |
2017 |
||||||||
Cash flows provided by operating activities: |
|||||||||
Net income |
$ |
236,703 |
307,315 |
||||||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||||||
Depreciation |
99,861 |
119,562 |
|||||||
Accretion of contingent acquisition consideration |
16,489 |
13,476 |
|||||||
Impairment of property and equipment |
— |
23,431 |
|||||||
Equity-based compensation |
26,049 |
27,283 |
|||||||
Equity in earnings of unconsolidated affiliates |
(485) |
(20,194) |
|||||||
Distributions from unconsolidated affiliates |
7,702 |
20,195 |
|||||||
Amortization of deferred financing costs |
1,814 |
2,888 |
|||||||
Gain on sale of assets |
(3,859) |
— |
|||||||
Changes in assets and liabilities: |
|||||||||
Accounts receivable–Antero Resources |
1,573 |
(41,043) |
|||||||
Accounts receivable–third party |
1,467 |
70 |
|||||||
Prepaid expenses |
(529) |
(141) |
|||||||
Accounts payable |
95 |
3,003 |
|||||||
Accounts payable–Antero Resources |
1,055 |
3,266 |
|||||||
Accrued liabilities |
(9,328) |
16,685 |
|||||||
Net cash provided by operating activities |
$ |
378,607 |
475,796 |
||||||
Cash flows used in investing activities: |
|||||||||
Additions to gathering systems and facilities |
(228,100) |
(346,217) |
|||||||
Additions to water handling and treatment systems |
(188,220) |
(195,162) |
|||||||
Investments in unconsolidated affiliates |
(75,516) |
(235,004) |
|||||||
Proceeds from sale of assets |
10,000 |
— |
|||||||
Change in other assets |
3,673 |
(3,435) |
|||||||
Net cash used in investing activities |
$ |
(478,163) |
(779,818) |
||||||
Cash flows provided by (used in) financing activities: |
|||||||||
Deemed distribution to Antero Resources, net |
— |
— |
|||||||
Distributions to Antero Resources |
— |
— |
|||||||
Distributions to unitholders |
(182,446) |
(283,950) |
|||||||
Issuance of senior notes |
650,000 |
— |
|||||||
Borrowings (repayments) on bank credit facilities, net |
(410,000) |
345,000 |
|||||||
Issuance of common units, net of offering costs |
65,395 |
248,956 |
|||||||
Payments of deferred financing costs |
(10,435) |
(5,520) |
|||||||
Employee tax withholding for settlement of equity compensation awards |
(5,636) |
(5,945) |
|||||||
Other |
(163) |
(198) |
|||||||
Net cash provided by (used in) financing activities |
$ |
106,715 |
298,343 |
||||||
Net increase (decrease) in cash and cash equivalents |
7,159 |
(5,679) |
|||||||
Cash and cash equivalents, beginning of period |
6,883 |
14,042 |
|||||||
Cash and cash equivalents, end of period |
$ |
14,042 |
8,363 |
||||||
Supplemental disclosure of cash flow information: |
|||||||||
Cash paid during the period for interest |
13,494 |
46,666 |
|||||||
Supplemental disclosure of noncash investing activities: |
|||||||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
(8,471) |
16,338 |
Antero Midstream GP LP | ||||||
Consolidated Balance Sheets | ||||||
December 31, 2016 and 2017 | ||||||
(In thousands, except number of shares and units) | ||||||
December 31, | ||||||
2016 |
2017 | |||||
Assets | ||||||
Current assets: |
||||||
Cash |
$ |
9,609 |
5,987 | |||
Accounts receivable - related party |
217 |
— | ||||
Total current assets |
9,826 |
5,987 | ||||
Investment in Antero Midstream Partners LP |
7,543 |
23,772 | ||||
Total assets |
$ |
17,369 |
29,759 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accounts payable and accrued liabilities |
426 |
293 | ||||
Income taxes payable |
6,674 |
13,858 | ||||
Total current liabilities |
7,100 |
14,151 | ||||
Partners' capital: |
||||||
Common shareholders - public (186,181,975 shares issued and outstanding at December 31, 2017) |
— |
(19,866) | ||||
Antero Resources Midstream Management LLC members' equity |
10,269 |
— | ||||
IDR LLC Series B units (32,875 vested units issued and outstanding at December 31, 2017) |
— |
35,474 | ||||
Total partners' capital |
10,269 |
15,608 | ||||
Total liabilities and partners' capital |
$ |
17,369 |
29,759 |
Antero Midstream GP LP | |||||||||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||||||||
Three Months Ended December 31, 2016 and 2017 | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
Three Months Ended December 31, |
|||||||||||||
2016 |
2017 |
||||||||||||
Equity in earnings of Antero Midstream Partners LP |
$ |
7,557 |
23,772 |
||||||||||
Total income |
7,557 |
23,772 |
|||||||||||
General and administrative expense |
425 |
279 |
|||||||||||
Equity-based compensation |
— |
8,662 |
|||||||||||
Total expenses |
425 |
8,941 |
|||||||||||
Income before income taxes |
7,132 |
14,831 |
|||||||||||
Provision for income taxes |
(2,856) |
(8,924) |
|||||||||||
Net income and comprehensive income |
$ |
4,276 |
5,907 |
||||||||||
Net income attributable to Antero Midstream GP LP subsequent to IPO |
$ |
5,907 |
|||||||||||
Net income attributable to Series B units |
(784) |
||||||||||||
Net income attributable to common shareholders |
$ |
5,123 |
|||||||||||
Net income per common share - basic and diluted |
$ |
0.03 |
|||||||||||
Weighted average number of common shares outstanding - basic and diluted |
186,181 |
||||||||||||
Antero Midstream GP LP | |||||||||||
Consolidated Statements of Operations and Comprehensive Income | |||||||||||
Years Ended December 31, 2016 and 2017 | |||||||||||
(In thousands, except per share amounts) | |||||||||||
Year Ended December 31, |
|||||||||||
2016 |
2017 |
||||||||||
Equity in earnings of Antero Midstream Partners LP |
$ |
16,944 |
69,720 |
||||||||
Total income |
16,944 |
69,720 |
|||||||||
General and administrative expense |
814 |
6,201 |
|||||||||
Equity-based compensation |
— |
34,933 |
|||||||||
Total expenses |
814 |
41,134 |
|||||||||
Income before income taxes |
16,130 |
28,586 |
|||||||||
Provision for income taxes |
(6,419) |
(26,261) |
|||||||||
Net income and comprehensive income |
$ |
9,711 |
2,325 |
||||||||
Net income attributable to Antero Midstream GP LP subsequent to IPO |
$ |
7,264 |
|||||||||
Net income attributable to Series B units |
(784) |
||||||||||
Net income attributable to common shareholders |
$ |
6,480 |
|||||||||
Net income per common share - basic and diluted |
$ |
0.03 |
|||||||||
Weighted average number of common shares outstanding - basic and diluted |
186,176 |
||||||||||
Antero Midstream GP LP | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
Year Ended December 31, 2016 and 2017 | |||||||||||||||
(In thousands) | |||||||||||||||
Year Ended December 31, |
|||||||||||||||
2016 |
2017 |
||||||||||||||
Cash flows provided by operating activities: |
|||||||||||||||
Net income |
$ |
9,711 |
2,325 |
||||||||||||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Equity in earnings of Antero Midstream Partners LP |
(16,944) |
(69,720) |
|||||||||||||
Distributions received from Antero Midstream Partners LP |
10,370 |
53,491 |
|||||||||||||
Equity-based compensation |
— |
34,933 |
|||||||||||||
Deferred income taxes |
(368) |
— |
|||||||||||||
Changes in current assets and liabilities: |
|||||||||||||||
Accounts receivable - related party |
(217) |
— |
|||||||||||||
Accounts payable and accrued liabilities |
426 |
(133) |
|||||||||||||
Income taxes payable |
6,559 |
7,184 |
|||||||||||||
Net cash provided by operating activities |
9,537 |
28,080 |
|||||||||||||
Cash flows used in investing activities |
— |
— |
|||||||||||||
Cash flows used in financing activities |
|||||||||||||||
Distributions to Antero Resources Investment LLC |
— |
(15,691) |
|||||||||||||
Distributions to shareholders |
— |
(16,011) |
|||||||||||||
Net cash used in financing activities |
— |
(31,702) |
|||||||||||||
Net increase (decrease) in cash |
9,537 |
(3,622) |
|||||||||||||
Cash, beginning of period |
72 |
9,609 |
|||||||||||||
Cash, end of period |
$ |
9,609 |
5,987 |
||||||||||||
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-fourth-quarter-and-full-year-2017-financial-and-operating-results-300598276.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Jan. 24, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced plans to issue their fourth quarter and full year 2017 earnings on Tuesday, February 13, 2018 after the close of trading on the New York Stock Exchange.
A joint conference call for Antero Midstream and AMGP is scheduled on Wednesday, February 14, 2018 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, February 21, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10114473.
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay until Wednesday, February 21, 2018 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-fourth-quarter-and-full-year-2017-earnings-release-date-and-joint-conference-call-300587771.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Jan. 17, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their 2018 guidance and extended their long-term targets through 2022. In addition, Antero Midstream provided a fourth quarter 2017 update and its 2018 capital budget. Antero Midstream and AGMP will also host an analyst day tomorrow, January 18, 2018 in New York City. The event will be webcast live beginning at 9:00 am ET and interested parties may access the live audio webcast and related presentation materials on the investor relations website at www.anteromidstream.com or www.anteromidstreamgp.com.
Antero Midstream Highlights Include:
AMGP Highlights Include:
For a discussion of the non-GAAP financial measures Adjusted EBITDA, Distributable Cash Flow, and Free Cash Flow please see "Non-GAAP Financial Measures."
Commenting on the Antero Midstream and AMGP's long-term outlook, Michael Kennedy, Antero Midstream's CFO, said, "Due to our significant visibility into Antero Resources Corporation's (NYSE: AR) ("Antero Resources") long-term development plan, Antero Midstream and AMGP have the ability to extend our top-tier distribution growth targets through 2022. These distribution growth targets are supported by a high-graded organic project backlog of $2.7 billion servicing Antero Resources' internally funded development program over the next five years. The significant opportunity set, along with Antero Midstream's just-in-time capital investment philosophy, allows Antero Midstream to internally fund its organic infrastructure plan with cash flow from operations and revolving credit facility borrowings while generating attractive Partnership wide Return on Invested Capital in the 15% to 20% range."
Antero Midstream and AMGP Long Term Targets
Antero Midstream continues to target annual distribution growth of 28% to 30% through 2020 while maintaining a Distributable Cash Flow ("DCF") coverage ratio averaging 1.25x. In addition, Antero Midstream is initiating targets for 20% distribution growth in 2021 and 2022 while maintaining a DCF coverage ratio of 1.1x to 1.2x. Coinciding with Antero Midstream's distribution targets, following a previously announced 20% across the board increase in targets as a result of corporate tax reform, AMGP continues to target distribution growth of 154% to 172% in 2018, 63% to 65% in 2019 and 51% to 53% in 2020 while maintaining its DCF coverage ratio of 1.0x. In addition, AMGP initiated distribution growth targets of 29% to 31% in 2021 and 27% to 29% in 2022. Antero Midstream and AMGP distribution targets are supported by Antero Midstream's organic growth strategy supporting Antero Resources' development program. Antero Midstream and AMGP's long-term targets exclude the potential impact of third party revenues, acquisitions or divestitures and common equity issuances, consistent with historical practice.
Antero Midstream 2018 Capital Budget
During 2018, Antero Midstream plans to expand its existing Marcellus and Ohio Utica Shale gathering, compression, fresh water delivery systems, and its processing and fractionation joint venture ("Joint Venture") to accommodate Antero Resources development program. Today in a separate news release, Antero Resources announced its 2018 consolidated drilling and completion capital budget of $1.3 billion, which is forecast to generate production growth of 20%. In addition, Antero Resources reaffirmed that it is targeting a 20% compound annual growth rate for net production for the years 2018 through 2020 and introduced 15% annual production growth targets for both 2021 and 2022. Antero Resources' release can be found at www.anteroresources.com.
Commenting on the Antero Resources long-term outlook, along with its impact on Antero Midstream's growth, Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream, said, "Antero Resources' development plan focuses on high margin liquids-rich locations on Antero Midstream dedicated acreage over the next five years. We expect our development plan to generate peer leading growth and approximately $1.6 billion in E&P standalone free cash flow, resulting in a self-funded business model and deleveraging balance sheet. This attractive profile puts Antero Resources in an elite group of E&P's and also provides Antero Midstream with a high level of confidence in its long term throughput and distribution growth targets."
Antero Midstream has budgeted an investment of $585 million and $65 million in expansion and maintenance capital, respectively, resulting in a total Antero Midstream capital budget of $650 million in 2018. This capital budget includes $385 million of capital for gathering and compression infrastructure, resulting in 840 MMcf/d of incremental compression capacity and over 51 miles of incremental gathering pipelines in the Marcellus and Ohio Utica Shales combined. Approximately 90% of the gathering and compression capital is planned to be invested in the Marcellus Shale and the remaining 10% invested in the Ohio Utica Shale. This mix is driven by Antero Resources' development program focus on Marcellus Shale liquids rich drilling on Antero Midstream dedicated acreage.
In addition to capital expenditures for gathering and compression, Antero Midstream has budgeted an investment of $35 million for water infrastructure facilities to construct 25 miles of additional fresh water trunklines and surface pipelines to support Antero's completion activities. Approximately 85% of the water infrastructure budget will be allocated to the Marcellus Shale and the remaining 15% will be allocated to the Ohio Utica Shale. This excludes approximately $15 million of capital for the final completion milestone payments for the Antero Clearwater Facility after delays in the commissioning schedule due to process improvements. The Antero Clearwater Facility is expected to be placed into full commercial service during the first quarter of 2018.
Antero Midstream has budgeted an investment of $215 million for its 50% interest in the Joint Venture with MPLX, LP. During 2018, the Joint Venture expects to place online three additional processing plants, Sherwood 9, 10 and 11, bringing the Joint Venture's total processing capacity to five plants, or 1.0 Bcf/d. Sherwood 9 was placed online earlier this month. Sherwood 10 is expected to be placed online in the third quarter of 2018 and Sherwood 11 is expected to be placed online during the fourth quarter of 2018. In addition, the budget includes the Joint Venture's option to purchase an additional 20,000 Bbls/d of capacity at the Hopedale 4 fractionation plant, which is expected to be placed online during the fourth quarter of 2018.
Antero Midstream expects to fund all 2018 capital expenditures through cash flow from operations and available borrowing capacity within Antero Midstream's existing $1.5 billion bank credit facility. As of September 30, 2017, Antero Midstream had approximately $1.0 billion of liquidity under its credit facility to fund organic growth opportunities.
Below is a comparison of the 2018 capital budget to the 2017 capital budget:
Year Ended December 31, |
||||||
Capital Comparison ($MM) |
2017 |
2018 |
% Change | |||
Gathering and Compression Infrastructure |
$350 |
$385 |
10% | |||
Fresh Water Infrastructure |
75 |
35 |
(53)% | |||
Advanced Wastewater Treatment Facility |
100 |
15 |
(85)% | |||
Processing and Fractionation Joint Venture |
275 |
215 |
(22)% | |||
Total Capital |
$800 |
$650 |
(19)% | |||
Expansion Capital |
$735 |
$585 |
(20)% | |||
Maintenance Capital |
65 |
65 |
- | |||
Total Capital |
$800 |
$650 |
(19)% |
Antero Midstream 2018 Guidance
Antero Midstream is forecasting net income of $435 million to $480 million, Adjusted EBITDA of $705 million to $755 million and Distributable Cash Flow of $575 million to $625 million for 2018. Antero Midstream's 2018 guidance includes $10 to $15 million of distributions from its 15% interest in the Stonewall Gathering Pipeline and $30 to $35 million of distributions from its 50% interest in the Joint Venture. Additionally, Antero Midstream is forecasting annual distribution growth of 28% to 30% as compared to 2017, resulting in an average DCF coverage ratio of 1.25x to 1.35x on an annual basis. Antero Midstream's 2018 guidance excludes any impact from potential third party volumes or transactions.
Below is a comparison of the 2018 guidance to 2017 guidance.
2017 |
2018 |
||||||||
Low |
High |
Low |
High |
% Change | |||||
Net Income ($MM) |
$305 |
— |
$345 |
$435 |
— |
$480 |
41% | ||
Adjusted EBITDA ($MM) |
$520 |
— |
$560 |
$705 |
— |
$755 |
35% | ||
Distributable Cash Flow ($MM) |
$405 |
— |
$445 |
$575 |
— |
$625 |
41% | ||
Year-Over-Year Distribution Growth |
29% |
28% |
— |
30% |
— |
AMGP 2018 Guidance
2017 |
2018(1) | ||||||||
Actual |
Low |
High | |||||||
Distributions Per Share |
$0.16 |
$0.52 |
— |
$0.55 | |||||
Year-Over-Year Distribution Growth |
— |
154% |
— |
172% | |||||
1) |
2018 represents year-over-year growth compared to full-year 2017 distributions. 2017 actual distributions include pro-rated distributions for the second quarter of 2017 for the period following the initial public offering through June 30, 2017. |
Antero Midstream Fourth Quarter 2017 Operating Update
Low pressure gathering volumes for the fourth quarter of 2017 averaged 1,711 MMcf/d, a 12% increase as compared to the fourth quarter of 2016. Low pressure gathering volumes were negatively impacted by lower Antero Resources production in the Utica than budgeted due to the delayed in-service date of the Rover Pipeline. Compression volumes for the fourth quarter of 2017 averaged 1,355 MMcf/d, a 47% increase as compared to the fourth quarter of 2016. High pressure gathering volumes for the fourth quarter of 2017 averaged 1,842 MMcf/d, a 28% increase from the fourth quarter of 2016. High pressure gathering volumes were in excess of low pressure gathering volumes due to Antero Resources' temporary use of an Antero Midstream owned high pressure line to avoid downstream pipeline constraints. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 149 MBbl/d during the quarter, in line with the fourth quarter of 2016.
Gross processing volumes from the Joint Venture for the fourth quarter of 2017 averaged 425 MMcf/d, an increase of 16% compared to the third quarter of 2017. Gross Joint Venture fractionation volumes averaged 9,096 Bbl/d, a 41% increase sequentially, driven by increased rich gas volumes processed by MPLX and the Joint Venture.
Three Months Ended December 31, |
||||||
Average Daily Volumes: |
2016 |
2017 |
% | |||
Low Pressure Gathering (MMcf/d) |
1,522 |
1,711 |
12% | |||
Compression (MMcf/d) |
920 |
1,355 |
47% | |||
High Pressure Gathering (MMcf/d) |
1,437 |
1,842 |
28% | |||
Fresh Water Delivery (MBbl/d) |
150 |
149 |
(1)% | |||
Gross Joint Venture Processing (MMcf/d) |
— |
425 |
* | |||
Gross Joint Venture Fractionation (Bbl/d) |
— |
9,096 |
* |
Antero Midstream Preliminary Fourth Quarter 2017 Financial Results
Based on preliminary analysis of the financial results for the three months ended December 31, 2017, the Partnership expects net income to be between $61 million and $67 million and Adjusted EBITDA to be between $136 million and $148 million, respectively.
The following reconciles net income to Adjusted EBITDA based on these preliminary financial results for the three months ended December 31, 2017 (in thousands):
Three months ended | ||||||
December 31, 2017 | ||||||
Low |
High | |||||
Net income |
$ |
60,500 |
— |
$ |
66,500 | |
Interest expense |
9,500 |
— |
11,000 | |||
Depreciation expense |
29,000 |
— |
33,000 | |||
Impairment expense |
23,000 |
— |
24,000 | |||
Accretion of contingent acquisition consideration |
3,500 |
— |
4,000 | |||
Equity-based compensation |
6,500 |
— |
7,500 | |||
Equity in earnings of unconsolidated affiliates |
(5,500) |
— |
(8,500) | |||
Distributions from unconsolidated affiliates |
9,500 |
— |
10,500 | |||
Adjusted EBITDA |
$ |
136,000 |
— |
$ |
148,000 | |
The information presented above is based upon information available to the Partnership as of January 17, 2018 and is not a comprehensive statement of the Partnership's financial results. These are preliminary unaudited financial results. The Partnership's completed results to be reported for the three months ended December 31, 2017 may differ materially from these preliminary results. During the course of the preparation of the Partnership's consolidated financial statements and related notes to be included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2017, additional adjustments to the preliminary financial information presented below may be identified. Any such adjustments may be material.
Non-GAAP Financial Measures and Definitions
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, impairment expense, accretion of contingent acquisition consideration, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
The Partnership defines Free Cash Flow as cash flow from operating activities before changes in working capital less capital expenditures. Management believes that Free Cash Flow is a useful indicator of the Partnership's ability to internally fund infrastructure investments, service or incur additional debt, and assess the company's financial performance and its ability to generate excess cash from its operations. Management believes that changes in operating assets and liabilities relate to the timing of cash receipts and disbursements and therefore may not relate to the period in which the operating activities occurred.
The Partnership defines Return on Invested Capital as net income plus interest expense divided by average total liabilities and partners' capital, excluding current liabilities. Management believes that Return on Invested Capital is a useful indicator of the Partnership's return on its infrastructure investments.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream has not included a reconciliation of Adjusted EBITDA and Distributable Cash Flow to the nearest GAAP financial measure for 2018 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 Adjusted EBITDA and Distributable Cash Flow and net income (in thousands):
Twelve months ended | ||||||
December 31, 2018 | ||||||
Low |
High | |||||
Depreciation expense |
$ |
160,000 |
— |
$ |
170,000 | |
Equity based compensation expense |
25,000 |
— |
35,000 | |||
Accretion of contingent acquisition consideration |
15,000 |
— |
20,000 | |||
Equity in earnings of unconsolidated affiliates |
30,000 |
— |
40,000 | |||
Distributions from unconsolidated affiliates |
40,000 |
— |
50,000 | |||
The Partnership cannot forecast interest expense due to the timing and uncertainty of debt issuances and associated interest rates. Additionally, Antero Midstream cannot reasonably forecast impairment expense as the impairment is driven by a number of factors that will be determined in the future and are beyond Antero Midstream's control currently.
Free Cash Flow and Return on Invested Capital are non-GAAP financial measures. The GAAP measures most directly comparable to Free Cash Flow and Return on Invested Capital are cash flow from operating activities and net income plus interest expense divided by average total liabilities and partners' capital, respectively. The non-GAAP financial measures of Free Cash Flow and Return on Invested Capital should not be considered as alternatives to the GAAP measure of cash flow from operating activities. Free Cash Flow and Return on Invested Capital are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Free Cash Flow and Return on Invested Capital. You should not consider Free Cash Flow and Return on Invested Capital in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Free Cash Flow and Return on Invested Capital may not be comparable to similarly titled measures of other partnerships.
Antero Midstream has not included reconciliations of Free Cash Flow and Return on Invested Capital to their nearest GAAP financial measures for 2018 because it would be impractical to forecast changes in current assets and liabilities. Antero Midstream is able to forecast capital expenditures, which is a reconciling item between Free Cash Flow and Return on Invested capital to their most comparable GAAP financial measure. For the 2018 to 2022 period, Antero forecasts cumulative capital expenditures of $2.7 billion.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream; Antero Midstream GP LP
DENVER, Jan. 17, 2018 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today announced its 2018 capital budget and guidance, extended long-term targets through 2022 and provided an update to 2017. Antero will also host its analyst day tomorrow, January 18, 2018 in New York City. The event will be webcast live beginning at 9:00 am ET. Interested parties may access the live audio webcast and related presentation materials on Antero's investor relations website at http://investors.anteroresources.com.
2018 Guidance and Long-Term Target Highlights Include:
Preliminary Fourth Quarter 2017 Highlights Include:
For a discussion of the non-GAAP financial measures Stand-alone E&P Adjusted EBITDAX, Consolidated Adjusted EBITDAX, Stand-alone E&P Adjusted operating cash flow, Consolidated Adjusted operating cash flow and Free Cash Flow, please see "Non-GAAP Financial Measures."
Commenting on Antero's long-term targets, Paul Rady, Chairman and CEO, said, "2018 will be a transformational year for the company as we move toward free cash flow generation, while maintaining our peer leading high margin growth profile. Through continued efficiency gains, we reduced our five-year capital spend target by a cumulative $2.9 billion as compared to last year's internal long term targets, while maintaining our annual production growth targets through 2022. Due to the significant capital efficiencies that we have achieved over the past several years including from longer lateral drilling, we expect to deliver this high growth profile with flat annual drilling and completion spending through 2020 followed by modest spending increases in 2021 and 2022. Antero's ability to target top-tier production growth, while generating free cash flow and a declining leverage profile, speaks to our extensive high quality liquids rich drilling inventory. As the largest NGL producer in the U.S., we have substantial exposure to the improving liquids commodity price environment, which supports our ability to deliver peer leading Adjusted EBITDAX margins and achieve the long term targets outlined here today."
2018 Capital Budget
Antero's consolidated capital budget for 2018 is $1.45 billion, including $1.3 billion for drilling and completion, $25 million for leasehold maintenance and $125 million for discretionary leasehold expenditures. Antero's drilling and completion budget has remained essentially flat for three consecutive years. Net production is expected to average approximately 2.7 Bcfe/d in 2018, representing year-over-year growth of 20% as compared to 2017, including 23% liquids growth to 130,000 Bbl/d. Approximately 80% of the drilling and completion budget for 2018 is allocated to the Marcellus Shale and the remaining 20% is allocated to the Ohio Utica Shale.
The Company's 2018 capital budget excludes Antero Midstream Partners LP's ("Antero Midstream") (NYSE: AM) $650 million capital budget for the construction of low and high pressure gathering pipelines, compressor stations, processing and fractionation facilities, fresh water delivery and advanced wastewater treatment infrastructure. Antero Midstream announced its 2018 capital budget and guidance today in a separate news release, which can be found at www.anteromidstream.com.
In 2018, Antero plans to operate an average of five drilling rigs and four completion crews in the Marcellus Shale and expects to complete 120 to 125 wells with an average lateral length of 9,300 feet. The drilling plan in the Marcellus averages nine wells per pad. As average lateral lengths continue to increase, total well costs are expected to decline further in 2018 to $0.80 million per 1,000' of lateral, a 45% decline from 2014 and a 9% reduction from 2017 well costs.
The Company plans to operate one drilling rig and one completion crew in the Ohio Utica Shale in 2018 and expects to complete 20 to 25 wells with an average lateral length of approximately 11,600 feet. Antero is currently drilling and completing its Utica wells at an average budgeted cost of $0.89 million per 1,000' of lateral, a 43% well cost improvement over 2014 and a 9% improvement from 2017 well costs.
Antero is budgeting to continue to consolidate acreage for development plan purposes in the core of its Marcellus and Ohio Utica leasehold positions in 2018 along with extending leases on acreage that is planned to be developed over the next several years. Antero has budgeted $125 million for discretionary leasehold expenditures and approximately $25 million is budgeted for leasehold maintenance spending required to support the five-year development plan. Consistent with historical practices, the Company does not budget for asset or corporate acquisitions.
The following is a comparison of the 2018 consolidated capital budget to 2017 guidance.
($ in MM) |
Year Ended December 31, | |||||||||
Capital Comparison |
2017 |
2018 |
% Change | |||||||
Drilling & Completion |
$1,300 |
$1,300 |
0% | |||||||
Discretionary Leasehold Capital |
$200 |
$125 |
(38)% | |||||||
Leasehold Maintenance Capital (1) |
N/A |
$25 |
N/A | |||||||
Total Capital |
$1,500 |
$1,450 |
(3)% | |||||||
Average Operated Drilling Rigs (2) |
6 |
6 |
0% | |||||||
Average Operated Completion Crews (2) |
5 |
5 |
0% | |||||||
Operated Wells Spud (2) |
117 |
115 - 125 |
0% | |||||||
Operated Wells Completed (2) |
135 |
140 - 150 |
7% | |||||||
1) |
Leasehold maintenance capital expenditures were not previously guided to in 2017. Leasehold maintenance capital represents the leasehold capital required to achieve targeted working interest of 95% included in the five year targeted development plan, plus renewals associated with the 5-year development plan. |
2) |
Adjusted for 2017 actuals. |
The 2018 capital budget is expected to be primarily funded through cash flow from operations, with any additional funding coming from available borrowing capacity on Antero's bank credit facility. As of September 30, 2017, Antero had $2.9 billion of available consolidated liquidity.
2018 Guidance
Antero's 2018 net daily production, including liquids, is forecast to grow 20% as compared to 2017 volumes to approximately 2.7 Bcfe/d. Net liquids production is forecast to increase approximately 23% to an average of 130,000 Bbl/d in 2018, including 77,500 Bbl/d of C3+ NGLs, 43,000 Bbl/d of ethane and 9,500 Bbl/d of condensate.
Natural Gas and NGL Price Realizations and Cash Costs
The Company expects to realize a $0.00 to $0.05 price premium compared to Nymex for its natural gas sales during 2018. Antero's firm transportation and sales portfolio allows the Company to transport and sell virtually all of its natural gas production at current favorably priced indices, including TCO, Chicago, MichCon and Gulf Coast hubs. Driven by improved local differentials and the Mariner East 2 project, Antero is forecasting an average realized price for C3+ NGLs of 62.5% to 67.5% of WTI oil prices in 2018 compared to 60% of WTI oil for 2017 C3+ NGL pricing. Accordingly, the sales points for propane and butane are expected to be a combination of Marcus Hook, PA and Houston, PA. Antero is forecasting oil price differentials to WTI of $5.00 to $6.00 per barrel in 2018. Combining the expected improvement in pricing for NGLs and continued strong oil prices, Antero expects an overall increase in Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX of approximately $300 million from liquids in 2018 compared to 2017, before the impact of hedging.
Antero is forecasting a modest increase in Cash Production Expenses due to an increase in transportation expenses. The increase in transportation expenses are associated with Antero's firm commitments on new pipelines that have recently been placed in service or are expected to be placed in service during 2018. The new pipeline commitments allow Antero to continue to deliver natural gas to premium indices and receive a positive differential to Nymex. Net marketing expense is expected to remain flat at $0.10 to $0.15 per Mcfe in 2018 as the increase in unutilized pipeline capacity due to Antero's new firm commitment is offset by increasing production throughout the year and mitigation efforts executed in the first quarter of 2018.
The Company is providing the following guidance for 2018 on both a consolidated and an Antero Resources stand-alone basis:
2018 Guidance |
Consolidated |
Stand-alone E&P | ||||||
Low |
High |
Low |
High | |||||
Production |
||||||||
Net Daily Production (MMcfe/d) |
2,700 1,925 130,000 77,500 43,000 9,500 |
2,700 1,925 130,000 77,500 43,000 9,500 | ||||||
Net Daily Residue Natural Gas Production (MMcf/d) |
||||||||
Net Daily Liquids Production (Bbl/d) |
||||||||
Net Daily C3+ NGL Production (Bbl/d) |
||||||||
Net Daily Ethane Production (Bbl/d) |
||||||||
Net Daily Oil Production (Bbl/d) |
||||||||
Realized Pricing (1) |
||||||||
Natural Gas Realized Price vs. Nymex Henry Hub ($/Mcf)(2) |
$0.00 |
$0.05 |
$0.00 |
$0.05 | ||||
Oil Realized Price vs. WTI Oil ($/Bbl) |
$(5.00) |
$(6.00) |
$(5.00) |
$(6.00) | ||||
C3+ NGL Realized Price (% of Nymex WTI) (1) |
62.5% |
67.5% |
62.5% |
67.5% | ||||
Ethane Realized Price (Differential to Mont Belvieu) ($/Gal) |
$(0.03) |
$(0.05) |
$(0.03) |
$(0.05) | ||||
Cash Expenses |
||||||||
Cash Production Expense ($/Mcfe)(3) |
$1.65 |
$1.75 |
$2.10 |
$2.20 | ||||
Marketing Expense, Net of Marketing Revenue ($/Mcfe) |
$0.10 |
$0.15 |
$0.10 |
$0.15 | ||||
G&A Expense ($/Mcfe) (4) |
$0.15 |
$0.20 |
$0.125 |
$0.175 | ||||
Adjusted Operating Cash Flow ($MM) (5) |
$1,750 - $1,900 |
$1,480 - $1,600 | ||||||
Adjusted EBITDAX ($MM) (5) |
$2,050 - $2,150 |
$1,700 - $1,800 | ||||||
Capital Expenditures |
||||||||
Drilling and Completion Capital ($MM) (6) |
$1,300 |
$1,500 | ||||||
Leasehold Maintenance Capital ($MM) |
$25 |
$25 | ||||||
Discretionary Land Capital ($MM) |
$125 |
$125 | ||||||
Total |
$1,450 |
$1,650 |
(1) |
Based on strip pricing as of December 31, 2017; natural gas price of $2.84/Mcf and WTI of $59.57/Bbl, all prices before hedging. |
(2) |
Includes Btu upgrade as Antero's processed tailgate and unprocessed dry gas production is greater than 1050 Btu on average. |
(3) |
Includes lease operating expenses, gathering, compression, transportation expenses and production and ad valorem taxes. Stand-alone cash production expense includes 100% of gathering and compression and water fees paid to Antero Midstream that are eliminated on a consolidated basis. |
(4) |
Excludes equity-based compensation. |
(5) |
For a description of the non-GAAP financial measures Adjusted Operating Cash Flow and Adjusted EBITDAX, please read "Non-GAAP Financial Measures." |
(6) |
Stand-alone Drilling and Completion Capital includes 100% of the water fees paid to Antero Midstream that are eliminated on a consolidated basis and capitalized on a Stand-alone basis. |
Extended Long-Term Targets
As a result of continued capital efficiency gains, significant liquids exposure, favorable price realizations due to firm transportation arrangements, attractively hedged gas prices and Appalachian-leading core drilling inventory, Antero is maintaining its 20% compound annual growth rate target for net gas equivalent production through 2020 and is introducing a 15% growth rate target in each of 2021 and 2022. This equates to a debt-adjusted compounded annual production growth rate of 24% through 2020 and 20% to 24% in each of 2021 and 2022. Antero is able to forecast this long-term growth target, despite reducing the targeted 5-year drilling and completion capital by a cumulative $2.9 billion compared to the 2017 long-term outlook. Due to these substantial efficiency improvements, driven by a combination of longer laterals, improved cycle times, capital allocation and enhanced recoveries, Antero is now targeting Free Cash Flow generation of approximately $1.6 billion over the five-year period based on year end 2017 strip pricing of $54.71/Bbl WTI and $2.84/MMBtu natural gas and $2.8 billion over the five-year period assuming flat $60 per barrel WTI oil and $2.85/MMBtu natural gas prices. Antero expects this to result in a declining net debt to Adjusted EBITDAX ratio to the low 2.0-times range by year end 2018 and below 2.0 times in 2019, assuming strip pricing.
Antero forecasts the percentage of natural gas production sold at current favorably priced indices through 2022 to improve relative to 2018 guidance resulting in natural gas price realizations, before hedges, at a $0.05 to $0.10 per Mcf premium to Nymex including the BTU premium. Further enhancing price realizations, Antero has hedged approximately 80% of natural gas production targets for the years 2018 through 2020 at an average hedged price of $3.50 per MMBtu. The Company has 2.8 Tcfe hedged through 2023 with a mark to market value of approximately $1.3 billion, based on December 31, 2017 strip pricing.
Updated for the longer lateral drilling plan, Antero has an inventory of approximately 3,300 undrilled core 3P locations with an average lateral length of 10,800 feet. Approximately 59% of Antero's drilling inventory is comprised of laterals greater than 10,000 feet and 44% is greater than 12,000 feet.
Supported by Antero Resources' long-term production growth targets, Antero Midstream today announced a long-term distribution growth target of 28% to 30% per year through 2020 and 20% per year in 2021 and 2022. As of December 31, 2017, Antero Resources owned approximately 53% of Antero Midstream common units.
Commenting on the 2018 capital budget and guidance, Glen Warren, Antero's President and CFO, said, "Continued drilling efficiency improvements, a longer lateral drilling program, strong production growth and our position as the largest NGL producer in the U.S. provides a significant step-up in free cash flow over our extended five-year outlook. Our $1.6 billion in targeted Free Cash Flow generation through 2022 before discretionary leasehold acquisitions, (based on current strip pricing) is expected to provide significant financial flexibility to pay down debt or return capital to shareholders. We forecast a significant decrease in leverage ratios to the low 2.0-times on a stand-alone basis by year-end 2018, with further declines over the five-year outlook when using the Free Cash Flow to pay down debt. This profile places Antero in an elite group comprised of a handful of upstream companies that are generating double digit percentage production growth and near term free cash flow on the foundation of a strong balance sheet and a large core drilling inventory."
Fourth Quarter 2017 Operating Update
Antero's net daily production for the fourth quarter of 2017 averaged 2,347 MMcfe/d, including 1,702 MMcf/d (72%) of natural gas, 101,226 Bbl/d (26%) of natural gas liquids, including 31,425 Bbl/d of ethane, and 6,207 Bbl/d (2%) of oil.
The following table provides an update to Adjusted EBITDAX for the fourth quarter of 2017, including a revised range for Consolidated Adjusted EBITDAX of $430 - $445 million, up from the $410 - $440 million original guidance and Stand-alone E&P Adjusted EBITDAX that is expected to be $370 - $385 million:
($MM) |
Consolidated |
Stand-alone E&P | ||||||
Net income or loss including noncontrolling interests |
$515 - $550 |
$480 - $500 | ||||||
Adjusted EBITDAX (1) |
$430 - $445 |
$370 - $385 | ||||||
(1) |
For a description of the non-GAAP financial measure, Adjusted EBITDAX, please read "Non-GAAP Financial Measures." Stand-alone E&P Adjusted EBITDAX includes 100% of gathering and compression and water fees paid to Antero Midstream that are eliminated on consolidated basis and expensed on Stand-alone basis. |
Fourth quarter 2017 production represents an organic production growth rate of 18% from the fourth quarter of 2016 and a 1% increase compared to the third quarter of 2017. Fourth quarter 2017 production was negatively impacted by the delayed in-service date of the Rover Pipeline, resulting in 10 Utica wells not being placed into sales until year-end 2017. Those 10 wells are currently producing approximately 175 MMcfe/d on restricted choke and were previously scheduled to come on-line in November 2017. Liquids production for the fourth quarter of 2017 represents an organic production growth rate of 24% from the fourth quarter of 2016 and a 4% decrease sequentially. The sequential decline in liquids production reflects the effect of higher NGL distributions to royalty owners as a result of the improvement in liquids pricing.
Antero's average realized natural gas price before settled derivatives for the fourth quarter of 2017 was $2.80 per Mcf, a $0.13 per Mcf negative differential to the average Nymex price for the period. This differential represents an improvement from the $0.29 per Mcf negative differential to Nymex realized in the third quarter of 2017. The improvement was primarily driven by reduced impacts from the disputes with Washington Gas Light Company and one of its affiliates (collectively, "WGL") and South Jersey Resources Group and one of its affiliates (collectively, "South Jersey"), which negatively impacted realizations by $0.18 per Mcf and $0.02 per Mcf, respectively during the quarter compared to $0.22 per Mcf and $0.04 per Mcf, respectively, during the third quarter of 2017. Looking ahead to 2018, Antero does not expect a material impact to its realized pricing and cash flow from these contractual disputes due in part to additional takeaway capacity that is expected to be placed in service throughout the year and narrow regional basis differentials based on current strip pricing.
Antero's average realized C3+ NGL price before settled derivatives for the fourth quarter of 2017 was $39.16 per barrel, or approximately 71% of the average WTI oil price for the period. This reflects a 55% increase in realized price as compared to the fourth quarter of 2016 and a 35% increase sequentially. The increase was driven primarily by the strengthening of Mont Belvieu pricing relative to WTI, which continues to benefit by an increase in export volumes.
Antero's average realized oil price before hedging for the fourth quarter of 2017 was $49.37 per barrel, a $6.00 per barrel negative differential to the average WTI oil price. The Company's average realized oil price after hedging for the quarter was $49.06 per barrel, a $6.31 per barrel negative differential to the average WTI oil price.
The following table details the components of average net production average realized prices for the three months ended December 31, 2017:
Three Months Ended December 31, 2017 | |||||||||||||||
Gas |
Oil |
NGL (C3+) |
Ethane (C2) |
Combined | |||||||||||
Average Net Production |
1,702 |
6,207 |
69,801 |
31,425 |
2,347 | ||||||||||
Average Realized Prices |
Gas ($/Mcf) |
Oil ($/Bbl) |
NGL (C3+) |
Ethane (C2) ($/Bbl) |
Combined | ||||||||||
Average realized price before settled derivatives |
$ |
2.80 |
$ |
49.37 |
$ |
39.16 |
$ |
10.02 |
$ |
3.46 | |||||
Settled derivatives |
0.87 |
(0.31) |
(9.24) |
0.15 |
0.36 | ||||||||||
Average realized price after settled derivatives |
$ |
3.67 |
$ |
49.06 |
$ |
29.92 |
$ |
10.17 |
$ |
3.82 | |||||
Nymex average price |
$ |
2.93 |
$ |
55.37 |
$ |
2.93 | |||||||||
Premium / (Differential) to Nymex |
$ |
0.74 |
$ |
(6.31) |
$ |
0.89 |
The information presented above is based upon information available to the Company as of January 17, 2018 and is not a comprehensive statement of the Company's financial results. These are preliminary non-reviewed unaudited financial results. The Company's completed results to be reported for the three months ended December 31, 2017 may differ materially from this preliminary data. During the course of the preparation of the Company's consolidated financial statements and related notes to be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, additional adjustments to the preliminary financial information presented herein may be identified. Any such adjustments may be material.
Analyst Day Presentation and Live Webcast
Antero plans to host an analyst day on Thursday, January 18, 2018 in New York City. Interested parties may access the live audio webcast and related presentation materials by visiting the investor relations section on Antero's website as detailed below. Paul Rady, Chairman and Chief Executive Officer, and Glen Warren, President and Chief Financial Officer, along with other Antero executives, will present Antero's corporate strategy and long-term outlook. The event will be webcast live beginning at 9:00 am ET and may be accessed on Antero's investor relations website at http://investors.anteroresources.com. A replay of the webcast will also be available on Antero's investor relations website.
Non-GAAP Financial Measures
Debt-adjusted production growth is defined as net production per Debt-Adjusted share for each specified period. Debt-adjusted shares represent period ending projected debt balances divided by ending share price plus ending shares outstanding. Forecasted debt-adjusted shares assumes Antero share price of $19.87 per share as of January 12, 2018.
Consolidated Adjusted EBITDAX, Stand-alone E&P Adjusted EBITDAX, Consolidated Adjusted Operating Cash Flow, Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow are financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial measures used by the company may not be comparable to similarly titled measures utilized by other companies. These measures should not be considered in isolation or as substitutes for their nearest GAAP measures. The Stand-alone measures are presented to isolate the results of the operations of Antero apart from the performance of Antero Midstream, which is otherwise consolidated into the results of Antero.
Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX
Consolidated Adjusted EBITDAX as defined by the Company represents net income or loss from continuing operations, including noncontrolling interests, before interest expense, interest income, derivative fair value gains or losses (excluding net cash receipts or payments on derivative instruments included in derivative fair value gains or losses), taxes, impairment, depletion, depreciation, amortization, and accretion, exploration expense, franchise taxes, equity-based compensation, gain or loss on early extinguishment of debt, and gain or loss on sale of assets. Consolidated Adjusted EBITDAX also includes distributions from unconsolidated affiliates and excludes equity in earnings or losses of unconsolidated affiliates.
Stand-alone E&P Adjusted EBITDAX as defined by the Company represents income or loss from continuing operations as reported in the Parent column of Antero's guarantor footnote to its financial statements before interest expense, interest income, derivative fair value gains or losses from exploration and production and marketing (excluding net cash receipts or payments on derivative instruments included in derivative fair value gains or losses), impairment, depletion, depreciation, amortization, and accretion, exploration expense, franchise taxes, equity-based compensation, gain or loss on early extinguishment of debt, gain or loss on sale of assets, equity in earnings of Antero Midstream and gain or loss on changes in the fair value of contingent acquisition consideration. Stand-alone E&P Adjusted EBITDAX also includes distributions received from limited partner interests in Antero Midstream common units.
The GAAP financial measure nearest to Consolidated Adjusted EBITDAX is net income or loss including noncontrolling interest that will be reported in Antero's consolidated financial statements. The GAAP financial measure nearest to Stand-alone E&P Adjusted EBITDAX is Stand-alone net income or loss that will be reported in the Parent column of Antero's guarantor footnote to its financial statements. While there are limitations associated with the use of Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX described below, management believes that these measures are useful to an investor in evaluating the company's financial performance because these measures:
There are significant limitations to using Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX as measures of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the company's net income on a consolidated and Stand-alone basis, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDAX reported by different companies. In addition, Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX provide no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position.
Consolidated Adjusted Operating Cash Flow, Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow
Consolidated Adjusted Operating Cash Flow as defined by the Company represents net cash provided by operating activities before changes in current assets and liabilities. Stand-alone E&P Adjusted Operating Cash Flow as defined by the Company represents Stand-alone net cash provided by operating activities that will be reported in the Parent column of Antero's guarantor footnote to its financial statements before changes in current assets and liabilities, plus earn out payments of $125 million expected in each of 2019 and 2020 from Antero Midstream associated with the water drop down transaction that occurred in 2015. Free cash flow as defined by the Company represents Stand-alone E&P Adjusted operating cash flow, less Stand-alone E&P Drilling and Completion capital, less Land Maintenance Capital.
The GAAP financial measure nearest to Consolidated Adjusted Operating Cash Flow is cash flow from operating activities as reported in Antero's consolidated financial statements. The GAAP financial measure nearest to Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow is Stand-alone cash flow from operating activities that will be reported in the Parent column of Antero's guarantor footnote to its financial statements. Management believes that Consolidated Adjusted Operating Cash Flow and Stand-alone E&P Adjusted Operating Cash Flow are useful indicators of the company's ability to internally fund its activities and to service or incur additional debt on a consolidated and Stand-alone basis. Management believes that changes in current assets and liabilities, which are excluded from the calculation of these measures, relate to the timing of cash receipts and disbursements and therefore may not relate to the period in which the operating activities occurred and generally do not have a material impact on the ability of the company to fund its operations. Management believes that Free Cash Flow is a useful measure for assessing the company's financial performance and measuring its ability to generate excess cash from its operations.
There are significant limitations to using Consolidated Adjusted Operating Cash Flow, Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow as measures of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the company's net income on a consolidated and Stand-alone E&P basis, the lack of comparability of results of operations of different companies and the different methods of calculating Consolidated Adjusted Operating Cash Flow and Stand-alone E&P Adjusted Operating Cash Flow reported by different companies. Consolidated Adjusted Operating Cash Flow and Stand-alone E&P Adjusted Operating Cash Flow do not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations.
The following table provides a range of preliminary results for the fourth quarter of 2017:
($MM)
|
Three Months Ended December 31, 2017 | ||||||||||
Consolidated |
Stand-alone E&P | ||||||||||
Low |
High |
Low |
High | ||||||||
Net income including noncontrolling interest (1) |
$ |
525,000 |
— |
$ |
560,000 |
$ |
490,000 |
— |
$ |
510,000 | |
Commodity derivative (gains) |
(175,000) |
— |
(180,000) |
(175,000) |
— |
(180,000) | |||||
Gains (losses) on settled derivative instruments |
76,000 |
— |
78,000 |
76,000 |
— |
78,000 | |||||
Interest expense |
62,000 |
— |
64,000 |
50,000 |
— |
55,000 | |||||
Loss on early extinguishment of debt |
1,000 |
— |
2,000 |
1,000 |
— |
2,000 | |||||
Provision (benefit) for income taxes |
(390,000) |
— |
(430,000) |
(390,000) |
— |
(430,000) | |||||
Depreciation, depletion, amortization, and accretion |
210,000 |
— |
218,000 |
176,000 |
— |
191,000 | |||||
Impairment of unproved properties |
70,000 |
— |
77,000 |
70,000 |
— |
77,000 | |||||
Impairment of fixed assets and other |
22,000 |
— |
24,000 |
— |
— |
— | |||||
Exploration expense |
3,000 |
— |
4,000 |
3,000 |
— |
4,000 | |||||
Gain on change in fair value of contingent acquisition consideration |
— |
— |
— |
(3,000) |
— |
(4,000) | |||||
Equity-based compensation expense |
23,000 |
— |
25,000 |
17,000 |
— |
20,000 | |||||
Equity in earnings of unconsolidated affiliate |
(6,000) |
— |
(8,000) |
— |
— |
— | |||||
Distributions from unconsolidated affiliates |
9,000 |
— |
11,000 |
— |
— |
— | |||||
Equity in income of Antero Midstream |
— |
— |
— |
22,000 |
— |
28,000 | |||||
Distributions from limited partner interest in Antero Midstream |
— |
— |
— |
33,000 |
— |
34,000 | |||||
Adjusted EBITDAX |
$ |
430,000 |
$ |
445,000 |
$ |
370,000 |
$ |
385,000 | |||
(1) |
The GAAP financial measure nearest to Consolidated Adjusted EBITDAX is net income including noncontrolling interest as reported in Antero's consolidated financial statements. The GAAP financial measure nearest to Stand-alone E&P Adjusted EBITDAX is Stand-alone net income or loss that will be reported in the Parent column of AR's guarantor footnote to its financial statements. |
Antero has not included a reconciliation of Consolidated Adjusted EBITDAX or Stand-alone E&P Adjusted EBITDAX to their nearest GAAP financial measures for 2018 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise. Antero is able to forecast the following reconciling items between Consolidated Adjusted EBITDAX and Stand-alone E&P Adjusted EBITDAX to net income from continuing operations including noncontrolling interest:
(in thousands) |
|||||||
Consolidated |
Stand-alone E&P | ||||||
Low |
High |
Low |
High | ||||
Interest expense |
$250,000 |
$300,000 |
$200,000 |
$220,000 | |||
Depreciation, depletion, amortization, and accretion expense |
950,000 |
1,050,000 |
800,000 |
900,000 | |||
Impairment expense |
100,000 |
125,000 |
100,000 |
125,000 | |||
Exploration expense |
5,000 |
15,000 |
5,000 |
15,000 | |||
Equity-based compensation expense |
95,000 |
115,000 |
70,000 |
90,000 | |||
Equity in earnings of unconsolidated affiliate |
30,000 |
40,000 |
N/A |
N/A | |||
Distributions from unconsolidated affiliates |
40,000 |
50,000 |
N/A |
N/A | |||
Distributions from limited partner interest in Antero Midstream |
N/A |
N/A |
166,000 |
170,000 |
Antero has a significant portfolio of commodity derivative contracts that it does not account for using hedge accounting, and forecasting unrealized gains or losses on this portfolio is impracticable and imprecise due to the price volatility of the underlying commodities. Antero is also forecasting no impact from franchise taxes, gain or loss on early extinguishment of debt, or gain or loss on sale of assets, for 2018. For income tax expense (benefit), Antero is forecasting a 2018 effective tax rate of 18% to 19%.
Antero has not included reconciliations of Consolidated Adjusted Operating Cash Flow, Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow to their nearest GAAP financial measures for 2018 because it would be impractical to forecast changes in current assets and liabilities. However, Antero is able to forecast the earn out payments expected from Antero Midstream associated with the water drop down transaction that occurred in 2015, each of which is a reconciling item between Stand-alone E&P Adjusted Operating Cash Flow and Free Cash Flow, as applicable, and cash flow from operating activities as reported in the Parent column of Antero's guarantor footnote to its financial statements. Antero forecasts these items to be $125 million in each of 2019 and 2020. Additionally, Antero is able to forecast lease maintenance expenditures and Stand-alone drilling and completion capital, each of which is a reconciling item between Free Cash Flow and its most comparable GAAP financial measure. For the 2018 to 2022 period, Antero forecasts cumulative lease maintenance expenditures of $200 million and cumulative Stand-alone E&P drilling and completion capital of $8.6 billion.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AR's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments AR expects, believes or anticipates will or may occur in the future, such as those regarding future commodity prices, future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, Consolidated Adjusted EBITDAX, Stand-alone E&P Adjusted EBITDAX, Consolidated Adjusted Operating Cash Flow, Stand-alone Adjusted Operating Cash Flow, Free Cash Flow, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, estimated realized natural gas, natural gas liquids and oil prices, acreage quality, access to multiple gas markets, expected drilling and development plans (including the number, type, lateral length and location of wells to be drilled, the number and type of drilling rigs and the number of wells per pad), projected well costs, future financial position, future technical improvements and future marketing opportunities, 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 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.
AR cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the AR's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in AR's Annual Report on Form 10-K for the year ended December 31, 2016.
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SOURCE Antero Resources Corporation
DENVER, Jan. 16, 2018 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective fourth quarter 2017 distributions.
Antero Midstream Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.365 per unit ($1.46 per unit annualized) for the fourth quarter of 2017. The distribution represents a 30% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is Antero Midstream's twelfth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on February 13, 2018 to unitholders of record as of February 1, 2018.
AMGP Increased Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a distribution of $0.075 per share ($0.30 per share annualized) for the fourth quarter of 2017. The distribution represents a 27% increase compared to the third quarter of 2017. The distribution is AMGP's second consecutive quarterly distribution increase since its initial public offering in May 2017 and will be payable on February 20, 2018 to shareholders of record as of February 1, 2018.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream; Antero Midstream GP LP
DALLAS, Jan. 3, 2018 /PRNewswire/ -- Alerian announced today the real-time launch of the Alerian Energy Infrastructure Capital Strength Select Index, a composite of North American midstream, refining, and utility companies chosen for their ownership of pipeline transportation assets, leverage profile, and above-market dividend payments. The index is disseminated real-time on a price-return basis (AMCS) and on a total-return basis (AMCST).
"The AMCS was designed with the understanding that the portion of the North American energy value chain from midstream to distribution has become increasingly integrated," said Alerian President and CEO Kenny Feng. "The composition of this index also seeks to address growing investor focus on strengthening balance sheets and improving corporate governance."
Constituents as of January 2, 2018
Name |
Ticker |
AltaGas Ltd |
ALA |
Antero Midstream Partners LP |
AM |
Andeavor |
ANDV |
Buckeye Partners LP |
BPL |
Boardwalk Pipeline Partners LP |
BWP |
CenterPoint Energy Inc |
CNP |
Cheniere Energy Partners LP Holdings LLC |
CQH |
Dominion Energy Inc |
D |
Enbridge Inc |
ENB |
EnLink Midstream LLC |
ENLC |
Enterprise Products Partners LP |
EPD |
EQT GP Holdings LP |
EQGP |
Gibson Energy Inc |
GEI |
HollyFrontier Corp |
HFC |
Inter Pipeline Ltd |
IPL |
Keyera Corp |
KEY |
Kinder Morgan Inc |
KMI |
Macquarie Infrastructure Corp |
MIC |
Magellan Midstream Partners LP |
MMP |
Marathon Petroleum Corp |
MPC |
OGE Energy Corp |
OGE |
ONEOK Inc |
OKE |
Plains GP Holdings LP |
PAGP |
Pembina Pipeline Corp |
PPL |
Phillips 66 |
PSX |
Sempra Energy |
SRE |
Tallgrass Energy GP LP |
TEGP |
TransCanada Corp |
TRP |
Valero Energy Corp |
VLO |
Western Gas Equity Partners LP |
WGP |
The Williams Companies Inc |
WMB |
About Alerian
Alerian equips investors to make informed decisions about Master Limited Partnerships (MLPs) and energy infrastructure. Its benchmarks, including the flagship Alerian MLP Index (AMZ), are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of December 31, 2017, over $16 billion is directly tied to the Alerian Index Series through exchange-traded funds and notes, separately managed accounts, and structured products. For more information, including index values and constituents, research content, and announcements regarding rebalancings, please visit alerian.com.
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SOURCE Alerian
DENVER, Jan. 2, 2018 /PRNewswire/ -- Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced increased long-term distribution targets from 2018 through 2020 as a result of a reduction in the U.S. federal corporate tax rate.
Increased Long-Term Distribution Targets
AMGP is increasing its long-term distribution per share targets from 2018 through 2020 as a result of a reduction in the U.S. federal corporate tax rate from 35% to 21% per the Tax Cuts and Jobs Act, effective January 1, 2018. As a partnership that has elected to be taxed as a corporation, AMGP's previously provided distribution per share targets were based on a U.S. federal corporate tax rate of approximately 35% and an aggregate effective state and local tax rate of approximately 3%, net of the federal benefit. AMGP's updated distribution per share targets are based on the new U.S. federal corporate tax rate of 21% and an aggregate effective state and local tax rate of approximately 4%, net of the federal benefit. AMGP's distribution growth targets through 2020 are based on Antero Midstream Partners LP's ("Antero Midstream") (NYSE: AM) compound annual distribution growth target of 28% to 30% through 2020, which remains unchanged from the targets provided on February 6, 2017. Additionally, AMGP's distribution growth targets exclude the impact of any future debt or equity offerings, acquisitions, or divestitures at either Antero Midstream or AMGP, consistent with historical practice.
AMGP's distribution per share targets have increased approximately 20% as compared to previously provided distribution targets from 2018 through 2020. AMGP's 2017 distribution guidance of $0.15 to $0.17 per share remains unchanged.
AMGP Long-term Targets |
2018 |
2019 |
2020 | ||||||||||
Updated Targets |
Low |
High |
Low |
High |
Low |
High | |||||||
Year-Over-Year Distribution Growth(1) |
154% |
— |
172% |
63% |
— |
65% |
51% |
— |
53% | ||||
AMGP Distributions Per Share |
$0.52 |
— |
$0.55 |
$0.84 |
— |
$0.91 |
$1.28 |
— |
$1.40 | ||||
Previously Provided Targets |
|||||||||||||
Year-Over-Year Distribution Growth(1) |
110% |
— |
124% |
63% |
— |
65% |
51% |
— |
53% | ||||
AMGP Distributions Per Share |
$0.43 |
— |
$0.46 |
$0.70 |
— |
$0.76 |
$1.06 |
— |
$1.16 | ||||
(1) 2018 represents year-over-year growth compared to full-year 2017 distributions.
Antero Midstream GP LP is a Delaware limited partnership that owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AMGP's control. All statements, other than historical facts, included in this release are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although AMGP believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
AMGP cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond AMGP's and Antero Midstream's control, incident to Antero Midstream's business. These risks include, but are not limited to, Antero Resources Corporation's ("Antero Resources") expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital and the timing of development expenditures.
For more information, contact Michael Kennedy – CFO of Antero Midstream GP LP at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream GP LP
DENVER, Nov. 29, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company"), Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") plan to host their first joint analyst day meeting on Thursday, January 18, 2018 in New York City for institutional investors and sell-side analysts. Other interested parties may access the live audio webcast and related presentation materials by visiting the investor relations section on Antero's website as detailed below. Paul Rady, Chairman and Chief Executive Officer, and Glen Warren, President and Chief Financial Officer, along with other Antero executives, will present Antero's corporate strategy and long-term outlook.
The event will be webcast live beginning at 9:00 am ET and may be accessed on Antero's investor relations website at http://investors.anteroresources.com. A replay of the webcast will also be available on Antero's investor relations website.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-resources-and-antero-midstream-announce-2018-analyst-day-300563883.html
SOURCE Antero Resources Corporation; Antero Midstream GP LP; Antero Midstream Partners LP
DENVER, Nov. 1, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their third quarter 2017 financial and operational results. The relevant condensed consolidated financial statements are included in Antero Midstream's and AMGP's Quarterly Reports on Form 10-Q for the quarter ended September 30, 2017, which have been filed with the Securities and Exchange Commission.
Antero Midstream Highlights Include:
Commenting on the outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream continued to deliver on its organic growth strategy supported by strong rates of return, high distribution coverage and low leverage. This strategy supports Antero Midstream's 28% to 30% long-term distribution growth targets and corresponding AMGP's growth targets through 2020. As an example of our visible organic growth strategy, the processing and fractionation Joint Venture brought online Sherwood 8 and filled the 200 MMcf/d of capacity almost immediately during the third quarter. This "just-in-time" capital investment delivers strong rates of return for Antero Midstream and builds momentum heading into 2018 where we expect to generate free cash flow before distributions."
Mr. Rady further added, "We are also pleased to announce that the Antero Clearwater advanced wastewater treatment facility is in its final stages of commissioning and is expected to commence commercial operations within the next few weeks. This state-of-the-art facility will be the largest treatment facility supporting oil and gas shale operations in the world and demonstrates Antero's commitment to environmentally responsible and sustainable development."
Recent Developments
New Antero Midstream Revolving Credit Facility
Antero Midstream has entered into a new $1.5 billion revolving credit facility with a maturity of October 2022. Additionally, the new revolving credit facility includes fall away covenants that are triggered if and when Antero Midstream is assigned an investment grade credit rating by the ratings agencies. The credit facility is supported by a bank syndicate, which is co-led by Wells Fargo Bank, N.A and JPMorgan Chase Bank, N.A. The bank syndicate is comprised of 20 banks, of which 18 were lenders in the prior facility.
Antero Midstream Distribution for the Third Quarter of 2017
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.34 per unit ($1.36 per unit annualized) for the third quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is Antero Midstream's eleventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 16, 2017 to unitholders of record as of November 1, 2017.
AMGP Distribution for the Third Quarter of 2017
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a cash distribution of $0.059 per share ($0.236 per share annualized) for the third quarter of 2017. The third quarter distribution represents AMGP's first full quarterly distribution since its initial public offering and will be payable on November 23, 2017 to shareholders of record as of November 1, 2017.
Antero Midstream Third Quarter 2017 Financial Results
Low pressure gathering volumes for the third quarter of 2017 averaged 1,586 MMcf/d, an 11% increase from the third quarter of 2016. Low pressure gathering volumes were negatively impacted by approximately 90 MMcf/d due to a one-time prior period adjustment. Compression volumes for the third quarter of 2017 averaged 1,207 MMcf/d, a 55% increase from the third quarter of 2016. High pressure gathering volumes for the third quarter of 2017 averaged 1,918 MMcf/d, a 42% increase from the third quarter of 2016. High pressure gathering volumes were in excess of low pressure gathering volumes due to Antero Resources Corporation ("Antero Resources") temporarily utilizing an Antero Midstream owned high pressure line to avoid downstream pipeline constraints. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 142 MBbl/d during the quarter, a 1% increase compared to the prior year quarter. The freshwater delivery system serviced 27% fewer completions as compared to the second quarter of 2017 due to the expected quarter to quarter variance in the completion schedule and movement of completion crews between pads.
Gross processing volumes from Antero Midstream's processing and fractionation joint venture (the "Joint Venture") for the third quarter of 2017 averaged 368 MMcf/d, an increase of 70% compared to the second quarter of 2017. Joint Venture processing volumes increased as the Joint Venture's second 200 MMcf/d processing plant, Sherwood 8, was placed in service during the quarter. Gross Joint Venture fractionation volumes averaged 6,431 Bbl/d, a 59% increase sequentially, driven by increased C3+ NGL production volumes processed by MPLX and the Joint Venture.
Three Months Ended September 30, |
||||||
Average Daily Volumes: |
2016 |
2017 |
% Change | |||
Low Pressure Gathering (MMcf/d) |
1,431 |
1,586 |
11% | |||
Compression (MMcf/d) |
777 |
1,207 |
55% | |||
High Pressure Gathering (MMcf/d) |
1,351 |
1,918 |
42% | |||
Fresh Water Delivery (MBbl/d) |
140 |
142 |
1% | |||
Gross Joint Venture Processing (MMcf/d) |
— |
368 |
* | |||
Gross Joint Venture Fractionation (Bbl/d) |
— |
6,431 |
* |
* |
Not applicable. Antero Midstream has a 50% interest in the processing and fractionation JV with MPLX |
For the three months ended September 30, 2017, the Partnership reported revenues of $194 million, comprised of $101 million from the Gathering and Processing segment and $93 million from the Water Handling and Treatment segment. Revenues increased 29% compared to the prior year quarter, driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $45 million from wastewater handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $11 million and $52 million, respectively, for a total of $63 million compared to $33 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $44 million from wastewater handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the third quarter of 2016. General and administrative expenses excluding equity-based compensation were $7 million during the third quarter of 2017, in line with the third quarter of 2016. Total operating expenses were $111 million, including $31 million of depreciation and $3 million of accretion of contingent acquisition consideration.
Net income for the third quarter of 2017 was $81 million, a 15% increase compared to the prior year quarter. Net income per limited partner unit was $0.33 per unit, an 11% decrease compared to the prior year quarter. Adjusted EBITDA was $128 million, a 16% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is primarily driven by increased throughput volumes and fresh water delivery volumes. Adjusted EBITDA for the quarter included $4 million in distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture. Cash interest paid was $21 million. Cash reserved for bond interest during the quarter decreased $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $11 million and distributable cash flow was $104 million, resulting in a DCF coverage ratio of 1.3x. Distributable cash flow is a non-GAAP financial measure. For a description of distributable cash flow, please read "Non-GAAP Financial Measures," and for a reconciliation to its nearest GAAP measure, please see the table below.
The following table reconciles net income to adjusted EBITDA and distributable cash flow as used in this release (in thousands):
Three months ended | |||||
September 30, | |||||
2016 |
2017 | ||||
Net income |
$ |
70,524 |
$ |
80,893 | |
Interest expense |
5,303 |
9,311 | |||
Depreciation expense |
26,136 |
30,556 | |||
Accretion of contingent acquisition consideration |
3,527 |
2,556 | |||
Equity-based compensation |
6,599 |
7,199 | |||
Equity in earnings of unconsolidated affiliates |
(1,544) |
(7,033) | |||
Distributions from unconsolidated affiliates |
— |
4,300 | |||
Adjusted EBITDA |
$ |
110,545 |
$ |
127,782 | |
Interest paid |
(4,043) |
(20,554) | |||
Decrease in cash reserved for bond interest (1) |
— |
8,831 | |||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2) |
(1,000) |
(1,500) | |||
Cash distribution to be received from unconsolidated affiliate |
2,221 |
— | |||
Maintenance capital expenditures(3) |
(4,638) |
(10,771) | |||
Distributable cash flow |
$ |
103,085 |
$ |
103,788 | |
Distributions Declared to Antero Midstream Holders |
|||||
Limited Partners |
$ |
47,025 |
$ |
63,454 | |
Incentive distribution rights |
4,820 |
19,067 | |||
Total Aggregate Distributions |
$ |
51,845 |
$ |
82,521 | |
DCF coverage ratio |
2.0x |
1.3x |
1) |
Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Commenting on Antero Midstream's outlook, Michael Kennedy, CFO of Antero Midstream said, "Looking ahead to the fourth quarter, we anticipate a sequential increase in throughput and water volumes given a planned increase in Antero Resources' completion activity, which is consistent with our 2017 guidance. This provides Antero Midstream with significant momentum heading into 2018 to support top-tier distribution growth and coverage. Additionally, AM's balance sheet strength and attractive project returns allows us to internally fund our organic opportunities while maintaining leverage in the low 2x range."
Gathering and Processing — Antero Midstream added 160 MMcf/d of compression capacity during the third quarter of 2017, bringing total compression capacity up to 1.6 Bcf/d in the Marcellus and Utica combined. Additionally, Antero Midstream connected 25 wells to its gathering system during the quarter. Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 32 well completions during the third quarter of 2017, a 9% decrease from the prior year quarter and 27% decrease sequentially. Antero Resources is currently operating four completion crews on Antero Midstream dedicated acreage. During the quarter, Antero Midstream began commissioning the Antero Clearwater Facility and expects the facility to commence advanced wastewater treatment operations in the fourth quarter of 2017.
Balance Sheet and Liquidity
As of September 30, 2017, Antero Midstream had $2 million in cash and $427 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.1 billion of liquidity. Antero Midstream's total debt and net debt to trailing twelve months adjusted EBITDA was 2.1x as of September 30, 2017. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $147 million in the third quarter of 2017 as compared to $114 million in the third quarter of 2016. Capital invested in gathering systems and related facilities was $99 million and capital invested in water handling and treatment assets was $48 million, including $33 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the processing and fractionation joint venture were $26 million during the quarter.
AMGP Third Quarter 2017 Financial Results
AMGP's equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $19.1 million. Net income for the third quarter of 2017 was $3.0 million as compared to net income of $2.8 million for the prior year quarter.
AMGP's cash distributions from Antero Midstream were $18.4 million for third quarter of 2017, net of $0.7 million of cash reserved for distributions on Series B units. General and administrative expenses were $0.6 million, provision for income taxes was $7.2 million, and reserve for tax benefit on Series B unit distributions was $0.3 million, resulting in cash available for distribution of $10.9 million.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three Months Ended | |||
Cash distributions from Antero Midstream Partners LP |
$ |
19,067 | |
Cash reserved for distributions to Series B units of IDR LLC |
(684) | ||
Cash distributions to Antero Midstream GP LP |
$ |
18,383 | |
General and administrative expenses |
(615) | ||
Provision for income taxes |
(7,157) | ||
Reserve for tax benefit on Series B unit distributions |
272 | ||
Distributable cash flow |
$ |
10,883 | |
DCF coverage ratio |
1.0x | ||
Common shares outstanding |
186,174 | ||
Cash distribution per common share |
$ |
0.059 |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, November 2, 2017 at 10:00 am MT to discuss the quarterly 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, November 10, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10111892.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Friday, November 10, 2017 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, accretion of contingent acquisition consideration, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, including cash distributions from unconsolidated affiliates and gain on asset sale.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
September 30, | |||
2017 | |||
Bank credit facility |
$ |
427,000 | |
5.375% AM senior notes due 2024 |
650,000 | ||
Net unamortized debt issuance costs |
(9,278) | ||
Consolidated total debt |
$ |
1,067,722 | |
Cash and cash equivalents |
(2,495) | ||
Consolidated net debt |
$ |
1,065,227 |
The following table reconciles net income to Adjusted EBITDA for the twelve months ended September 30, 2017 as used in this release (in thousands):
Twelve Months September 30, | ||
2017 | ||
Net income |
$ |
316,510 |
Interest expense |
36,170 | |
Depreciation expense |
114,366 | |
Accretion of contingent acquisition consideration |
15,777 | |
Equity-based compensation |
27,119 | |
Equity in earnings of unconsolidated affiliate |
(11,345) | |
Distributions from unconsolidated affiliates |
17,822 | |
Gain on asset sale |
(3,859) | |
Adjusted EBITDA |
$ |
512,560 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP Condensed Consolidated Balance Sheets December 31, 2016 and September 30, 2017 (Unaudited) (In thousands) | ||||||
December 31, 2016 |
September 30, 2017 | |||||
Assets | ||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
14,042 |
2,495 | |||
Accounts receivable–Antero Resources |
64,139 |
84,124 | ||||
Accounts receivable–third party |
1,240 |
1,165 | ||||
Prepaid expenses |
529 |
1,013 | ||||
Total current assets |
79,950 |
88,797 | ||||
Property and equipment, net |
2,195,879 |
2,508,204 | ||||
Investment in unconsolidated affiliates |
68,299 |
287,842 | ||||
Other assets, net |
5,767 |
10,548 | ||||
Total assets |
$ |
2,349,895 |
2,895,391 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accounts payable |
$ |
16,979 |
13,820 | |||
Accounts payable–Antero Resources |
3,193 |
4,050 | ||||
Accrued liabilities |
61,641 |
70,532 | ||||
Other current liabilities |
200 |
206 | ||||
Total current liabilities |
82,013 |
88,608 | ||||
Long-term liabilities: |
||||||
Long-term debt |
849,914 |
1,067,722 | ||||
Contingent acquisition consideration |
194,538 |
204,210 | ||||
Other |
620 |
465 | ||||
Total liabilities |
1,127,085 |
1,361,005 | ||||
Partners' capital: |
||||||
Common unitholders - public (70,020 units and 87,753 units issued and outstanding at December 31, 2016 and September 30, 2017, respectively) |
1,458,410 |
1,708,930 | ||||
Common unitholder - Antero Resources (32,929 units and 98,870 units issued and outstanding at December 31, 2016 and September 30, 2017, respectively) |
26,820 |
(193,611) | ||||
Subordinated unitholder - Antero Resources (75,941 issued and outstanding at December 31, 2016) |
(269,963) |
— | ||||
General partner |
7,543 |
19,067 | ||||
Total partners' capital |
1,222,810 |
1,534,386 | ||||
Total liabilities and partners' capital |
$ |
2,349,895 |
2,895,391 |
ANTERO MIDSTREAM PARTNERS LP Condensed Consolidated Statements of Operations and Comprehensive Income Three Months Ended September 30, 2016, and 2017 (Unaudited) (In thousands, except per unit amounts) | ||||||
Three Months Ended September 30, | ||||||
2016 |
2017 | |||||
Revenue: |
||||||
Gathering and compression–Antero Resources |
$ |
77,871 |
100,518 | |||
Water handling and treatment–Antero Resources |
72,411 |
93,111 | ||||
Gathering and compression–third party |
193 |
— | ||||
Total revenue |
150,475 |
193,629 | ||||
Operating expenses: |
||||||
Direct operating |
33,213 |
63,030 | ||||
General and administrative (including $6,599 and $7,199 of equity-based compensation in 2016 and 2017, respectively) |
13,316 |
14,316 | ||||
Depreciation |
26,136 |
30,556 | ||||
Accretion of contingent acquisition consideration |
3,527 |
2,556 | ||||
Total operating expenses |
76,192 |
110,458 | ||||
Operating income |
74,283 |
83,171 | ||||
Interest expense, net |
(5,303) |
(9,311) | ||||
Equity in earnings of unconsolidated affiliates |
1,544 |
7,033 | ||||
Net income and comprehensive income |
70,524 |
80,893 | ||||
Net income attributable to incentive distribution rights |
(4,807) |
(19,067) | ||||
Limited partners' interest in net income |
$ |
65,717 |
61,826 | |||
Net income per limited partner unit - basic and diluted |
$ |
0.37 |
0.33 | |||
Weighted average limited partner units outstanding - basic |
176,395 |
186,581 | ||||
Weighted average limited partner units outstanding - diluted |
176,766 |
187,145 |
ANTERO MIDSTREAM PARTNERS LP Consolidated Results of Segment Operations Three Months Ended September 30, 2016, and 2017 (Unaudited) (In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three months ended September 30, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
77,871 |
72,411 |
150,282 | |||||
Revenue - third-party |
193 |
— |
193 | ||||||
Total revenues |
78,064 |
72,411 |
150,475 | ||||||
Operating expenses: |
|||||||||
Direct operating |
4,692 |
28,521 |
33,213 | ||||||
General and administrative (before equity-based compensation) |
5,068 |
1,649 |
6,717 | ||||||
Equity-based compensation |
5,213 |
1,386 |
6,599 | ||||||
Depreciation |
18,298 |
7,838 |
26,136 | ||||||
Accretion of contingent acquisition consideration |
— |
3,527 |
3,527 | ||||||
Total expenses |
33,271 |
42,921 |
76,192 | ||||||
Operating income |
$ |
44,793 |
29,490 |
74,283 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
68,304 |
42,241 |
110,545 | |||||
Three months ended September 30, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
100,518 |
93,111 |
193,629 | |||||
Revenue - third-party |
— |
— |
— | ||||||
Total revenues |
100,518 |
93,111 |
193,629 | ||||||
Operating expenses: |
|||||||||
Direct operating |
10,560 |
52,470 |
63,030 | ||||||
General and administrative (before equity-based compensation) |
4,225 |
2,892 |
7,117 | ||||||
Equity-based compensation |
5,111 |
2,088 |
7,199 | ||||||
Depreciation |
21,803 |
8,753 |
30,556 | ||||||
Accretion of contingent acquisition consideration |
— |
2,556 |
2,556 | ||||||
Total expenses |
41,699 |
68,759 |
110,458 | ||||||
Operating income |
$ |
58,819 |
24,352 |
83,171 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
90,033 |
37,749 |
127,782 |
ANTERO MIDSTREAM PARTNERS LP Selected Operating Data Three Months Ended September 30, 2016, and 2017 (Unaudited) | |||||||||||||
Amount of |
|||||||||||||
Three Months Ended September 30, |
Increase |
Percentage | |||||||||||
2016 |
2017 |
(Decrease) |
Change | ||||||||||
Revenue: |
|||||||||||||
Revenue - Antero Resources |
$ |
150,282 |
193,629 |
43,347 |
29 |
% | |||||||
Revenue - third-party |
193 |
— |
(193) |
* |
|||||||||
Total revenue |
150,475 |
193,629 |
43,154 |
29 |
% | ||||||||
Operating expenses: |
|||||||||||||
Direct operating |
33,213 |
63,030 |
29,817 |
90 |
% | ||||||||
General and administrative (before equity-based compensation) |
6,717 |
7,117 |
400 |
6 |
% | ||||||||
Equity-based compensation |
6,599 |
7,199 |
600 |
9 |
% | ||||||||
Depreciation |
26,136 |
30,556 |
4,420 |
17 |
% | ||||||||
Accretion of contingent acquisition consideration |
3,527 |
2,556 |
(971) |
(28) |
% | ||||||||
Total operating expenses |
76,192 |
110,458 |
34,266 |
45 |
% | ||||||||
Operating income |
74,283 |
83,171 |
8,888 |
12 |
% | ||||||||
Interest expense |
(5,303) |
(9,311) |
(4,008) |
76 |
% | ||||||||
Equity in earnings of unconsolidated affiliates |
1,544 |
7,033 |
5,489 |
356 |
% | ||||||||
Net income |
$ |
70,524 |
80,893 |
10,369 |
15 |
% | |||||||
Adjusted EBITDA |
$ |
110,545 |
127,782 |
17,237 |
16 |
% | |||||||
Operating Data: |
|||||||||||||
Gathering—low pressure (MMcf) |
131,625 |
145,898 |
14,273 |
11 |
% | ||||||||
Gathering—high pressure (MMcf) |
124,266 |
176,471 |
52,205 |
42 |
% | ||||||||
Compression (MMcf) |
71,470 |
111,070 |
39,600 |
55 |
% | ||||||||
Condensate gathering (MBbl) |
48 |
— |
(48) |
* |
|||||||||
Processing - Joint Venture (MMcf) |
— |
33,841 |
33,841 |
* |
|||||||||
Fractionation - Joint Venture (MBbl) |
— |
592 |
592 |
* |
|||||||||
Fresh water delivery (MBbl) |
12,895 |
13,022 |
127 |
1 |
% | ||||||||
Wastewater handling (MBbl) |
2,577 |
3,723 |
1,146 |
44 |
% | ||||||||
Wells serviced by fresh water delivery |
35 |
32 |
(3) |
(9) |
% | ||||||||
Gathering—low pressure (MMcf/d) |
1,431 |
1,586 |
155 |
11 |
% | ||||||||
Gathering—high pressure (MMcf/d) |
1,351 |
1,918 |
567 |
42 |
% | ||||||||
Compression (MMcf/d) |
777 |
1,207 |
430 |
55 |
% | ||||||||
Condensate gathering (MBbl/d) |
1 |
— |
(1) |
* |
|||||||||
Processing - Joint Venture (MMcf/d) |
— |
368 |
368 |
* |
|||||||||
Fractionation - Joint Venture (MBbl/d) |
— |
6 |
6 |
* |
|||||||||
Fresh water delivery (MBbl/d) |
140 |
142 |
2 |
1 |
% | ||||||||
Wastewater handling (MBbl/d) |
28 |
40 |
12 |
44 |
% | ||||||||
Average realized fees: |
|||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
0.32 |
0.01 |
3 |
% | |||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
||||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
||||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.17 |
— |
(4.17) |
* |
||||||||
Average fresh water delivery fee ($/Bbl) |
$ |
3.68 |
3.71 |
0.03 |
1 |
% | |||||||
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016, and 2017 (Unaudited) | |||||
Nine Months Ended September 30, | |||||
2016 |
2017 | ||||
Cash flows from operating activities: |
|||||
Net income |
$ |
163,352 |
243,160 | ||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation |
74,100 |
88,604 | |||
Accretion of contingent acquisition consideration |
10,384 |
9,672 | |||
Equity-based compensation |
19,366 |
20,436 | |||
Equity in earnings of unconsolidated affiliates |
(2,027) |
(12,887) | |||
Distributions from unconsolidated affiliates |
— |
10,120 | |||
Amortization of deferred financing costs |
1,185 |
1,906 | |||
Changes in assets and liabilities: |
|||||
Accounts receivable–Antero Resources |
7,314 |
(19,985) | |||
Accounts receivable–third party |
1,464 |
75 | |||
Prepaid expenses |
(53) |
(484) | |||
Accounts payable |
1,467 |
1,181 | |||
Accounts payable–Antero Resources |
99 |
857 | |||
Accrued liabilities |
(17,516) |
1,612 | |||
Net cash provided by operating activities |
259,135 |
344,267 | |||
Cash flows used in investing activities: |
|||||
Additions to gathering systems and facilities |
(152,769) |
(254,619) | |||
Additions to water handling and treatment systems |
(137,355) |
(143,470) | |||
Investment in unconsolidated affiliates |
(45,044) |
(216,776) | |||
Change in other assets |
(2,409) |
(5,877) | |||
Net cash used in investing activities |
(337,577) |
(620,742) | |||
Cash flows provided by financing activities: |
|||||
Distributions to unitholders |
(129,752) |
(200,037) | |||
Issuance of senior notes |
650,000 |
— | |||
Borrowings (repayments) on bank credit facilities, net |
(450,000) |
217,000 | |||
Issuance of common units, net of offering costs |
19,605 |
248,949 | |||
Payments of deferred financing costs |
(8,940) |
— | |||
Employee tax withholding for settlement of equity compensation awards |
— |
(932) | |||
Other |
(133) |
(52) | |||
Net cash provided by financing activities |
80,780 |
264,928 | |||
Net increase (decrease) in cash and cash equivalents |
2,338 |
(11,547) | |||
Cash and cash equivalents, beginning of period |
6,883 |
14,042 | |||
Cash and cash equivalents, end of period |
$ |
9,221 |
2,495 | ||
Supplemental disclosure of cash flow information: |
|||||
Cash paid during the period for interest |
$ |
11,751 |
42,530 | ||
Supplemental disclosure of noncash investing activities: |
|||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
(21,971) |
2,936 |
Antero Midstream GP LP Condensed Consolidated Balance Sheets December 31, 2016 and September 30, 2017 (Unaudited) (In thousands) | ||||||
December 31, 2016 |
September 30, 2017 | |||||
Assets | ||||||
Current assets: |
||||||
Cash |
$ |
9,609 |
2,419 | |||
Accounts receivable - related party |
217 |
— | ||||
Prepaid expenses |
— |
49 | ||||
Total current assets |
9,826 |
2,468 | ||||
Investment in Antero Midstream Partners LP |
7,543 |
19,067 | ||||
Total assets |
$ |
17,369 |
21,535 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accrued liabilities |
426 |
611 | ||||
Income taxes payable |
6,674 |
8,900 | ||||
Total current liabilities |
7,100 |
9,511 | ||||
Liability for equity-based compensation |
— |
3,344 | ||||
Total liabilities |
7,100 |
12,855 | ||||
Partners' capital |
10,269 |
8,680 | ||||
Total liabilities and partners' capital |
$ |
17,369 |
21,535 |
Antero Midstream GP LP Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Three Months Ended September 30, 2016 and 2017 (Unaudited) (In thousands, except per share amounts) | |||||
Three Months Ended September 30, | |||||
2016 |
2017 | ||||
Equity in earnings of Antero Midstream Partners LP |
$ |
4,807 |
19,067 | ||
Total income |
4,807 |
19,067 | |||
General and administrative expense |
205 |
615 | |||
Equity-based compensation |
— |
8,317 | |||
Total expenses |
205 |
8,932 | |||
Income before income taxes |
4,602 |
10,135 | |||
Provision for income taxes |
(1,825) |
(7,157) | |||
Net income and comprehensive income |
$ |
2,777 |
2,978 | ||
Net income per common share - basic and diluted |
$ |
0.02 | |||
Weighted average number of common shares outstanding - basic |
186,173 | ||||
Weighted average number of common shares outstanding - diluted |
191,175 |
Antero Midstream GP LP Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 and 2017 (Unaudited) (In thousands) | ||||||
Nine Months Ended September 30, | ||||||
2016 |
2017 | |||||
Cash flows provided by operating activities: |
||||||
Net income (loss) |
$ |
5,435 |
(3,582) | |||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: |
||||||
Equity in earnings of Antero Midstream Partners LP |
(9,388) |
(45,948) | ||||
Distributions received from Antero Midstream Partners LP |
5,550 |
34,424 | ||||
Equity-based compensation |
— |
26,271 | ||||
Deferred income taxes |
(368) |
— | ||||
Changes in current assets and liabilities: |
||||||
Accounts receivable - related party |
(202) |
— | ||||
Prepaid expenses |
— |
(49) | ||||
Accounts payable |
— |
— | ||||
Accrued liabilities |
350 |
185 | ||||
Income taxes payable |
3,741 |
2,226 | ||||
Net cash provided by operating activities |
5,118 |
13,527 | ||||
Cash flows used in investing activities |
— |
— | ||||
Cash flows used in financing activities |
||||||
Distributions to Antero Resources Investment LLC |
— |
(15,691) | ||||
Distributions to shareholders |
— |
(5,026) | ||||
Net cash used in financing activities |
— |
(20,717) | ||||
Net increase (decrease) in cash |
5,118 |
(7,190) | ||||
Cash, beginning of period |
72 |
9,609 | ||||
Cash, end of period |
$ |
5,190 |
2,419 |
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-third-quarter-2017-financial-and-operational-results-300547773.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Oct. 12, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced plans to issue their third quarter 2017 earnings on Wednesday, November 1, 2017 after the close of trading on the New York Stock Exchange.
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, November 2, 2017 at 10:00 am MT to discuss the 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, November 10, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10111892.
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay until Friday, November 10, 2017 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-third-quarter-2017-earnings-release-date-and-joint-conference-call-300536168.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Oct. 11, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective third quarter 2017 distributions.
Antero Midstream Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.34 per unit ($1.36 per unit annualized) for the third quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is Antero Midstream's eleventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 16, 2017 to unitholders of record as of November 1, 2017.
AMGP Increased Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a distribution of $0.059 per share ($0.236 per share annualized) for the third quarter of 2017. The third quarter distribution represents AMGP's first full quarterly distribution following the pro-rata distribution for the second quarter for the period from the closing of the initial public offering on May 9, 2017 through June 30, 2017. The distribution will be payable on November 23, 2017 to shareholders of record as of November 1, 2017.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-third-quarter-distributions-300535096.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, Sept. 21, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company") announced today that it has monetized over $1 billion of non-exploration and production ("E&P") assets including the previously announced sale of 10 million common units representing limited partner interests in Antero Midstream Partners LP (NYSE:AM) ("Antero Midstream") and the restructuring of a portion of its commodity hedge portfolio.
Highlights:
During the third quarter of 2017, Antero Resources monetized over $1 billion of non-E&P assets through a combination of the previously announced sale of Antero Midstream common units and the restructuring of its hedge portfolio. Proceeds from the monetization program were used to repay credit facility borrowings. Proceeds from the monetization program are not expected to result in cash taxes payable due to the utilization of a portion of Antero's $1.5 billion of net operating losses carried forward. Pro forma for the $311 million of net proceeds from the Antero Midstream secondary offering and approximate $750 million hedge portfolio restructuring proceeds, Antero Resources' standalone E&P net debt to last twelve months adjusted EBITDAX ratio and its consolidated net debt to last twelve months adjusted EBITDAX ratio were 2.4x and 2.7x, respectively, as of June 30, 2017. Additionally, on a pro forma basis as of June 30, 2017, the Company had no borrowings under its $4.0 billion revolving credit facility and $154 million of cash, resulting in over $3.4 billion of liquidity, net of letters of credit outstanding.
Glen Warren, President and CFO, commented, "Antero has monetized a portion of its non-E&P assets in a tax-efficient manner with no dilution to shareholders, in order to maintain a healthy and flexible balance sheet. The resulting leverage is in the mid 2-times range. Further, the monetizations highlight the value of Antero's 53% ownership position in Antero Midstream and its industry leading hedge position. Importantly, we have maintained the volume of natural gas hedged through 2022 at prices 16% above current NYMEX strip prices. The implied hedge restructuring cost was in line with Antero's credit facility borrowing costs, resulting in the ability to efficiently bring forward approximately $750 million in hedge value. This delevering further supports Antero's ability to maintain its peer-leading annual production growth target of 20% to 22% through 2020 with no increase to the previously disclosed capital spending outlook."
As a result of the completed delevering program, Antero expects its 2017 standalone E&P net debt to last twelve months EBITDAX ratio to remain in the mid 2-times area, reduced from the previous outlook of low-to-mid 3-times area. In addition, for the 2018 through 2020 period, the Company expects its standalone E&P net debt to last twelve months EBITDAX ratio to further decline to the low-to-mid 2-times range from the previous outlook of the mid 2-times range. During this period, Antero Resources expects to fund drilling and completion capital through stand-alone E&P cash flow from operations assuming current strip pricing.(1)
Antero Resources' Sale of Antero Midstream Common Units
On September 6, 2017, Antero Resources announced the pricing of an underwritten public offering of 10 million common units (the "Offering") representing limited partner interests in Antero Midstream held by Antero Resources at a price of $31.45 per common unit for aggregate net proceeds to Antero Resources of approximately $311 million after underwriting fees but before estimated offering expenses. After giving effect to the Offering and assuming no exercise of the underwriters' option to purchase 1.5 million additional common units, Antero Resources owns approximately 99 million common units, or 53% of Antero Midstream's outstanding common units.
Antero Resources Hedge Portfolio Monetization
During the third quarter of 2017, Antero Resources restructured a portion of its natural gas hedge portfolio for the years 2018 through 2022 to monetize approximately $750 million of the portfolio's $2.0 billion mark-to-market value as of June 30, 2017. The Company has reduced the average fixed index price on its 2018 natural gas hedges to $3.50 per MMBtu while maintaining the total volume hedged in 2018, resulting in approximately 100% of the Company's targeted 2018 natural gas production hedged at price approximately 13% above current NYMEX strip pricing. Additionally, Antero has reduced the average fixed index price on its 2019 natural gas hedges to $3.50 per MMBtu and average fixed index price on its 2020 natural gas hedges to $3.25 per MMBtu while maintaining the total volume hedged. As a result, approximately 80% of the Company's targeted 2018 through 2020 natural gas production is hedged at $3.43 per MMBtu, or approximately 16% above current NYMEX strip pricing. After deducting approximately $750 million of proceeds from the $2.0 billion mark-to-market value as of June 30, 2017, Antero Resources has 3.1 Tcfe hedged through 2023 with a pro forma value of approximately $1.3 billion.
The following table summarizes Antero's pro forma natural gas hedge position as of June 30, 2017:
Period |
Natural Gas MMBtu/d |
Average Index price ($/MMBtu) | ||
3Q 2017: |
||||
NYMEX Henry Hub |
1,370,000 |
$3.33 | ||
CGTLA |
420,000 |
$4.20 | ||
Chicago |
70,000 |
$4.45 | ||
4Q 2017: |
||||
NYMEX Henry Hub |
1,370,000 |
$3.46 | ||
CGTLA |
420,000 |
$4.37 | ||
Chicago |
70,000 |
$4.68 | ||
2H 2017 Total |
1,860,000 |
$3.64 | ||
2018 NYMEX Henry Hub |
2,002,500 |
$3.50 | ||
2019 NYMEX Henry Hub |
2,330,000 |
$3.50 | ||
2020 NYMEX Henry Hub |
1,417,500 |
$3.25 | ||
2021 NYMEX Henry Hub |
710,000 |
$3.00 | ||
2022 NYMEX Henry Hub |
850,000 |
$3.00 | ||
2023 NYMEX Henry Hub |
90,000 |
$2.91 |
Adjusted EBITDAX is a non-GAAP financial measure that the Company defines as net income including noncontrolling interest after adjusting for those items shown in the table below. Adjusted EBITDAX, as used and defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position.
Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, Antero Resource's management team believes adjusted EBITDAX is useful to an investor in evaluating the Company's financial performance because this measure:
There are significant limitations to using adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero's net income, the lack of comparability of results of operations of different companies and the different methods of calculating adjusted EBITDAX reported by different companies. The following tables represent a reconciliation of the Company's net income including noncontrolling interest to adjusted EBITDAX.
Twelve months ended | ||
June 30, | ||
2017 | ||
Net Income including noncontrolling interest |
$ |
160,915 |
Commodity derivative gains |
(414,945) | |
Net cash receipts on settled derivative instruments |
462,149 | |
Gain on sale of assets |
(97,635) | |
Interest expense |
262,925 | |
Loss on early extinguishment of debt |
16,956 | |
Income tax expense |
25,468 | |
Depreciation, depletion, amortization and accretion |
827,381 | |
Impairment of unproved properties |
169,563 | |
Exploration expense |
8,650 | |
Equity-based compensation expense |
105,613 | |
Equity in earnings of unconsolidated affiliates |
(5,855) | |
Distributions from unconsolidated affiliates |
13,522 | |
State franchise taxes |
11 | |
Total Adjusted EBITDAX |
$ |
1,534,718 |
"Standalone E&P Adjusted EBITDAX" is also used by our management team for various purposes, including as a measure of operating performance of our exploration and production and marketing segments and as a basis for strategic planning and forecasting. Standalone E&P Adjusted EBITDAX is a non-GAAP financial measure that we define as operating income or loss before derivative fair value gains or losses from exploration and production and marketing (excluding net cash receipts or payments on derivative instruments included in derivative fair value gains or losses), impairment, depletion, depreciation, amortization, and accretion, exploration expense, franchise taxes, equity-based compensation, gain or loss on early extinguishment of debt, gain or loss on sale of assets, and gain or loss on changes in the fair value of contingent acquisition consideration. Standalone E&P Adjusted EBITDAX also includes distributions received from limited partner interests in Antero Midstream common units. Operating income or loss represents net income or loss, including noncontrolling interests, before interest expense and interest income, income taxes, and equity in earnings of unconsolidated affiliates. Operating income is the most directly comparable GAAP financial measure to Standalone E&P Adjusted EBITDAX because we do not account for income tax expense or interest expense on a segment basis.
The following table reconciles operating income to total Adjusted EBITDAX on a standalone E&P basis. Standalone E&P basis includes operations from both the exploration and production segment and marketing segment (in thousands):
Twelve months ended | ||
June 30, | ||
2017 | ||
Standalone E&P operating income |
$ |
315,172 |
Commodity derivative gains |
(414,945) | |
Net cash receipts on settled derivatives instruments |
462,149 | |
Depreciation, depletion, amortization and accretion |
716,516 | |
Impairment of unproved properties |
169,563 | |
Exploration expense |
8,650 | |
Change in fair value of contingent acquisition consideration |
(16,748) | |
Equity-based compensation expense |
79,093 | |
Gain on sale of assets |
(93,776) | |
State franchise taxes |
11 | |
Distributions from limited partner interest in Antero Midstream |
119,213 | |
Standalone E&P Adjusted EBITDAX |
$ |
1,344,898 |
The following table reconciles total debt to net debt on a consolidated basis and a standalone E&P basis (in thousands):
June 30, |
Pro Forma June 30, | |||||
2017 |
2017 | |||||
AR Bank credit facility |
$ |
930,000 |
$ |
— | ||
AM Bank credit facility |
305,000 |
305,000 | ||||
5.375% AR senior notes due 2021 |
1,000,000 |
1,000,000 | ||||
5.125% AR senior notes due 2022 |
1,100,000 |
1,100,000 | ||||
5.625% AR senior notes due 2023 |
750,000 |
750,000 | ||||
5.375% AM senior notes due 2024 |
650,000 |
650,000 | ||||
5.000% AR senior notes due 2025 |
600,000 |
600,000 | ||||
AR Net unamortized premium |
1,655 |
1,655 | ||||
AR Net unamortized debt issuance costs |
(35,131) |
(35,131) | ||||
AM Net unamortized debt issuance costs |
(9,551) |
(9,551) | ||||
Consolidated total debt |
$ |
5,291,973 |
$ |
4,361,973 | ||
Less: AR Cash and cash equivalents |
22,657 |
153,657 | ||||
Less: AM Cash and cash equivalents |
17,533 |
17,533 | ||||
Consolidated net debt |
$ |
5,251,783 |
$ |
4,190,783 | ||
Standalone E&P net debt |
$ |
4,323,867 |
$ |
3,262,867 |
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Resource's control. All statements, other than historical facts included in this release, 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 Resources 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. Nothing in this release is intended to constitute guidance with respect to Antero Midstream Partners LP.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resource's Annual Report on Form 10-K for the year ended December 31, 2016.
1. |
Includes distributions from limited partner interests in Antero Midstream and expected contingent payments to be received from Antero Midstream related to the divestiture of its fresh water delivery business. |
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SOURCE Antero Resources Corporation
DENVER, Sept. 6, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company") announced today the pricing of an underwritten public offering of 10,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream Partners LP (NYSE: AM) (the "Partnership") held by Antero Resources at a price of $31.45 per common unit for aggregate gross proceeds of approximately $315 million before estimated offering expenses. In connection with the Offering, Antero Resources granted the underwriters a 30-day option to purchase up to an additional 1,500,000 common units. After giving effect to the Offering and assuming no exercise of the underwriters' option to purchase additional common units, Antero Resources will own approximately 53% of the Partnership's outstanding common units.
Barclays and Wells Fargo are acting as joint book-running managers for the Offering. The Offering will only be made by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Barclays Capital Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 barclaysprospectus@broadridge.com Toll-Free: 1-888-603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 cmclientsupport@wellsfargo.com Telephone: 1-800-326-5897 |
Antero Midstream Partners LP has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (the "SEC") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Antero Midstream Partners LP has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Antero Resources will arrange to send you the prospectus after filing if you request it by calling (303) 357-7310. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Resource's control. All statements, other than historical facts included in this release, 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 Resources 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. Nothing in this release is intended to constitute guidance with respect to Antero Midstream Partners LP.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resource's Annual Report on Form 10-K for the year ended December 31, 2016.
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SOURCE Antero Resources Corporation
DENVER, Sept. 6, 2017 /PRNewswire/ -- Antero Midstream Partners (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced the pricing of an underwritten public offering of 10,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream held by Antero Resources Corporation (NYSE: AR) at a price of $31.45 per unit for aggregate gross proceeds to Antero Resources Corporation of approximately $315 million before estimated offering expenses. Antero Midstream will not receive any proceeds from the sale of common units in the Offering. In connection with the Offering, Antero Resources granted the underwriters a 30-day option to purchase up to an additional 1,500,000 common units. After giving effect to the Offering and assuming no exercise of the underwriters' option to purchase additional common units, Antero Resources will own approximately 53% of the Partnership's outstanding common units.
Barclays and Wells Fargo are acting as joint book-running managers for the Offering. The Offering will only be made by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Barclays Capital Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 barclaysprospectus@broadridge.com Toll-Free: 1-888-603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 cmclientsupport@wellsfargo.com Telephone: 1-800-326-5897 |
Antero Midstream has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (the "SEC") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Antero Midstream has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Antero Resources will arrange to send you the prospectus after filing if you request it by calling (303) 357-7310. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's control. All statements, other than historical facts included in this release, 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. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Sept. 6, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources," the "Company" or the "Selling Unitholder") announced today the commencement of an underwritten public offering (the "Offering") of 10,000,000 common units representing limited partner interests in Antero Midstream Partners LP (NYSE: AM) held by Antero Resources. In addition, the Selling Unitholder anticipates granting the underwriters a 30-day option to purchase up to an additional 1,500,000 common units. Antero Resources intends to use the net proceeds from the Offering to repay borrowings under its credit facility. The Company currently owns 108,870,335 common units.
Barclays and Wells Fargo are acting as joint book-running managers for the Offering. The Offering will only be made by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Barclays Capital Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 barclaysprospectus@broadridge.com Toll-Free: 1-888-603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 cmclientsupport@wellsfargo.com Telephone: 1-800-326-5897 |
Antero Midstream Partners LP intends to file a registration statement (including a prospectus) with the Securities and Exchange Commission (the "SEC") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Antero Midstream Partners LP has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Antero Resources will arrange to send you the prospectus after filing if you request it by calling (303) 357-7310. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Resource's control. All statements, other than historical facts included in this release, 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 Resources 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. Nothing in this release is intended to constitute guidance with respect to Antero Midstream Partners LP.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resource's Annual Report on Form 10-K for the year ended December 31, 2016.
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SOURCE Antero Resources Corporation
DENVER, Sept. 6, 2017 /PRNewswire/ -- Antero Midstream Partners (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today that Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Selling Unitholder") commenced an underwritten public offering (the "Offering") of 10,000,000 common units representing limited partner interests in Antero Midstream held by Antero Resources. In addition, the Selling Unitholder anticipates granting the underwriters a 30-day option to purchase up to an additional 1,500,000 common units. Antero Resources intends to use the net proceeds from the Offering to repay borrowings under its credit facility. Antero Resources currently owns 108,870,335 common units. Antero Midstream will not receive any proceeds from the sale of common units in the Offering.
Barclays and Wells Fargo are acting as joint book-running managers for the Offering. The Offering will only be made by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from
Barclays Capital Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 barclaysprospectus@broadridge.com Toll-Free: 1-888-603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 cmclientsupport@wellsfargo.com Telephone: 1-800-326-5897 |
Antero Midstream intends to file a registration statement (including a prospectus) with the Securities and Exchange Commission (the "SEC") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Antero Midstream has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Antero Resources will arrange to send you the prospectus after filing if you request it by calling (303) 357-7310. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources'properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Midstream's control. All statements, other than historical facts included in this release, 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. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Aug. 2, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today released their second quarter 2017 financial and operational results. The relevant condensed consolidated financial statements are included in Antero Midstream's and AMGP's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2017, which have been filed with the Securities and Exchange Commission.
Highlights Include:
Recent Developments
Antero Midstream Distribution for the Second Quarter of 2017
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.32 per unit for the second quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is Antero Midstream's tenth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 16, 2017 to unitholders of record as of August 3, 2017.
Completion of AMGP Initial Public Offering
On May 9, 2017, AMGP announced the closing of its initial public offering of 37,250,000 common shares representing limited partner interests in AMGP previously held by Antero Resources Investment LLC ("ARI"). Total gross proceeds to ARI, before underwriters' fees and estimated expenses, were approximately $875 million. No proceeds were retained by AMGP.
AMGP 2017 Distribution Guidance and Long-term Outlook
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a cash distribution of $0.027 per share for the second quarter of 2017. The distribution reflects a pro-rated distribution from the closing of the AMGP initial public offering on May 9, 2017 through June 30, 2017. The distribution will be payable on August 23, 2017 to shareholders of record as of August 3, 2017.
On June 15, 2017, AMGP announced distribution guidance of $0.15 to $0.17 for the year ended December 31, 2017, which includes the previously announced pro-rated distribution of $0.027 for the second quarter of 2017. AMGP is targeting distributions per share of $0.43 to $0.46 for 2018, $0.70 to $0.76 for 2019, and $1.06 to $1.16 for 2020, driven by Antero Midstream's compound annual distribution growth target per unit of 28% to 30% through 2020. AMGP's guidance and long-term targets assume 1.0x DCF coverage and exclude the impact of any future debt or equity offerings, acquisitions, or divestitures at either Antero Midstream or AMGP.
Antero Midstream Second Quarter 2017 Financial Results
Low pressure gathering volumes for the second quarter of 2017 averaged 1,683 MMcf/d, a 24% increase from the second quarter of 2016 and a 1% increase sequentially. Compression volumes for the second quarter of 2017 averaged 1,192 MMcf/d, an 81% increase from the second quarter of 2016 and a 16% increase sequentially. High pressure gathering volumes for the second quarter of 2017 averaged 1,734 MMcf/d, a 38% increase from the second quarter of 2016 and a 10% increase sequentially. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. In the second quarter of 2017, which was the first full quarter of operations for the Antero Midstream / MPLX joint venture (the "Joint Venture"), processing volumes averaged 216 MMcf/d and fractionation volumes averaged 4,039 Bbl/d. Fresh water delivery volumes averaged 173 MBbl/d during the quarter, a 64% increase compared to the prior year quarter and a 17% increase sequentially.
Three Months Ended June 30, |
|||||||
Average Daily Volumes: |
2016 |
2017 |
% |
||||
Low Pressure Gathering (MMcf/d) |
1,353 |
1,683 |
24% |
||||
Compression (MMcf/d) |
658 |
1,192 |
81% |
||||
High Pressure Gathering (MMcf/d) |
1,253 |
1,734 |
38% |
||||
Joint Venture Processing (MMcf/d) |
— |
216 |
* |
||||
Joint Venture Fractionation (Bbl/d) |
— |
4,039 |
* |
||||
Fresh Water Delivery (MBbl/d) |
105 |
173 |
64% |
* Not applicable. |
For the three months ended June 30, 2017, the Partnership reported revenues of $194 million, comprised of $99 million from the Gathering and Processing segment and $95 million from the Water Handling and Treatment segment. Revenues increased 42% compared to the prior year quarter, driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $36 million from wastewater handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $10 million and $42 million, respectively, for a total of $52 million compared to $43 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $35 million from produced water handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $15 million, a $2 million increase compared to the second quarter of 2016. General and administrative expenses excluding equity-based compensation were $8 million during the second quarter of 2017, a $1 million increase compared to the second quarter of 2016. Total operating expenses were $101 million, including $30 million of depreciation and $4 million of accretion of contingent acquisition consideration.
Net income for the second quarter of 2017 was $87 million, a 75% increase compared to the prior year quarter. Net income per limited partner unit was $0.39 per unit, a 44% increase compared to the prior year quarter. Adjusted EBITDA was $139 million, a 59% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is primarily driven by increased throughput volumes and fresh water delivery volumes. Adjusted EBITDA for the quarter included $6 million in distributions from Stonewall Gathering LLC ("Stonewall") and did not include distributions from the processing and fractionation joint venture. Antero Midstream expects distributions from Stonewall to be approximately $10 to $15 million and distributions from the processing and fractionation joint venture to be approximately $10 million in 2017, both in line with previously provided guidance. Cash interest paid was $2 million. Cash reserved for bond interest during the quarter was $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $16 million and distributable cash flow was $110 million, resulting in a DCF coverage ratio of 1.5x.
Commenting on the outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "The second quarter highlights the benefits of Antero Midstream's integrated full value chain strategy, as Antero's advanced completions drove record gathering, compression and fresh water delivery volumes for Antero Midstream. Additionally, Antero Midstream's processing and fractionation investment is beginning to build significant momentum, as the Joint Venture's first processing plant, Sherwood 7, was fully utilized during the second quarter and we recently placed on line the Joint Venture's second processing plant, Sherwood 8, which is already fully utilized. The Joint Venture's next plant, Sherwood 9 (200 MMcf/d), is expected to be in service in January of 2018."
The following table reconciles net income to adjusted EBITDA and distributable cash flow as used in this release (in thousands):
Three months ended | |||||
June 30, | |||||
2016 |
2017 | ||||
Net income |
$ |
49,912 |
$ |
87,175 | |
Interest expense |
3,879 |
9,015 | |||
Depreciation expense |
24,140 |
30,512 | |||
Accretion of contingent acquisition consideration |
3,461 |
3,590 | |||
Equity-based compensation |
6,793 |
6,951 | |||
Equity in earnings of unconsolidated affiliates |
(484) |
(3,623) | |||
Distributions from unconsolidated affiliates |
— |
5,820 | |||
Adjusted EBITDA |
$ |
87,701 |
$ |
139,440 | |
Interest paid |
(4,264) |
(2,308) | |||
Cash reserved/paid for bond interest (1) |
— |
(8,734) | |||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2) |
(1,000) |
(2,431) | |||
Cash distribution to be received from unconsolidated affiliate |
778 |
— | |||
Maintenance capital expenditures(3) |
(5,710) |
(16,422) | |||
Distributable cash flow |
$ |
77,505 |
$ |
109,545 | |
Distributions Declared to Antero Midstream Holders |
|||||
Limited Partners |
$ |
44,044 |
$ |
59,695 | |
Incentive distribution rights |
2,731 |
15,328 | |||
Total Aggregate Distributions |
$ |
46,775 |
$ |
75,023 | |
DCF coverage ratio |
1.7x |
1.5x |
1) Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
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. |
Commenting on Antero Midstream's quarterly results, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream reported another strong quarter with operating revenues and adjusted EBITDA increasing by 42% and 59% over the prior year quarter, respectively. Importantly, the strong second quarter results and peer leading distribution growth and DCF coverage keep us on track to achieve our 2017 guidance. Antero Midstream remains well capitalized, with debt to trailing twelve months adjusted EBITDA of 1.9x and over $1.2 billion of liquidity."
Gathering and Processing — Current compression capacity is approximately 1.4 Bcf/d in the Marcellus and Utica combined and was over 83% utilized on average in the second quarter. Additionally, Antero Midstream connected 28 wells to its gathering system during the quarter. Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 44 well completions during the second quarter of 2017, a 42% increase from the prior year quarter and 29% increase sequentially. Antero Resources is currently operating five completion crews on Antero Midstream dedicated acreage. During the quarter, Antero Midstream continued construction on the Antero Clearwater Facility, which is expected to be placed into service in the fourth quarter of 2017 and have up to 60,000 Bbl/d of treating capacity.
Balance Sheet and Liquidity
As of June 30, 2017, Antero Midstream had $18 million in cash and $305 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.2 billion of liquidity. Antero Midstream's net debt to trailing twelve months adjusted EBITDA was 1.9x as of June 30, 2017. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Capital Investments
Capital expenditures, excluding investments in the processing and fractionation joint venture, were $146 million in the second quarter of 2017 as compared to $90 million in the second quarter of 2016. Capital invested in gathering systems and facilities was $88 million and capital invested in water handling and treatment assets was $58 million, including $46 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the processing and fractionation joint venture were $31 million during the quarter.
AMGP Second Quarter 2017 Financial Results
AMGP's equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $15.3 million. Net loss for the second quarter of 2017 was $3.3 million as compared to net income of $1.6 million for the prior year quarter. AMGP's net loss and cash available for distribution for the three months ending June 30, 2017 included non-recurring and non-tax deductible general and administrative expenses related to the AMGP initial public offering. These general and administrative expenses are not included in the post-IPO period, as presented below.
AMGP's cash distributions from Antero Midstream were $8.5 million for the period following the closing of the AMGP initial public offering on May 9, 2017 through June 30, 2017, net of $0.3 million of cash distributions on Series B units. General and administrative expenses and income taxes were $0.3 million and $3.2 million, respectively, resulting in cash available for distribution of $5.0 million.
The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):
Three months ended |
Post-IPO Period | ||||
Cash distributions from Antero Midstream Partners LP |
$ |
15,328 |
$ |
8,784 | |
Cash distributions to AMGP |
14,861 |
8,517 | |||
Cash distributions on Series B units of IDR LLC |
467 |
267 | |||
AMGP |
|||||
Cash distributions to AMGP |
$ |
14,861 |
$ |
8,517 | |
General and administrative expenses |
(3,203) |
(300) | |||
Provision for income taxes |
(5,755) |
(3,248) | |||
Cash available for distribution |
$ |
5,903 |
$ |
4,969 | |
DCF Coverage Ratio |
— |
1.0x | |||
Common shares outstanding |
— |
186,170 | |||
Cash distribution per common share |
$ |
— |
$ |
0.027 |
Conference Call
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, August 3, 2017 at 10:00 am MT to discuss the quarterly 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, August 11, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10108843.
Presentation
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay on Antero Midstream's website and AMGP's website until Friday, August 11, 2017 at 10:00 am MT. Information on Antero Midstream's website and AMGP's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, accretion of contingent acquisition consideration, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
June 30, | |||
2017 | |||
Bank credit facility |
$ |
305,000 | |
5.375% AM senior notes due 2024 |
650,000 | ||
Net unamortized debt issuance costs |
(9,551) | ||
Consolidated total debt |
$ |
945,449 | |
Cash and cash equivalents |
(17,533) | ||
Consolidated net debt |
$ |
927,916 |
The following table reconciles net income to adjusted EBITDA for the twelve months ended June 30, 2017 as used in this release (in thousands):
Twelve Months June 30, | ||
2017 | ||
Net income |
$ |
306,141 |
Interest expense |
32,162 | |
Depreciation expense |
109,946 | |
Accretion of contingent acquisition consideration |
16,748 | |
Equity-based compensation |
26,520 | |
Equity in earnings of unconsolidated affiliate |
(5,855) | |
Distributions from unconsolidated affiliates |
13,522 | |
Gain on asset sale |
(3,859) | |
Adjusted EBITDA |
$ |
495,325 |
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's and AMGP's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's and AMGP's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | ||||||
Condensed Consolidated Balance Sheets | ||||||
December 31, 2016 and June 30, 2017 | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
December 31, 2016 |
June 30, 2017 | |||||
Assets | ||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
14,042 |
17,533 | |||
Accounts receivable–Antero Resources |
64,139 |
79,062 | ||||
Accounts receivable–third party |
1,240 |
1,237 | ||||
Prepaid expenses |
529 |
294 | ||||
Total current assets |
79,950 |
98,126 | ||||
Property and equipment, net |
2,195,879 |
2,394,276 | ||||
Investment in unconsolidated affiliates |
68,299 |
259,697 | ||||
Other assets, net |
5,767 |
9,838 | ||||
Total assets |
$ |
2,349,895 |
2,761,937 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accounts payable |
$ |
16,979 |
15,077 | |||
Accounts payable–Antero Resources |
3,193 |
2,989 | ||||
Accrued liabilities |
61,641 |
77,096 | ||||
Other current liabilities |
200 |
204 | ||||
Total current liabilities |
82,013 |
95,366 | ||||
Long-term liabilities: |
||||||
Long-term debt |
849,914 |
945,449 | ||||
Contingent acquisition consideration |
194,538 |
201,654 | ||||
Other |
620 |
515 | ||||
Total liabilities |
1,127,085 |
1,242,984 | ||||
Partners' capital: |
||||||
Common unitholders - public (70,020 units and 77,672 units issued and outstanding at December 31, 2016 and June 30, 2017, respectively) |
1,458,410 |
1,722,808 | ||||
Common unitholder - Antero Resources (32,929 units and 108,870 units issued and outstanding at December 31, 2016 and June 30, 2017, respectively) |
26,820 |
(219,183) | ||||
Subordinated unitholder - Antero Resources (75,941 issued and outstanding at December 31, 2016) |
(269,963) |
— | ||||
General partner |
7,543 |
15,328 | ||||
Total partners' capital |
1,222,810 |
1,518,953 | ||||
Total liabilities and partners' capital |
$ |
2,349,895 |
2,761,937 |
ANTERO MIDSTREAM PARTNERS LP | ||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||
Three Months Ended June 30, 2016, and 2017 | ||||||
(Unaudited) | ||||||
(In thousands, except per unit amounts) | ||||||
Three Months Ended June 30, | ||||||
2016 |
2017 | |||||
Revenue: |
||||||
Gathering and compression–Antero Resources |
$ |
71,715 |
98,633 | |||
Water handling and treatment–Antero Resources |
64,893 |
95,004 | ||||
Gathering and compression–third party |
202 |
129 | ||||
Total revenue |
136,810 |
193,766 | ||||
Operating expenses: |
||||||
Direct operating |
42,597 |
52,308 | ||||
General and administrative (including $6,793 and $6,951 of equity-based compensation in 2016 and 2017, respectively) |
13,305 |
14,789 | ||||
Depreciation |
24,140 |
30,512 | ||||
Accretion of contingent acquisition consideration |
3,461 |
3,590 | ||||
Total operating expenses |
83,503 |
101,199 | ||||
Operating income |
53,307 |
92,567 | ||||
Interest expense, net |
(3,879) |
(9,015) | ||||
Equity in earnings of unconsolidated affiliates |
484 |
3,623 | ||||
Net income and comprehensive income |
49,912 |
87,175 | ||||
Net income attributable to incentive distribution rights |
(2,731) |
(15,328) | ||||
Limited partners' interest in net income |
$ |
47,181 |
71,847 | |||
Net income per limited partner unit - basic and diluted |
$ |
0.27 |
0.39 | |||
Weighted average limited partner units outstanding - basic |
176,172 |
186,065 | ||||
Weighted average limited partner units outstanding - diluted |
176,226 |
186,533 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Results of Segment Operations | |||||||||
Three Months Ended June 30, 2016, and 2017 | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three months ended June 30, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
71,715 |
64,893 |
136,608 | |||||
Revenue - third-party |
202 |
— |
202 | ||||||
Total revenues |
71,917 |
64,893 |
136,810 | ||||||
Operating expenses: |
|||||||||
Direct operating |
7,447 |
35,150 |
42,597 | ||||||
General and administrative (before equity-based compensation) |
4,837 |
1,675 |
6,512 | ||||||
Equity-based compensation |
5,301 |
1,492 |
6,793 | ||||||
Depreciation |
16,964 |
7,176 |
24,140 | ||||||
Accretion of contingent acquisition consideration |
— |
3,461 |
3,461 | ||||||
Total expenses |
34,549 |
48,954 |
83,503 | ||||||
Operating income |
$ |
37,368 |
15,939 |
53,307 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
59,633 |
28,068 |
87,701 | |||||
Three months ended June 30, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
98,633 |
95,004 |
193,637 | |||||
Revenue - third-party |
129 |
— |
129 | ||||||
Total revenues |
98,762 |
95,004 |
193,766 | ||||||
Operating expenses: |
|||||||||
Direct operating |
9,922 |
42,386 |
52,308 | ||||||
General and administrative (before equity-based compensation) |
5,468 |
2,370 |
7,838 | ||||||
Equity-based compensation |
5,237 |
1,714 |
6,951 | ||||||
Depreciation |
22,271 |
8,241 |
30,512 | ||||||
Accretion of contingent acquisition consideration |
— |
3,590 |
3,590 | ||||||
Total expenses |
42,898 |
58,301 |
101,199 | ||||||
Operating income |
$ |
55,864 |
36,703 |
92,567 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
89,192 |
50,248 |
139,440 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Selected Operating Data | ||||||||||||
Three Months Ended June 30, 2016, and 2017 | ||||||||||||
(Unaudited) | ||||||||||||
Amount of Increase (Decrease) |
||||||||||||
Three Months Ended June 30, |
Percentage | |||||||||||
2016 |
2017 |
Change | ||||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
136,608 |
193,637 |
57,029 |
42 |
% | ||||||
Revenue - third-party |
202 |
129 |
(73) |
(36) |
% | |||||||
Total revenue |
136,810 |
193,766 |
56,956 |
42 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
42,597 |
52,308 |
9,711 |
23 |
% | |||||||
General and administrative (before equity-based compensation) |
6,512 |
7,838 |
1,326 |
20 |
% | |||||||
Equity-based compensation |
6,793 |
6,951 |
158 |
2 |
% | |||||||
Depreciation |
24,140 |
30,512 |
6,372 |
26 |
% | |||||||
Accretion of contingent acquisition consideration |
3,461 |
3,590 |
129 |
4 |
% | |||||||
Total operating expenses |
83,503 |
101,199 |
17,696 |
21 |
% | |||||||
Operating income |
53,307 |
92,567 |
39,260 |
74 |
% | |||||||
Interest expense |
(3,879) |
(9,015) |
(5,136) |
132 |
% | |||||||
Equity in earnings of unconsolidated affiliates |
484 |
3,623 |
3,139 |
649 |
% | |||||||
Net income |
$ |
49,912 |
87,175 |
37,263 |
75 |
% | ||||||
Adjusted EBITDA |
$ |
87,701 |
139,440 |
51,739 |
59 |
% | ||||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
123,116 |
153,180 |
30,064 |
24 |
% | |||||||
Gathering—high pressure (MMcf) |
114,013 |
157,806 |
43,793 |
38 |
% | |||||||
Compression (MMcf) |
59,834 |
108,451 |
48,617 |
81 |
% | |||||||
Condensate gathering (MBbl) |
180 |
* |
* |
* |
||||||||
Processing - Joint Venture (Mcf) |
— |
19,662 |
* |
* |
||||||||
Fractionation - Joint Venture (Bbl) |
— |
368 |
* |
* |
||||||||
Fresh water delivery (MBbl) |
9,589 |
15,761 |
6,172 |
64 |
% | |||||||
Wastewater handling (MBbl) |
2,740 |
3,400 |
660 |
24 |
% | |||||||
Wells serviced by fresh water delivery |
31 |
44 |
13 |
42 |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,353 |
1,683 |
330 |
24 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,253 |
1,734 |
481 |
38 |
% | |||||||
Compression (MMcf/d) |
658 |
1,192 |
534 |
81 |
% | |||||||
Condensate gathering (MBbl/d) |
2 |
* |
* |
* |
||||||||
Processing - Joint Venture (MMcf/d) |
— |
216 |
* |
* |
||||||||
Fractionation - Joint Venture (Bbl/d) |
— |
4 |
* |
* |
||||||||
Fresh water delivery (MBbl/d) |
105 |
173 |
68 |
64 |
% | |||||||
Wastewater handling (MBbl/d) |
30 |
37 |
7 |
24 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
0.32 |
0.01 |
3 |
% | ||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
|||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
|||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.17 |
— |
(4.17) |
(100) |
% | ||||||
Average fresh water delivery fee - Antero Resources($/Bbl) |
$ |
3.68 |
3.72 |
0.04 |
1 |
% |
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||
Consolidated Statements of Cash Flows | |||||
Six Months Ended June 30, 2016, and 2017 | |||||
(Unaudited) | |||||
Six months ended June 30, | |||||
2016 |
2017 | ||||
Cash flows from operating activities: |
|||||
Net income |
$ |
92,829 |
162,267 | ||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation |
47,963 |
58,048 | |||
Accretion of contingent acquisition consideration |
6,857 |
7,116 | |||
Equity-based compensation |
12,766 |
13,237 | |||
Equity in earnings of unconsolidated affiliates |
(484) |
(5,854) | |||
Distributions from unconsolidated affiliates |
— |
5,820 | |||
Amortization of deferred financing costs |
726 |
1,267 | |||
Changes in assets and liabilities: |
|||||
Accounts receivable–Antero Resources |
10,918 |
(14,923) | |||
Accounts receivable–third party |
1,448 |
3 | |||
Prepaid expenses |
(106) |
235 | |||
Accounts payable |
4,515 |
(523) | |||
Accounts payable–Antero Resources |
4 |
(204) | |||
Accrued liabilities |
(8,837) |
8,449 | |||
Net cash provided by operating activities |
168,599 |
234,938 | |||
Cash flows used in investing activities: |
|||||
Additions to gathering systems and facilities |
(96,969) |
(155,365) | |||
Additions to water handling and treatment systems |
(78,625) |
(95,451) | |||
Investment in unconsolidated affiliates |
(45,044) |
(191,364) | |||
Change in other assets |
(3,090) |
(4,804) | |||
Net cash used in investing activities |
(223,728) |
(446,984) | |||
Cash flows provided by financing activities: |
|||||
Distributions to unitholders |
(82,977) |
(125,014) | |||
Borrowings on bank credit facilities, net |
140,000 |
95,000 | |||
Issuance of common units, net of offering costs |
— |
246,585 | |||
Employee tax withholding for settlement of equity compensation awards |
— |
(932) | |||
Other |
(93) |
(102) | |||
Net cash provided by financing activities |
56,930 |
215,537 | |||
Net increase in cash and cash equivalents |
1,801 |
3,491 | |||
Cash and cash equivalents, beginning of period |
6,883 |
14,042 | |||
Cash and cash equivalents, end of period |
$ |
8,684 |
17,533 | ||
Supplemental disclosure of cash flow information: |
|||||
Cash paid during the period for interest |
$ |
7,708 |
21,976 | ||
Supplemental disclosure of noncash investing activities: |
|||||
Increase in accrued capital expenditures and accounts payable for property and equipment |
$ |
7,770 |
5,627 |
Antero Midstream GP LP | ||||||
Condensed Consolidated Balance Sheets | ||||||
December 31, 2016 and June 30, 2017 | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
December 31, 2016 |
June 30, 2017 | |||||
Assets | ||||||
Current assets: |
||||||
Cash |
$ |
9,609 |
11,391 | |||
Accounts receivable - related party |
217 |
358 | ||||
Total current assets |
9,826 |
11,749 | ||||
Investment in Antero Midstream Partners LP |
7,543 |
15,328 | ||||
Total assets |
$ |
17,369 |
27,077 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities: |
||||||
Accounts payable |
$ |
— |
347 | |||
Accrued liabilities |
426 |
1,483 | ||||
Income taxes payable |
6,674 |
3,584 | ||||
Total current liabilities |
7,100 |
5,414 | ||||
Liability for equity-based compensation |
— |
2,723 | ||||
Total liabilities |
7,100 |
8,137 | ||||
Partners' capital |
10,269 |
18,940 | ||||
Total liabilities and partners' capital |
$ |
17,369 |
27,077 |
Antero Midstream GP LP | |||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | |||||
Three Months Ended June 30, 2016 and 2017 | |||||
(Unaudited) | |||||
(In thousands, except per share amounts) | |||||
Three Months Ended June 30, | |||||
2016 |
2017 | ||||
Equity in earnings of Antero Midstream Partners LP |
$ |
2,731 |
15,328 | ||
Total income |
2,731 |
15,328 | |||
General and administrative expense |
145 |
3,203 | |||
Equity-based compensation |
— |
9,631 | |||
Total expenses |
145 |
12,834 | |||
Income before income taxes |
2,586 |
2,494 | |||
Provision for income taxes |
(1,036) |
(5,755) | |||
Net income (loss) and comprehensive income (loss) |
$ |
1,550 |
(3,261) | ||
Net loss attributable to Antero Midstream GP LP subsequent to IPO |
$ |
(1,621) | |||
Net loss per common share |
$ |
(0.01) | |||
Weighted average number of common shares outstanding (basic and diluted): |
186,170 |
Antero Midstream GP LP | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
Six Months Ended June 30, 2016 and 2017 | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
Six Months Ended June 30, | ||||||
2016 |
2017 | |||||
Cash flows provided by operating activities: |
||||||
Net income (loss) |
$ |
2,658 |
(6,560) | |||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: |
||||||
Equity in earnings of Antero Midstream Partners LP |
(4,581) |
(26,881) | ||||
Distributions received from Antero Midstream Partners LP |
2,819 |
19,096 | ||||
Equity-based compensation |
— |
17,954 | ||||
Deferred income taxes |
(368) |
— | ||||
Changes in current assets and liabilities: |
— | |||||
Accounts receivable - related party |
(201) |
(141) | ||||
Accounts payable |
— |
347 | ||||
Accrued liabilities |
145 |
1,057 | ||||
Income taxes payable |
1,941 |
(3,090) | ||||
Net cash provided by operating activities |
2,413 |
1,782 | ||||
Cash flows used in investing activities |
— |
— | ||||
Cash flows used in financing activities |
— |
— | ||||
Net increase in cash |
2,413 |
1,782 | ||||
Cash, beginning of period |
72 |
9,609 | ||||
Cash, end of period |
$ |
2,485 |
11,391 |
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-report-second-quarter-2017-financial-and-operational-results-300498715.html
SOURCE Antero Midstream; Antero Midstream GP LP
DENVER, July 18, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced plans to issue their second quarter 2017 earnings on Wednesday, August 2, 2017 after the close of trading on the New York Stock Exchange.
A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, August 3, 2017 at 10:00 am MT to discuss the 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream." A telephone replay of the call will be available Friday, August 11, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10108843.
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream's website at www.anteromidstream.com or AMGP's website at www.anteromidstreamgp.com. The webcast will be archived for replay until Friday, August 11, 2017 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.
AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes. Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares. AMGP owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-second-quarter-2017-earnings-release-date-and-joint-conference-call-300490125.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, July 13, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced their respective second quarter 2017 distributions.
AM Increased Quarterly Distribution
The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.320 per unit ($1.280 per unit annualized) for the second quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is Antero Midstream's tenth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 16, 2017 to unitholders of record as of August 3, 2017.
AMGP Initial Quarterly Distribution
The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a cash distribution of $0.027 per share for the second quarter of 2017. The distribution reflects a pro-rated distribution for the quarter from the closing of the AMGP initial public offering on May 9, 2017 through June 30, 2017. The distribution will be payable on August 23, 2017 to shareholders of record as of August 3, 2017.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation's properties located in West Virginia and Ohio.
AMGP is a Delaware limited partnership that owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/antero-midstream-and-amgp-announce-quarterly-distributions-300488069.html
SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
DENVER, June 15, 2017 /PRNewswire/ -- Antero Midstream GP LP (NYSE: AMGP) ("AMGP") today announced its 2017 distribution guidance and provided a long-term outlook through 2020.
2017 Guidance
AMGP is forecasting distributions per share of $0.15 to $0.17 for the year ended December 31, 2017. The forecast distributions reflect a pro-rated distribution during the second quarter of 2017 (from the closing of the AMGP initial public offering on May 9th, 2017 through June 30th, 2017) and forecasted distributions for the third and fourth quarters of 2017. AMGP's forecast distributions per share correspond to Antero Midstream Partners LP's (NYSE: AM) ("Antero Midstream") 2017 annual distribution growth guidance of 28% to 30%, as provided on February 6th, 2017. Antero Midstream's previously provided guidance can be found at www.anteromidstream.com.
Guidance |
2017 | ||
Antero Midstream |
Low |
High | |
Year-Over-Year Distribution Growth |
28% |
— |
30% |
AM Distributions Per Unit |
$1.32 |
— |
$1.34 |
DCF Coverage Ratio |
1.30x |
— |
1.45x |
AMGP |
|||
AMGP Distributions Per Share(1) |
$0.15 |
— |
$0.17 |
Year-Over-Year Distribution Growth |
* |
— |
* |
DCF Coverage Ratio |
1.0x |
* not applicable |
(1) Represents pro-rated distribution per share following closing of IPO on May 9th, 2017 and forecasted distributions for the third and fourth quarters of 2017. |
Long-term Outlook
AMGP is targeting the following distributions per share through 2020 based on Antero Midstream's corresponding compound annual distribution growth target of 28% to 30% through 2020, as provided on February 6th, 2017. AMGP's distribution growth targets exclude the impact of any future debt or equity offerings, acquisitions, or divestitures at either Antero Midstream or AMGP.
Long-term Targets |
2018 |
2019 |
2020 | ||||||||
Antero Midstream |
Low |
High |
Low |
High |
Low |
High | |||||
Year-Over-Year Distribution Growth |
28% |
— |
30% |
28% |
— |
30% |
28% |
— |
30% | ||
AM Distributions Per Unit |
$1.69 |
— |
$1.74 |
$2.16 |
— |
$2.26 |
$2.76 |
— |
$2.94 | ||
DCF Coverage Ratio |
>1.25x |
>1.25x |
>1.25x | ||||||||
AMGP |
|||||||||||
Year-Over-Year Distribution Growth(1) |
110% |
— |
114% |
63% |
— |
65% |
51% |
— |
53% | ||
AMGP Distributions Per Share |
$0.43 |
— |
$0.46 |
$0.70 |
— |
$0.76 |
$1.06 |
— |
$1.16 | ||
DCF Coverage Ratio |
1.0x |
1.0x |
1.0x |
(1) 2018 represents year-over-year growth compared to full-year 2017 distributions. |
Antero Midstream GP LP is a Delaware limited partnership that owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AMGP's control. All statements, other than historical facts, included in this release are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although AMGP believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
AMGP cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond AMGP's and Antero Midstream's control, incident to Antero Midstream's business. These risks include, but are not limited to, Antero Resources Corporation's ("Antero Resources") expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital and the timing of development expenditures.
For more information, contact Michael Kennedy – CFO of Antero Midstream GP LP at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream GP LP
DENVER, May 9, 2017 /PRNewswire/ -- Antero Midstream GP LP ("AMGP") today announced the closing of its initial public offering of 37,250,000 common shares representing limited partner interests in AMGP by Antero Resources Investment LLC (the "Selling Shareholder"), at a public offering price of $23.50 per common share for total gross proceeds (before underwriters' fees and estimated expenses) of approximately $875 million. AMGP will not receive any of the proceeds from the common shares to be sold by the Selling Shareholder. AMGP owns the general partner of Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and incentive distribution rights in Antero Midstream and has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes.
At the closing of the offering, the public holds an approximate 20.0% limited partner interest in AMGP and the Selling Shareholder holds the remaining approximate 80.0% limited partner interest in AMGP.
Morgan Stanley, Barclays and J.P. Morgan acted as joint book-running managers for the offering. Baird, Citigroup, Goldman Sachs & Co. LLC and Wells Fargo Securities acted as book-running managers.
In connection with the offering, Antero Resources Midstream Management LLC ("ARMM") has converted into a Delaware limited partnership, and, in connection with such conversion, has changed its name to Antero Midstream GP LP. ARMM has filed a registration statement relating to these securities with the U.S. Securities and Exchange Commission (the "SEC"), which has been declared effective. The offering of these securities is being made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. A copy of the final prospectus for the offering may be obtained, when available, from:
Morgan Stanley & Co. LLC |
Barclays c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, New York 11717 barclaysprospectus@broadridge.com Toll-Free: (888) 603-5847 |
J.P. Morgan c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY, 11717 1-866-803-9204 Email: prospectus-eq_fi@jpmchase.com
|
Baird Attention: Syndicate Department 777 East Wisconsin Avenue Milwaukee, WI 53202-5391 Telephone: 1-800-792-2473 Email: syndicate@rwbaird.com |
Citigroup c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 Telephone: 1-800-831-9146 |
Goldman Sachs & Co. LLC f/k/a Goldman, Sachs & Co. Attention: Prospectus Department 200 West Street New York, NY 10282 Telephone: 1-866-471-2526 Facsimile: 212-902-9316 prospectus-ny@ny.email.gs.com |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 Telephone: 1-800-326-5897 cmclientsupport@wellsfargo.com |
A copy of the final prospectus may be obtained free of charge by visiting the SEC's website at www.sec.gov.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream GP LP is a Delaware limited partnership that owns the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AMGPs control. All statements, other than historical facts, included in this release are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although AMGP believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
AMGP cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond AMGP's and Antero Midstream's control, incident to Antero Midstream's business. These risks include, but are not limited to, commodity price volatility, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital and the timing of development expenditures.
For more information, contact Michael Kennedy – CFO of Antero Midstream GP LP at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream GP LP
DENVER, May 8, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its first quarter 2017 financial and operational results. The relevant condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which has been filed with the Securities and Exchange Commission.
First Quarter Highlights Include:
Recent Developments
Distribution for the First Quarter of 2017
The Board of Directors of the general partner of the Partnership, declared a cash distribution of $0.30 per unit ($1.20 per unit annualized) for the first quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is the Partnership's ninth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be paid on May 10, 2017 to unitholders of record as of May 3, 2017. Cash distributions to be paid on incentive distribution rights for the first quarter of 2017 totaled $12 million.
Commenting on the outlook for Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream continues to build momentum in expanding its operations across the midstream value chain, further supported by Antero Resources' recently announced commitment to Sherwood Plants 10 and 11, which will be owned by the joint venture between Antero Midstream and MarkWest. We continue to see significant opportunities for expansion in Appalachia both on our organic development program and opportunities that present themselves as a result of Antero Resources' leadership in NGL production and liquids-rich drilling inventory in Appalachia."
First Quarter 2017 Financial Results
Low pressure gathering volumes for the first quarter of 2017 averaged 1,659 MMcf/d, a 26% increase from the first quarter of 2016 and a 9% increase sequentially. Compression volumes for the first quarter of 2017 averaged 1,028 MMcf/d, a 68% increase from the first quarter of 2016 and a 12% increase sequentially. High pressure gathering volumes for the first quarter of 2017 averaged 1,581 MMcf/d, a 28% increase from the first quarter of 2016 and a 12% increase sequentially. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 148 MBbl/d during the quarter, a 51% increase compared to the prior year quarter and a 1% decrease sequentially.
Three Months Ended March 31, |
|||||||
Average Daily Throughput: |
2016 |
2017 |
% |
||||
Low Pressure Gathering (MMcf/d) |
1,303 |
1,659 |
26% |
||||
Compression (MMcf/d) |
606 |
1,028 |
68% |
||||
High Pressure Gathering (MMcf/d) |
1,222 |
1,581 |
28% |
||||
Average Daily Volumes: |
|||||||
Fresh Water Delivery (MBbl/d) |
97 |
148 |
51% |
For the three months ended March 31, 2017, the Partnership reported revenues of $175 million, comprised of $92 million from the Gathering and Processing segment and $83 million from the Water Handling and Treatment segment. Revenues increased 28% compared to the prior year quarter, primarily driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $33 million from produced water handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $8 million and $40 million, respectively, for a total of $48 million compared to $49 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $32 million from produced water handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the first quarter of 2016. General and administrative expenses excluding equity-based compensation were $8 million during the first quarter of 2017, a 15% increase compared to the first quarter of 2016. The increase in general and administrative expenses was primarily driven by non-recurring legal expenses incurred from the processing and fractionation joint venture. Total operating expenses were $93 million, including $28 million of depreciation and $4 million of accretion of contingent acquisition consideration.
Net income for the first quarter of 2017 was $75 million, a 75% increase compared to the prior year quarter. Net income per limited partner unit was $0.35 per unit, a 52% increase compared to the prior year quarter. Adjusted EBITDA was $119 million, a 49% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is primarily driven by increased throughput volumes and fresh water delivery volumes. Adjusted EBITDA during the quarter did not include cash distributions from unconsolidated affiliates related to Stonewall Gathering LLC ("Stonewall") and the joint venture with MarkWest Energy Partners, L.P. ("MarkWest"), a wholly owned subsidiary of MPLX, due to the timing of the declaration of the distributions. The Partnership estimates cash distributions from unconsolidated affiliates for the full year 2017 to be approximately $18 million to $22 million, consistent with previously provided 2017 guidance. Cash interest paid, net of cash previously reserved for bond interest, was $9 million. Cash reserved for bond interest during the quarter was $2 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $16 million and distributable cash flow was $91 million, resulting in a DCF coverage ratio of 1.4x.
Commenting on Antero Midstream's quarterly results, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream continued to execute on its organically driven business plan in the first quarter of 2017, reporting a 49% year-over-year increase in adjusted EBITDA and peer-leading distribution growth of 28%. Importantly, the first quarter places Antero Midstream on track to achieve its previously provided 2017 adjusted EBITDA, distributable cash flow, distribution growth and coverage guidance."
The following table reconciles net income to adjusted EBITDA and distributable cash flow as used in this release (in thousands):
Three months ended | |||||
March 31, | |||||
2016 |
2017 | ||||
Net income |
$ |
42,918 |
$ |
75,091 | |
Interest expense |
3,704 |
8,836 | |||
Depreciation expense |
23,823 |
27,536 | |||
Accretion of contingent acquisition consideration |
3,396 |
3,526 | |||
Equity-based compensation |
5,972 |
6,286 | |||
Equity in earnings of unconsolidated affiliates |
— |
(2,231) | |||
Distributions from unconsolidated affiliates |
— |
— | |||
Adjusted EBITDA |
$ |
79,813 |
$ |
119,044 | |
Interest paid(1) |
(3,444) |
(9,187) | |||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2) |
(1,000) |
(1,500) | |||
Cash reserved for bond interest (3) |
— |
(1,552) | |||
Maintenance capital expenditures(4) |
(5,808) |
(15,903) | |||
Distributable cash flow |
$ |
69,561 |
$ |
90,902 | |
Total distributions declared |
$ |
43,252 |
$ |
67,306 | |
DCF coverage ratio |
1.6x |
1.4x |
1) |
Interest for the three months ended March 31, 2017 includes $20 million of cash interest paid, partially offset by $11 million of cash reserved for bond interest in the fourth quarter of 2016. |
2) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter. |
3) |
Cash reserved for bond interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
4) |
Maintenance capital expenditures represent that portion of our estimated capital expenditures associated with (i) the connection of new wells to our gathering and compression 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 distribution to new wells necessary to maintain the average throughput volume on our systems. |
Gathering and Processing — During the first quarter, Antero Midstream added a total of 305 MMcf/d of compression capacity by placing in service two compressor stations in the Marcellus Shale. Antero's current compression capacity is approximately 1.4 Bcf/d in the Marcellus and Utica combined and compression capacity was over 82% utilized on average in the first quarter. Additionally, Antero Midstream connected 21 wells to its Marcellus gathering system during the quarter. Antero Resources is currently operating seven drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 34 well completions during the first quarter of 2017, a 13% increase from the first quarter of 2016 and 3% decrease sequentially. Antero Resources is currently operating six completion crews on Antero Midstream dedicated acreage. During the quarter Antero Midstream continued construction on the Antero Clearwater Facility, which is expected to be placed into service in the fourth quarter of 2017.
Balance Sheet and Liquidity
As of March 31, 2017, Antero Midstream had $200 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.3 billion in available credit facility capacity. Antero Midstream's net debt to trailing twelve months adjusted EBITDA was 1.9x as of March 31, 2017. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Capital Spending
Capital expenditures, excluding investments in the processing and fractionation joint venture were $104 million in the first quarter of 2017 as compared to $86 million in the first quarter of 2016. Capital invested in gathering systems and facilities was $67 million and capital invested in water handling and treatment assets was $37 million, including $19 million invested in the Antero Clearwater Facility. Capital invested in the MarkWest joint venture was $160 million during the quarter.
Conference Call
Antero Midstream will hold a call on Tuesday, May 9, 2017 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, May 17, 2017 at 10:00 am MT at 844-512-2921 (U.S.) or 412-317-6671 (International) using the passcode 10103995.
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 on the Partnership's website until Wednesday, May 17, 2017 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Partnership's website before the May 9, 2017 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, accretion of contingent acquisition consideration, 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 Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, cash reserved for income tax withholding payments upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
March 31, | |||
2017 | |||
Bank credit facility |
$ |
200,000 | |
5.375% AM senior notes due 2024 |
650,000 | ||
Net unamortized debt issuance costs |
(9,821) | ||
Consolidated total debt |
$ |
840,179 | |
Cash and cash equivalents |
— | ||
Consolidated net debt |
$ |
840,179 |
The following table reconciles net income to adjusted EBITDA for the twelve months ended March 31, 2017 as used in this release (in thousands):
Twelve Months March 31, | ||
2017 | ||
Net income |
$ |
268,877 |
Add: |
||
Interest expense |
27,026 | |
Depreciation expense |
103,574 | |
Accretion of contingent acquisition consideration |
16,619 | |
Equity-based compensation |
26,361 | |
Equity in (earnings) of unconsolidated affiliate |
(2,716) | |
Distributions from unconsolidated affiliates |
7,702 | |
Gain on asset sale |
(3,859) | |
Adjusted EBITDA |
$ |
443,584 |
Antero Midstream is a limited partnership 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' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
December 31, 2016 and March 31, 2017 | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
December 31, 2016 |
March 31, 2017 | |||||||
Assets | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
14,042 |
— | |||||
Accounts receivable–Antero Resources |
64,139 |
71,500 | ||||||
Accounts receivable–third party |
1,240 |
1,200 | ||||||
Prepaid expenses |
529 |
498 | ||||||
Total current assets |
79,950 |
73,198 | ||||||
Property and equipment: |
||||||||
Gathering systems and facilities |
1,705,839 |
1,767,741 | ||||||
Water handling and treatment systems |
744,682 |
771,239 | ||||||
2,450,521 |
2,538,980 | |||||||
Less accumulated depreciation |
(254,642) |
(282,178) | ||||||
Property and equipment, net |
2,195,879 |
2,256,802 | ||||||
Investment in unconsolidated affiliates |
68,299 |
230,419 | ||||||
Other assets, net |
5,767 |
11,274 | ||||||
Total assets |
$ |
2,349,895 |
2,571,693 | |||||
Liabilities and Partners' Capital | ||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
16,979 |
13,512 | |||||
Accounts payable–Antero Resources |
3,193 |
2,428 | ||||||
Accrued liabilities |
61,641 |
47,083 | ||||||
Other current liabilities |
200 |
187 | ||||||
Total current liabilities |
82,013 |
63,210 | ||||||
Long-term liabilities: |
||||||||
Long-term debt |
849,914 |
840,179 | ||||||
Contingent acquisition consideration |
194,538 |
198,064 | ||||||
Other |
620 |
567 | ||||||
Total liabilities |
1,127,085 |
1,102,020 | ||||||
Partners' capital: |
||||||||
Common unitholders - public (70,020 units and 76,924 units issued and outstanding at December 31, 2016 and March 31, 2017, respectively) |
1,458,410 |
1,689,681 | ||||||
Common unitholder - Antero Resources (32,929 units and 108,870 units issued and outstanding at December 31, 2016 and March 31, 2017, respectively) |
26,820 |
(231,561) | ||||||
Subordinated unitholder - Antero Resources (75,941 and zero units issued and outstanding at December 31, 2016 and March 31, 2017, respectively) |
(269,963) |
— | ||||||
General partner |
7,543 |
11,553 | ||||||
Total partners' capital |
1,222,810 |
1,469,673 | ||||||
Total liabilities and partners' capital |
$ |
2,349,895 |
2,571,693 | |||||
ANTERO MIDSTREAM PARTNERS LP | ||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||
Three Months Ended March 31, 2016, and 2017 | ||||||
(Unaudited) | ||||||
(In thousands, except per unit amounts) | ||||||
Three Months Ended March 31, | ||||||
2016 |
2017 | |||||
Revenue: |
||||||
Gathering and compression–Antero Resources |
$ |
69,359 |
91,524 | |||
Water handling and treatment–Antero Resources |
66,439 |
83,110 | ||||
Gathering and compression–third party |
275 |
135 | ||||
Total revenue |
136,073 |
174,769 | ||||
Operating expenses: |
||||||
Direct operating |
49,141 |
47,554 | ||||
General and administrative (including $5,972 and $6,286 of equity-based compensation in 2016 and 2017, respectively) |
13,091 |
14,457 | ||||
Depreciation |
23,823 |
27,536 | ||||
Accretion of contingent acquisition consideration |
3,396 |
3,526 | ||||
Total operating expenses |
89,451 |
93,073 | ||||
Operating income |
46,622 |
81,696 | ||||
Interest expense, net |
(3,704) |
(8,836) | ||||
Equity in earnings of unconsolidated affiliates |
— |
2,231 | ||||
Net income and comprehensive income |
42,918 |
75,091 | ||||
Net income attributable to incentive distribution rights |
(1,850) |
(11,553) | ||||
Limited partners' interest in net income |
$ |
41,068 |
63,538 | |||
Net income per limited partner unit - basic and diluted |
$ |
0.23 |
0.35 | |||
Weighted average limited partner units outstanding - basic |
176,154 |
183,033 | ||||
Weighted average limited partner units outstanding - diluted |
176,160 |
183,447 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Consolidated Results of Segment Operations | |||||||||
Three Months Ended March 31, 2016, and 2017 | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three months ended March 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
69,359 |
66,439 |
135,798 | |||||
Revenue – third party |
275 |
— |
275 | ||||||
Total revenues |
69,634 |
66,439 |
136,073 | ||||||
Operating expenses: |
|||||||||
Direct operating |
7,619 |
41,522 |
49,141 | ||||||
General and administrative (before equity-based compensation) |
4,949 |
2,170 |
7,119 | ||||||
Equity-based compensation |
4,386 |
1,586 |
5,972 | ||||||
Depreciation |
16,861 |
6,962 |
23,823 | ||||||
Accretion of contingent acquisition consideration |
— |
3,396 |
3,396 | ||||||
Total expenses |
33,815 |
55,636 |
89,451 | ||||||
Operating income |
$ |
35,819 |
10,803 |
46,622 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
57,066 |
22,747 |
79,813 | |||||
Three months ended March 31, 2017 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
91,524 |
83,110 |
174,634 | |||||
Revenue – third party |
135 |
— |
135 | ||||||
Total revenues |
91,659 |
83,110 |
174,769 | ||||||
Operating expenses: |
|||||||||
Direct operating |
8,114 |
39,440 |
47,554 | ||||||
General and administrative (before equity-based compensation) |
5,549 |
2,622 |
8,171 | ||||||
Equity-based compensation |
4,589 |
1,697 |
6,286 | ||||||
Depreciation |
19,700 |
7,836 |
27,536 | ||||||
Accretion of contingent acquisition consideration |
— |
3,526 |
3,526 | ||||||
Total expenses |
37,952 |
55,121 |
93,073 | ||||||
Operating income |
$ |
53,707 |
27,989 |
81,696 | |||||
Segment and consolidated Adjusted EBITDA |
$ |
77,996 |
41,048 |
119,044 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Selected Operating Data | ||||||||||||
Three Months Ended March 31, 2016, and 2017 | ||||||||||||
(Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
Amount of |
||||||||||||
Three months ended March 31, |
Increase |
Percentage | ||||||||||
2016 |
2017 |
(Decrease) |
Change | |||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
135,798 |
174,634 |
38,836 |
29 |
% | ||||||
Revenue – third party |
275 |
135 |
(140) |
(51) |
% | |||||||
Total revenue |
136,073 |
174,769 |
38,696 |
28 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
49,141 |
47,554 |
(1,587) |
(3) |
% | |||||||
General and administrative (before equity-based compensation) |
7,119 |
8,171 |
1,052 |
15 |
% | |||||||
Equity-based compensation |
5,972 |
6,286 |
314 |
5 |
% | |||||||
Depreciation |
23,823 |
27,536 |
3,713 |
16 |
% | |||||||
Accretion of contingent acquisition consideration |
3,396 |
3,526 |
130 |
4 |
% | |||||||
Total operating expenses |
89,451 |
93,073 |
3,622 |
4 |
% | |||||||
Operating income |
46,622 |
81,696 |
35,074 |
75 |
% | |||||||
Interest expense |
(3,704) |
(8,836) |
(5,132) |
139 |
% | |||||||
Equity in earnings of unconsolidated affiliates |
— |
2,231 |
2,231 |
* |
||||||||
Net income |
$ |
42,918 |
75,091 |
32,173 |
75 |
% | ||||||
Adjusted EBITDA |
$ |
79,813 |
119,044 |
39,231 |
49 |
% | ||||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
118,597 |
149,268 |
30,671 |
26 |
% | |||||||
Gathering—high pressure (MMcf) |
111,162 |
142,313 |
31,151 |
28 |
% | |||||||
Compression (MMcf) |
55,102 |
92,521 |
37,419 |
68 |
% | |||||||
Condensate gathering (MBbl) |
270 |
15 |
(255) |
(94) |
% | |||||||
Fresh water delivery (MBbl) |
8,857 |
13,363 |
4,506 |
51 |
% | |||||||
Wastewater handling (MBbl) |
2,304 |
3,199 |
895 |
39 |
% | |||||||
Wells serviced by fresh water delivery |
30 |
34 |
4 |
13 |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,303 |
1,659 |
356 |
26 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,222 |
1,581 |
359 |
28 |
% | |||||||
Compression (MMcf/d) |
606 |
1,028 |
422 |
68 |
% | |||||||
Condensate gathering (MBbl/d) |
3 |
— |
(3) |
* |
||||||||
Fresh water delivery (MBbl/d) |
97 |
148 |
51 |
51 |
% | |||||||
Wastewater handling (MBbl/d) |
25 |
36 |
11 |
39 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
0.32 |
0.01 |
3 |
% | ||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
|||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
0.19 |
— |
— |
|||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.17 |
4.20 |
0.03 |
1 |
% | ||||||
Average fresh water delivery fee—Antero Resources($/Bbl) |
$ |
3.67 |
3.72 |
0.05 |
1 |
% |
ANTERO MIDSTREAM PARTNERS LP | ||||||
Consolidated Statements of Cash Flows | ||||||
Three Months Ended March 31, 2016, and 2017 | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
Three months ended March 31, | ||||||
2016 |
2017 | |||||
Cash flows from operating activities: |
||||||
Net income |
$ |
42,918 |
75,091 | |||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||
Depreciation |
23,823 |
27,536 | ||||
Accretion of contingent acquisition consideration |
3,396 |
3,526 | ||||
Equity-based compensation |
5,972 |
6,286 | ||||
Equity in earnings of unconsolidated affiliates |
— |
(2,231) | ||||
Amortization of deferred financing costs |
366 |
631 | ||||
Changes in assets and liabilities: |
||||||
Accounts receivable–Antero Resources |
2,267 |
(7,360) | ||||
Accounts receivable–third party |
1,415 |
41 | ||||
Prepaid expenses |
(336) |
31 | ||||
Accounts payable |
116 |
2,504 | ||||
Accounts payable–Antero Resources |
1,598 |
(765) | ||||
Accrued liabilities |
813 |
(5,542) | ||||
Net cash provided by operating activities |
82,348 |
99,748 | ||||
Cash flows used in investing activities: |
||||||
Additions to gathering systems and facilities |
(48,686) |
(66,559) | ||||
Additions to water handling and treatment systems |
(37,036) |
(36,954) | ||||
Investment in unconsolidated affiliates |
— |
(159,889) | ||||
Change in other assets |
(9,270) |
(5,874) | ||||
Net cash used in investing activities |
(94,992) |
(269,276) | ||||
Cash flows provided by financing activities: |
||||||
Distributions to unitholders |
(39,725) |
(57,633) | ||||
Borrowings (repayments) on bank credit facilities, net |
60,000 |
(10,000) | ||||
Issuance of common units, net of offering costs |
— |
223,119 | ||||
Other |
(36) |
— | ||||
Net cash provided by financing activities |
20,239 |
155,486 | ||||
Net increase (decrease) in cash and cash equivalents |
7,595 |
(14,042) | ||||
Cash and cash equivalents, beginning of period |
6,883 |
14,042 | ||||
Cash and cash equivalents, end of period |
$ |
14,478 |
— | |||
Supplemental disclosure of cash flow information: |
||||||
Cash paid during the period for interest |
$ |
3,686 |
19,668 | |||
Supplemental disclosure of noncash investing activities: |
||||||
Decrease in accrued capital expenditures and accounts payable for property and equipment |
$ |
27,640 |
14,989 | |||
SOURCE Antero Midstream Partners LP
DENVER, May 8, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today released its first quarter 2017 financial and operational results. The relevant condensed consolidated financial statements are included in Antero's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which has been filed with the Securities and Exchange Commission.
First Quarter Highlights Include:
Recent Developments
Borrowing Base Reaffirmed at $4.75 Billion
As a result of the recent spring borrowing base redetermination, the borrowing base under Antero's upstream credit facility was reaffirmed at $4.75 billion. Lender commitments under the facility remain at $4.0 billion. The bank syndicate, which is co-led by JPMorgan Chase Bank, N.A. and Wells Fargo, N.A., is currently comprised of 29 banks.
Natural Gas Firm Transportation Update
In February 2017, Energy Transfer Partners, L.P. ("Energy Transfer") received FERC approval to proceed with the construction of the Rover Pipeline ("Rover"). Energy Transfer has confirmed its plans to place Rover into service in the third quarter of 2017, with Phases 1 and 2 expected to come on line in July 2017 and November 2017, respectively. Antero is an anchor shipper on Rover with an 800,000 MMBtu/d firm commitment. The pipeline will connect Antero's Marcellus and Utica Shale assets to the Midwest and Gulf Coast via additional downstream firm transportation already in service. The project will also enable Antero to transport natural gas both from the Seneca (via Phase 1) and Sherwood (via Phase 2) Processing Facilities, allowing for maximum optionality on its firm transportation portfolio, and further strengthens the Company's ability to deliver on its long-term production targets through 2020.
NGL Infrastructure Update
In February 2017, Sunoco Logistics Partners LP ("Sunoco") began construction on the Mariner East 2 pipeline project after receiving the necessary permits from the Pennsylvania Department of Environmental Protection. The pipeline will transport NGLs from Southwestern Pennsylvania and Eastern Ohio to the Marcus Hook terminal and export facility near Philadelphia, Pennsylvania. Antero is an anchor shipper on Mariner East 2 with a 61,500 barrel per day commitment (11,500 barrels of ethane, 35,000 barrels of propane and 15,000 barrels of butane). The pipeline is expected to be placed into service in the fourth quarter of 2017. Antero is forecasting a C3+ NGL price realization improvement once Mariner East 2 is placed into service as the Company will have the ability to export ethane, propane and butane to international markets.
Firm Processing Update
Antero Resources recently committed to plants 8 through 11 at the Sherwood Facility and they are expected to be placed into service over the next 12 to 18 months. These four 200 MMcf/d plants at the Sherwood Processing Facility, in addition to Sherwood 7, will be owned by the recently formed joint venture between Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") and MarkWest Energy Partners, L.P. ("MarkWest"), a wholly owned subsidiary of MPLX, L.P. Plants 8 through 11 are expected to be placed into service in the third quarter of 2017, first quarter of 2018, third quarter of 2018 and fourth quarter of 2018, respectively. Plant 7 was placed into service in February of 2017.
First Quarter 2017 Financial and Operating Results
As of March 31, 2017, Antero owned a 59% limited partner interest in Antero Midstream. Antero Midstream's results are consolidated with Antero's results.
For the three months ended March 31, 2017, the Company reported net income of $268 million, or $0.85 per basic and diluted share, compared to a net loss of $5 million, or $(0.02) per basic and diluted share, in the first quarter of 2016. Net income for the first quarter of 2017 included the following items:
Excluding the items detailed above, the Company's results for the first quarter of 2017 were as follows:
For a description of adjusted net income and adjusted EBITDAX and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."
Antero's net daily production for the first quarter of 2017 averaged 2,144 MMcfe/d, including 99,119 Bbl/d of liquids (28% liquids). First quarter 2017 production represents an organic production growth rate of 22% from the first quarter of 2016 and an 8% increase compared to the fourth quarter of 2016. First quarter 2017 C3+ natural gas liquids ("NGLs") and oil production averaged 66,313 Bbl/d and 7,140 Bbl/d, respectively. Ethane (C2) production averaged 25,666 Bbl/d while leaving approximately 68,000 Bbl/d of ethane in the natural gas stream. Total liquids production for the first quarter of 2017 represents an organic production growth rate of 45% and 14% as compared to the first quarter of 2016 and fourth quarter of 2016, respectively.
Antero's average natural gas price before hedging increased 61% from the prior year quarter to $3.35 per Mcf, a $0.03 per Mcf premium to the average Nymex natural gas price for the period. Virtually all of Antero's first quarter 2017 natural gas revenue was realized at currently favorable price indices, including Columbia Gas Transmission (TCO), Chicago, MichCon, Gulf Coast and Nymex. Antero's average realized natural gas price after hedging for the first quarter of 2017 was $3.89 per Mcf, a $0.57 premium to the Nymex average natural gas price for the period, and a 14% decrease compared to the prior year quarter. During the quarter, Antero realized a cash settled natural gas hedge gain of $75 million, or $0.54 per Mcf compared to $302 million, or $2.46 per Mcf in the prior year quarter.
The Company's average realized C3+ NGL price before hedging for the first quarter of 2017 was $29.52 per barrel, or 57% of the average Nymex WTI oil price, which represents a 110% increase as compared to the prior year quarter. The improvement in C3+ NGL pricing is primarily due to an increase in Mont Belvieu pricing combined with an improvement in local differentials. Antero's average realized C3+ NGL price including hedges was $24.01 per barrel, a 27% increase compared to the first quarter of 2016. The Company's average realized ethane price before hedging for the first quarter of 2017 was $0.19 per gallon, or $8.00 per barrel. Antero's average realized ethane price including hedges for the first quarter of 2017 was $0.21 per gallon, or $8.73 per barrel. The average realized oil price before hedging was $41.96 per barrel, a $9.81 differential to Nymex WTI and a 95% increase as compared to the first quarter of 2016. Antero's average realized oil price including hedges was $43.17 per barrel, an $8.60 differential to Nymex WTI for the period.
Antero's average natural gas-equivalent price including C2+ NGLs and oil, but excluding hedge settlements, increased from the prior year quarter by 69% to $3.57 per Mcfe. The Company's average natural gas-equivalent price, including C2+ NGLs, oil and hedge settlements, decreased by 8% to $3.80 per Mcfe compared to the prior year quarter. For the first quarter of 2017, Antero realized a total cash settled hedge gain on all products of $45 million, or $0.23 per Mcfe.
Commenting on NGL price improvements and the outlook on liquids production, Glen Warren, President and CFO, said, "NGL price realizations for the quarter were strong, as we were able to achieve a pre-hedge C3+ NGL price of 57% of the average Nymex WTI oil price, which is above the high end of our recently increased 2017 NGL price guidance range of 50% to 55%. The uptick in liquids pricing compliments our market leading liquids-rich inventory in Appalachia and further highlights the momentum we have established through increased liquids production and forward-looking approach to capitalize on the NGL infrastructure buildout in the Northeast. Looking ahead, we expect this momentum to continue as Antero Midstream's recently announced joint venture with MarkWest combined with the expected startup of Mariner East 2 pipeline later this year provides tremendous visibility around getting our NGLs to market at favorable pricing."
Total operating revenue for the first quarter of 2017 was $1.2 billion as compared to $721 million for the first quarter of 2016. Operating revenue for the first quarter of 2017 included a $394 million non-cash gain on unsettled hedges, while the first quarter of 2016 included a $44 million non-cash loss on unsettled hedges. During the first quarter of 2017, the non-cash gain on unsettled hedges was driven by a decrease in natural gas futures pricing. Revenue excluding the unrealized hedge gain was $802 million, a 5% increase compared to the first quarter of 2016. Liquids production contributed 32% of total product revenues before hedges in the first quarter of 2017, as compared to a 25% contribution for the prior year quarter. For a reconciliation of revenue excluding unrealized hedge gains to operating revenue, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Marketing revenue for the first quarter of 2017 was $66 million. Antero's marketing revenue was primarily associated with the sale of third party gas purchased to utilize the Company's excess firm transportation capacity on the Tennessee, Columbia Gas and Rockies Express Pipelines. Marketing expense for the first quarter of 2017 was $90 million, including costs related to excess capacity and the cost of purchasing third party gas. Net marketing expense was $24 million, or $0.12 per Mcfe, for the first quarter of 2017, representing a 50%, or $0.12 per Mcfe decrease from the first quarter of 2016.
Per unit cash production expense (lease operating, gathering, compression, processing, transportation, and production and ad valorem taxes) for the first quarter of 2017 was $1.59 per Mcfe, a 7% increase compared to $1.49 per Mcfe in the prior year quarter. The increase is primarily due to increased utilization of a long haul pipeline which has higher per unit transportation costs as compared to our transportation portfolio average. The per unit cash production expense for the quarter included $0.08 per Mcfe for lease operating costs, $1.38 per Mcfe for gathering, compression, processing and transportation costs and $0.13 per Mcfe for production and ad valorem taxes. Per unit general and administrative expense for the first quarter of 2017, excluding non-cash equity-based compensation expense was $0.20 per Mcfe, a 5% decrease from the first quarter of 2016, driven by the increase in production. Per unit depreciation, depletion and amortization expense decreased 13% from the prior year quarter to $1.05 per Mcfe, primarily driven by increases in Antero's estimated recoverable reserves as well as decreases in its per unit development costs.
Adjusted EBITDAX of $365 million for the first quarter of 2017 represents a 3% increase compared to the prior year quarter. Adjusted EBITDAX margin for the quarter was $1.89 per Mcfe, representing a 15% decrease from the prior year quarter, driven primarily by a reduction in gains on settled derivatives. For the first quarter of 2017, cash flow from operations was $394 million, a 16% increase from the prior year quarter. Cash flow from operations before changes in working capital was $297 million, a 2% increase from the first quarter of 2016.
For a description of adjusted EBITDAX, adjusted EBITDAX margin, as well as cash flow from operations before changes in working capital and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."
The following table details the components of average net production and average realized prices for the three months ended March 31, 2017:
Three Months Ended March 31, 2017 | ||||||||||||||
Gas |
Oil |
C3+ NGLs |
Ethane |
Combined | ||||||||||
Average Net Production |
1,550 |
7,140 |
66,313 |
25,666 |
2,144 | |||||||||
Gas |
Oil |
C3+ NGLs |
Ethane |
Combined | ||||||||||
Average Realized Prices |
||||||||||||||
Average realized price before settled derivatives |
$ |
3.35 |
$ |
41.96 |
$ |
29.52 |
$ 8.00 |
$ |
3.57 | |||||
Settled derivatives |
0.54 |
1.21 |
(5.51) |
0.73 |
0.23 | |||||||||
Average realized price after settled derivatives |
$ |
3.89 |
$ |
43.17 |
$ |
24.01 |
$ 8.73 |
$ |
3.80 | |||||
Nymex average price |
$ |
3.32 |
$ |
51.77 |
$ |
3.32 | ||||||||
Premium / (Differential) to Nymex |
$ |
0.57 |
$ |
(8.60) |
$ |
0.48 | ||||||||
Marcellus Shale — Antero completed and placed on line 25 horizontal Marcellus wells during the first quarter of 2017 with an average lateral length of 8,850 feet. All 25 wells completed in the first quarter of 2017 have been on line for more than 30 days and had an average 30-day rate on choke of 18.6 MMcfe/d while rejecting ethane (21% liquids).
Current average well costs are $0.87 million per 1,000 feet of lateral in the Marcellus, which represents a 29% reduction from 2015 and in line with the fourth quarter of 2016. In the Marcellus, average drilling days from spud to final rig release declined to 12 days in the first quarter of 2017, a 49% reduction from 2015 and an 18% reduction from 2016. Antero is currently operating four drilling rigs and five completion crews in the Marcellus Shale.
One notable Marcellus pad that was completed late in the fourth quarter of 2016 had 4 wells with an average lateral length of 10,017 feet, an average BTU content of 1227 and an average of 1,700 pounds of proppant per foot. The average EUR for this pad is 2.4 Bcf/1,000 at the wellhead and 2.9 Bcfe/1,000' processed (ethane rejection). This pad had an all-in development cost of $0.39 per Mcfe, driving attractive rates of return.
Ohio Utica Shale — Antero did not complete and place on line any wells during the quarter while managing Utica development ahead of the anticipated Rover in service date. However, the Company drilled an average of 2,757 feet per day in its laterals while drilling and casing 13 wells during the quarter. Antero is currently operating three drilling rigs and one completion crew in the Utica Shale. The Company has plans to move one of these rigs to the Marcellus Shale in the second quarter of 2017.
Current average well costs are $1.01 million per 1,000 feet of lateral in the Utica, which represents a 26% reduction from 2015 and in line with the fourth quarter of 2016. Drilling days from spud to final rig release averaged 18 days in the Utica in the first quarter of 2017.
Commenting on the continued operational momentum and Antero's integrated business strategy, Paul Rady, Chairman and CEO said, "We continue to see increases in well productivity through the utilization of our advanced completion techniques while keeping drilling and completion costs down. We have seen encouraging early results in the Marcellus with completions yielding wellhead EURs in the 2.0 to 2.4 Bcf/1,000' range. Importantly, some of the early results are outside of our current high graded core areas and could lead to an extension of those areas. The continued operational momentum compliments Antero's integrated business strategy which includes best quality rock, firm transport to favorable price indices, an industry leading hedge book, significant exposure to liquids pricing upside and value created by infrastructure buildout through our 59% ownership in Antero Midstream. This high level of operational performance and integration gives us confidence in our ability to achieve our 2017 production growth guidance as well as our production growth targets through 2020."
Antero Midstream Financial Results
Antero Midstream results were released today and are available at www.anteromidstream.com.
Low pressure gathering volumes for the first quarter of 2017 averaged 1,659 MMcf/d, a 26% increase from the first quarter of 2016 and a 9% increase sequentially. Compression volumes for the first quarter of 2017 averaged 1,028 MMcf/d, a 68% increase from the first quarter of 2016 and a 12% increase sequentially. High pressure gathering volumes for the first quarter of 2017 averaged 1,581 MMcf/d, a 28% increase from the first quarter of 2016 and a 12% increase sequentially. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes averaged 148 MBbl/d during the quarter, a 51% increase compared to the prior year quarter and a 1% decrease sequentially.
For the three months ended March 31, 2017, the Partnership reported revenues of $175 million, comprised of $92 million from the Gathering and Processing segment and $83 million from the Water Handling and Treatment segment. Revenues increased 28% compared to the prior year quarter, primarily driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $33 million from produced water handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $8 million and $40 million, respectively, for a total of $48 million compared to $49 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $32 million from produced water handling and high rate water transfer services. General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the first quarter of 2016. General and administrative expenses excluding equity-based compensation were $8 million during the first quarter of 2017, a 15% increase compared to the first quarter of 2016. The increase in general and administrative expenses was primarily driven by non-recurring expenses incurred from the processing and fractionation joint venture with MarkWest. Total operating expenses were $93 million, including $28 million of depreciation and $4 million of accretion of contingent acquisition consideration.
The Board of Directors of the general partner of the Partnership declared a cash distribution of $0.30 per unit ($1.20 per unit annualized) for the first quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is the Partnership's ninth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be paid on May 10, 2017 to unitholders of record as of May 3, 2017.
Balance Sheet and Liquidity
As of March 31, 2017, Antero's consolidated net debt was $4.8 billion, of which $720 million were borrowings outstanding under the Company's and Antero Midstream's revolving credit facilities. Total borrowing capacity under these two facilities is currently $5.5 billion. Reduced for $710 million in letters of credit outstanding, the company had $4.1 billion in available consolidated liquidity as of March 31, 2017. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
First Quarter 2017 Capital Spending
Antero's drilling and completion costs for the three months ended March 31, 2017 were $307 million. In addition, the Company invested $56 million for land and $50 million for proved property acquisitions. Antero Midstream invested $67 million for gathering and compression systems, $37 million for water infrastructure projects, including $19 million on the Antero Clearwater Treatment Facility and $160 million in the recently announced processing and fractionation joint venture with MarkWest.
Hedge Position
Antero currently has hedged 3.3 Tcfe of future natural gas equivalent production using fixed price swaps covering the period from April 1, 2017 through December 31, 2023 at an average index price of $3.61 per MMBtu. At March 31, 2017, the Company's estimated fair value of commodity derivative instruments was $2.0 billion.
The following table summarizes Antero's hedge position as of March 31, 2017:
Period |
Natural Gas |
Average |
Liquids |
Average | ||
2Q 2017: |
||||||
Nymex Henry Hub |
1,370,000 |
$3.26 |
— |
— | ||
CGTLA |
420,000 |
$4.13 |
— |
— | ||
Chicago |
70,000 |
$4.38 |
— |
— | ||
Propane MB ($/Gal) |
— |
— |
27,500 |
$0.38 | ||
Ethane MB ($/Gall) |
— |
— |
20,000 |
$0.25 | ||
Nymex WTI ($/Bbl) |
— |
— |
3,000 |
$54.75 | ||
3Q 2017: |
||||||
Nymex Henry Hub |
1,370,000 |
$3.33 |
— |
— | ||
CGTLA |
420,000 |
$4.20 |
— |
— | ||
Chicago |
70,000 |
$4.45 |
— |
— | ||
Propane MB ($/Gal) |
— |
— |
27,500 |
$0.39 | ||
Ethane MB ($/Gal) |
— |
— |
20,000 |
$0.25 | ||
Nymex WTI ($/Bbl) |
— |
— |
3,000 |
$54.75 | ||
4Q 2017: |
||||||
Nymex Henry Hub |
1,370,000 |
$3.46 |
— |
— | ||
CGTLA |
420,000 |
$4.37 |
— |
— | ||
Chicago |
70,000 |
$4.68 |
— |
— | ||
Propane MB ($/Gal) |
— |
— |
27,500 |
$0.40 | ||
Ethane MB ($/Gal) |
— |
— |
20,000 |
$0.25 | ||
Nymex WTI ($/Bbl) |
— |
— |
3,000 |
$54.75 | ||
2017 Total |
1,860,000 |
$3.59 |
50,500 |
N/A (1) | ||
2018: |
||||||
Nymex Henry Hub |
2,002,500 |
$3.91 |
— |
— | ||
Propane MB ($/Gal) |
— |
— |
2,000 |
$0.65 | ||
2019 Nymex Henry Hub |
2,330,000 |
$3.70 |
— |
— | ||
2020 Nymex Henry Hub |
1,417,500 |
$3.63 |
— |
— | ||
2021 Nymex Henry Hub |
710,000 |
$3.31 |
— |
— | ||
2022 Nymex Henry Hub |
810,000 |
$3.18 |
— |
— | ||
2023 Nymex Henry Hub |
50,000 |
$2.83 |
— |
— | ||
(1) |
Average index price is not applicable as 2017 liquids hedges include propane, ethane and oil hedges. |
Conference Call
A conference call is scheduled on Tuesday, May 9, 2017 at 9:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Resources". A telephone replay of the call will be available until Wednesday, May 17, 2017 at 9:00 am MT at 844-512-2921 (U.S.) or 412-317-6671 (International) using the passcode 10103993.
A simultaneous webcast of the call may be accessed over the internet at www.anteroresources.com. The webcast will be archived for replay on the Company's website until Wednesday, May 17, 2017 at 9:00 am MT.
Presentation
An updated presentation will be posted to the Company's website before the May 9, 2017 conference call. The presentation can be found at www.anteroresources.com on the homepage. Information on the Company's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Revenue excluding unrealized hedge gains as set forth in this release represents total operating revenue adjusted for non-cash gains on unsettled hedges. Antero believes that revenue excluding unrealized hedge gains is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Revenue excluding unrealized hedge gains is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenue as an indicator of financial performance. The following table reconciles total operating revenue to revenue excluding unrealized hedge gains (in thousands):
Three months ended |
|||||||
2016 |
2017 |
||||||
Total operating revenue |
$ |
721,004 |
$ |
1,195,579 |
|||
Commodity derivative fair value gains |
(279,924) |
(438,775) |
|||||
Cash receipts for settled hedges |
324,347 |
44,849 |
|||||
Revenue excluding unrealized hedge gains |
$ |
765,427 |
$ |
801,653 |
Adjusted net income as set forth in this release represents net income (loss), adjusted for certain items. Antero believes that adjusted net income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance. The following table reconciles net income (loss) to adjusted net income (in thousands):
Three months ended |
|||||||
March 31, |
|||||||
2016 |
2017 |
||||||
Net income (loss) |
$ |
(5,055) |
$ |
268,396 |
|||
Non-cash commodity derivative (gains) losses on unsettled derivatives |
44,423 |
(393,926) |
|||||
Impairment of unproved properties |
15,526 |
26,899 |
|||||
Equity-based compensation |
23,470 |
25,503 |
|||||
Income tax effect of reconciling items |
(31,273) |
129,225 |
|||||
Adjusted net income |
$ |
47,091 |
$ |
56,097 |
Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operating activities before changes in working capital items. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity.
The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release (in thousands):
Three months ended |
|||||||
2016 |
2017 |
||||||
Net cash provided by operating activities |
$ |
340,168 |
$ |
393,939 |
|||
Net change in working capital |
(48,830) |
(97,337) |
|||||
Cash flow from operations before changes in working capital |
$ |
291,338 |
$ |
296,602 |
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
December 31, |
March 31, | ||||||
2016 |
2017 | ||||||
Bank credit facilities |
$ |
650,000 |
$ |
720,000 | |||
5.375% AR senior notes due 2021 |
1,000,000 |
1,000,000 | |||||
5.125% AR senior notes due 2022 |
1,100,000 |
1,100,000 | |||||
5.625% AR senior notes due 2023 |
750,000 |
750,000 | |||||
5.375% AM senior notes due 2024 |
650,000 |
650,000 | |||||
5.000% AR senior notes due 2025 |
600,000 |
600,000 | |||||
Net unamortized premium |
1,749 |
1,721 | |||||
Net unamortized debt issuance costs |
(47,776) |
(46,419) | |||||
Consolidated total debt |
$ |
4,703,973 |
$ |
4,775,302 | |||
Less: Cash and cash equivalents |
31,610 |
— | |||||
Consolidated net debt |
$ |
4,672,363 |
$ |
4,775,302 | |||
Adjusted EBITDAX is a non-GAAP financial measure that the Company defines as net income from continuing operations including noncontrolling interest after adjusting for those items shown in the table below. Adjusted EBITDAX, as used and defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, Antero's management team believes adjusted EBITDAX is useful to an investor in evaluating the Company's financial performance because this measure:
There are significant limitations to using adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero's net income, the lack of comparability of results of operations of different companies and the different methods of calculating adjusted EBITDAX reported by different companies. The following tables represent a reconciliation of the Company's net income from continuing operations including noncontrolling interest to adjusted EBITDAX, a reconciliation of adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before cash receipts for settled hedges to adjusted EBITDAX margin (in thousands except adjusted EBITDAX margin).
Three months ended |
||||||||||||||
March 31, |
||||||||||||||
2016 |
2017 |
|||||||||||||
Net income from continuing operations including noncontrolling interest |
$ |
10,650 |
$ |
305,558 |
||||||||||
Commodity derivative fair value gains |
(279,924) |
(438,775) |
||||||||||||
Gains on settled derivative instruments |
324,347 |
44,849 |
||||||||||||
Interest expense |
63,284 |
66,670 |
||||||||||||
Income tax expense |
4,815 |
131,346 |
||||||||||||
Depreciation, depletion, amortization, and accretion |
192,180 |
203,366 |
||||||||||||
Impairment of unproved properties |
15,526 |
26,899 |
||||||||||||
Exploration expense |
1,014 |
2,107 |
||||||||||||
Equity-based compensation expense |
23,470 |
25,503 |
||||||||||||
Equity in earnings of unconsolidated affiliate |
— |
(2,231) |
||||||||||||
State franchise taxes |
39 |
— |
||||||||||||
Total adjusted EBITDAX |
355,401 |
365,292 |
||||||||||||
Interest expense |
(63,284) |
(66,670) |
||||||||||||
Exploration expense |
(1,014) |
(2,107) |
||||||||||||
Changes in current assets and liabilities |
48,830 |
97,337 |
||||||||||||
State franchise taxes |
(39) |
— |
||||||||||||
Other non-cash items |
274 |
87 |
||||||||||||
Net cash provided by operating activities |
$ |
340,168 |
$ |
393,939 |
||||||||||
Three months ended |
||||||||||||||
March 31, |
||||||||||||||
Adjusted EBITDAX margin ($ per Mcfe): |
2016 |
2017 |
||||||||||||
Realized price before cash receipts for settled hedges |
$ |
2.11 |
$ |
3.57 |
||||||||||
Gathering, compression, and water handling and treatment revenues |
0.02 |
— |
||||||||||||
Lease operating expense |
(0.07) |
(0.08) |
||||||||||||
Gathering, compression, processing and transportation costs |
(1.30) |
(1.38) |
||||||||||||
Marketing, net |
(0.24) |
(0.12) |
||||||||||||
Production and ad valorem taxes |
(0.12) |
(0.13) |
||||||||||||
General and administrative(1) |
(0.21) |
(0.20) |
||||||||||||
Adjusted EBITDAX margin before settled hedges |
0.19 |
1.66 |
||||||||||||
Cash receipts for settled hedges |
2.03 |
0.23 |
||||||||||||
Adjusted EBITDAX margin ($ per Mcfe): |
$ |
2.22 |
$ |
1.89 |
(1) Excludes equity-based stock compensation that is included in G&A | ||||||
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, estimated realized natural gas and natural gas liquids prices, acreage quality, access to multiple gas markets, expected drilling and development plans, future financial position, future technical improvements and future marketing opportunities, 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 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.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2016.
ANTERO RESOURCES CORPORATION Condensed Consolidated Balance Sheets December 31, 2016 and March 31, 2017 (unaudited) (In thousands, except per share amounts) |
|||||||
December 31, 2016 |
March 31, 2017 |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
31,610 |
— |
||||
Accounts receivable, net of allowance for doubtful accounts of $1,195 in 2016 and 2017 |
29,682 |
36,874 |
|||||
Accrued revenue |
261,960 |
220,059 |
|||||
Derivative instruments |
73,022 |
237,086 |
|||||
Other current assets |
6,313 |
9,679 |
|||||
Total current assets |
402,587 |
503,698 |
|||||
Property and equipment: |
|||||||
Natural gas properties, at cost (successful efforts method): |
|||||||
Unproved properties |
2,331,173 |
2,330,010 |
|||||
Proved properties |
9,549,671 |
9,942,450 |
|||||
Water handling and treatment systems |
744,682 |
771,239 |
|||||
Gathering systems and facilities |
1,723,768 |
1,785,669 |
|||||
Other property and equipment |
41,231 |
42,290 |
|||||
14,390,525 |
14,871,658 |
||||||
Less accumulated depletion, depreciation, and amortization |
(2,363,778) |
(2,566,359) |
|||||
Property and equipment, net |
12,026,747 |
12,305,299 |
|||||
Derivative instruments |
1,731,063 |
1,811,435 |
|||||
Investments in unconsolidated affiliates |
68,299 |
230,418 |
|||||
Other assets |
26,854 |
37,804 |
|||||
Total assets |
$ |
14,255,550 |
14,888,654 |
||||
Liabilities and Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
38,627 |
37,706 |
||||
Accrued liabilities |
393,803 |
416,588 |
|||||
Revenue distributions payable |
163,989 |
198,775 |
|||||
Derivative instruments |
203,635 |
54,277 |
|||||
Other current liabilities |
17,334 |
16,090 |
|||||
Total current liabilities |
817,388 |
723,436 |
|||||
Long-term liabilities: |
|||||||
Long-term debt |
4,703,973 |
4,775,302 |
|||||
Deferred income tax liability |
950,217 |
1,081,563 |
|||||
Derivative instruments |
234 |
102 |
|||||
Other liabilities |
55,160 |
54,299 |
|||||
Total liabilities |
6,526,972 |
6,634,702 |
|||||
Commitments and contingencies |
|||||||
Equity: |
|||||||
Stockholders' equity: |
|||||||
Preferred stock, $0.01 par value; authorized - 50,000 shares; none issued |
— |
— |
|||||
Common stock, $0.01 par value; authorized - 1,000,000 shares; issued and outstanding 314,877 shares and 315,006 shares, respectively |
3,149 |
3,150 |
|||||
Additional paid-in capital |
5,299,481 |
6,407,158 |
|||||
Accumulated earnings |
959,995 |
1,228,391 |
|||||
Total stockholders' equity |
6,262,625 |
7,638,699 |
|||||
Noncontrolling interest in consolidated subsidiary |
1,465,953 |
615,253 |
|||||
Total equity |
7,728,578 |
8,253,952 |
|||||
Total liabilities and equity |
$ |
14,255,550 |
14,888,654 |
ANTERO RESOURCES CORPORATION Condensed Consolidated Statements of Operations and Comprehensive Income Three Months Ended March 31, 2016 and 2017 (unaudited) (In thousands, except per share amounts) | |||||||||||||||
Three Months Ended March 31, |
|||||||||||||||
2016 |
2017 |
||||||||||||||
Revenue: |
|||||||||||||||
Natural gas sales |
$ |
254,776 |
466,664 |
||||||||||||
Natural gas liquids sales |
73,065 |
194,652 |
|||||||||||||
Oil sales |
10,179 |
26,960 |
|||||||||||||
Gathering, compression, and water handling and treatment |
3,844 |
2,604 |
|||||||||||||
Marketing |
99,216 |
65,924 |
|||||||||||||
Commodity derivative fair value gains |
279,924 |
438,775 |
|||||||||||||
Total revenue |
721,004 |
1,195,579 |
|||||||||||||
Operating expenses: |
|||||||||||||||
Lease operating |
11,293 |
15,551 |
|||||||||||||
Gathering, compression, processing, and transportation |
208,738 |
266,829 |
|||||||||||||
Production and ad valorem taxes |
19,284 |
24,793 |
|||||||||||||
Marketing |
137,933 |
89,993 |
|||||||||||||
Exploration |
1,014 |
2,107 |
|||||||||||||
Impairment of unproved properties |
15,526 |
26,899 |
|||||||||||||
Depletion, depreciation, and amortization |
191,582 |
202,729 |
|||||||||||||
Accretion of asset retirement obligations |
598 |
637 |
|||||||||||||
General and administrative (including equity-based compensation expense of $23,470 and $25,503 in 2016 and 2017, respectively) |
56,287 |
64,698 |
|||||||||||||
Total operating expenses |
642,255 |
694,236 |
|||||||||||||
Operating income |
78,749 |
501,343 |
|||||||||||||
Other income (expenses): |
|||||||||||||||
Equity in earnings of unconsolidated affiliates |
— |
2,231 |
|||||||||||||
Interest |
(63,284) |
(66,670) |
|||||||||||||
Total other expenses |
(63,284) |
(64,439) |
|||||||||||||
Income before income taxes |
15,465 |
436,904 |
|||||||||||||
Provision for income tax expense |
(4,815) |
(131,346) |
|||||||||||||
Net income and comprehensive income including noncontrolling interest |
10,650 |
305,558 |
|||||||||||||
Net income and comprehensive income attributable to noncontrolling interest |
15,705 |
37,162 |
|||||||||||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation |
$ |
(5,055) |
268,396 |
||||||||||||
Earnings (loss) per common share—basic |
$ |
(0.02) |
0.85 |
||||||||||||
Earnings (loss) per common share—assuming dilution |
$ |
(0.02) |
0.85 |
||||||||||||
Weighted average number of shares outstanding: |
|||||||||||||||
Basic |
277,050 |
314,954 |
|||||||||||||
Diluted |
277,050 |
315,769 |
|||||||||||||
ANTERO RESOURCES CORPORATION Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 and 2017 (unaudited) (In thousands) |
||||||||
Three Months Ended March 31, |
||||||||
2016 |
2017 |
|||||||
Cash flows from operating activities: |
||||||||
Net income including noncontrolling interest |
$ |
10,650 |
305,558 |
|||||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||
Depletion, depreciation, amortization, and accretion |
192,180 |
203,366 |
||||||
Impairment of unproved properties |
15,526 |
26,899 |
||||||
Derivative fair value gains |
(279,924) |
(438,775) |
||||||
Gains on settled derivatives |
324,347 |
44,849 |
||||||
Deferred income tax expense |
4,815 |
131,346 |
||||||
Equity-based compensation expense |
23,470 |
25,503 |
||||||
Equity in earnings of unconsolidated affiliates |
— |
(2,231) |
||||||
Other |
274 |
87 |
||||||
Changes in current assets and liabilities: |
||||||||
Accounts receivable |
651 |
(7,192) |
||||||
Accrued revenue |
(8,204) |
41,901 |
||||||
Other current assets |
15 |
(3,366) |
||||||
Accounts payable |
4,387 |
12,545 |
||||||
Accrued liabilities |
49,041 |
19,339 |
||||||
Revenue distributions payable |
2,969 |
34,786 |
||||||
Other current liabilities |
(29) |
(676) |
||||||
Net cash provided by operating activities |
340,168 |
393,939 |
||||||
Cash flows used in investing activities: |
||||||||
Additions to proved properties |
— |
(49,664) |
||||||
Additions to unproved properties |
(28,675) |
(55,542) |
||||||
Drilling and completion costs |
(395,185) |
(306,925) |
||||||
Additions to water handling and treatment systems |
(37,036) |
(36,954) |
||||||
Additions to gathering systems and facilities |
(48,686) |
(66,559) |
||||||
Additions to other property and equipment |
(541) |
(590) |
||||||
Investment in unconsolidated affiliate |
— |
(159,889) |
||||||
Change in other assets |
(9,172) |
(12,350) |
||||||
Net cash used in investing activities |
(519,295) |
(688,473) |
||||||
Cash flows from financing activities: |
||||||||
Issuance of common units by Antero Midstream Partners LP |
— |
223,119 |
||||||
Proceeds from sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation |
178,000 |
— |
||||||
Borrowings on bank credit facilities, net |
33,000 |
70,000 |
||||||
Payments of deferred financing costs |
(64) |
— |
||||||
Distributions to noncontrolling interest in consolidated subsidiary |
(14,013) |
(27,149) |
||||||
Employee tax withholding for settlement of equity compensation awards |
(117) |
(1,657) |
||||||
Other |
(1,282) |
(1,389) |
||||||
Net cash provided by financing activities |
195,524 |
262,924 |
||||||
Net increase (decrease) in cash and cash equivalents |
16,397 |
(31,610) |
||||||
Cash and cash equivalents, beginning of period |
23,473 |
31,610 |
||||||
Cash and cash equivalents, end of period |
$ |
39,870 |
— |
|||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the period for interest |
$ |
14,350 |
35,770 |
|||||
Supplemental disclosure of noncash investing activities: |
||||||||
Decrease in accounts payable and accrued liabilities for additions to property and equipment |
$ |
(119,191) |
(10,020) |
|||||
ANTERO RESOURCES CORPORATION
The following tables set forth selected operating data for the three months ended March 31, 2016 compared to the three months ended March 31, 2017:
Three Months Ended March 31, |
Amount of |
Percent |
||||||||||
(in thousands) |
2016 |
2017 |
(Decrease) |
Change |
||||||||
Operating revenues and other: |
||||||||||||
Natural gas sales |
$ |
254,776 |
$ |
466,664 |
$ |
211,888 |
83 |
% | ||||
NGLs sales |
73,065 |
194,652 |
121,587 |
166 |
% | |||||||
Oil sales |
10,179 |
26,960 |
16,781 |
165 |
% | |||||||
Gathering, compression, and water handling and treatment |
3,844 |
2,604 |
(1,240) |
(32) |
% | |||||||
Marketing |
99,216 |
65,924 |
(33,292) |
(34) |
% | |||||||
Commodity derivative fair value gains |
279,924 |
438,775 |
158,851 |
57 |
% | |||||||
Total operating revenues and other |
721,004 |
1,195,579 |
474,575 |
66 |
% | |||||||
Operating expenses: |
||||||||||||
Lease operating |
11,293 |
15,551 |
4,258 |
38 |
% | |||||||
Gathering, compression, processing, and transportation |
208,738 |
266,829 |
58,091 |
28 |
% | |||||||
Production and ad valorem taxes |
19,284 |
24,793 |
5,509 |
29 |
% | |||||||
Marketing |
137,933 |
89,993 |
(47,940) |
(35) |
% | |||||||
Exploration |
1,014 |
2,107 |
1,093 |
108 |
% | |||||||
Impairment of unproved properties |
15,526 |
26,899 |
11,373 |
73 |
% | |||||||
Depletion, depreciation, and amortization |
191,582 |
202,729 |
11,147 |
6 |
% | |||||||
Accretion of asset retirement obligations |
598 |
637 |
39 |
7 |
% | |||||||
General and administrative (before equity-based compensation) |
32,817 |
39,195 |
6,378 |
19 |
% | |||||||
Equity-based compensation |
23,470 |
25,503 |
2,033 |
9 |
% | |||||||
Total operating expenses |
642,255 |
694,236 |
51,981 |
8 |
% | |||||||
Operating income |
78,749 |
501,343 |
422,594 |
537 |
% | |||||||
Other earnings (expenses): |
||||||||||||
Equity in earnings of unconsolidated affiliates |
— |
2,231 |
2,231 |
* |
||||||||
Interest expense |
(63,284) |
(66,670) |
(3,386) |
5 |
% | |||||||
Total other expenses |
(63,284) |
(64,439) |
(1,155) |
2 |
% | |||||||
Income before income taxes |
15,465 |
436,904 |
421,439 |
2,725 |
% | |||||||
Income tax expense |
(4,815) |
(131,346) |
(126,531) |
2,628 |
% | |||||||
Net income and comprehensive income including noncontrolling interest |
10,650 |
305,558 |
294,908 |
2,769 |
% | |||||||
Net income and comprehensive income attributable to noncontrolling interest |
15,705 |
37,162 |
21,457 |
137 |
% | |||||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation |
$ |
(5,055) |
$ |
268,396 |
$ |
273,451 |
* |
|||||
Adjusted EBITDAX (1) |
$ |
355,401 |
$ |
365,292 |
$ |
9,891 |
3 |
% | ||||
Three Months Ended March 31, |
Amount of |
Percent |
||||||||||
2016 |
2017 |
(Decrease) |
Change |
|||||||||
Production data: |
||||||||||||
Natural gas (Bcf) |
123 |
139 |
16 |
14 |
% | |||||||
C2 Ethane (MBbl) |
1,081 |
2,310 |
1,229 |
114 |
% | |||||||
C3+ NGLs (MBbl) |
4,681 |
5,968 |
1,287 |
27 |
% | |||||||
Oil (MBbl) |
472 |
643 |
171 |
36 |
% | |||||||
Combined (Bcfe) |
160 |
193 |
33 |
21 |
% | |||||||
Daily combined production (MMcfe/d) |
1,758 |
2,144 |
386 |
22 |
% | |||||||
Average prices before effects of derivative settlements: |
||||||||||||
Natural gas (per Mcf) |
$ |
2.08 |
$ |
3.35 |
$ |
1.27 |
61 |
% | ||||
C2 Ethane (per Bbl) |
$ |
6.68 |
$ |
8.00 |
$ |
1.32 |
20 |
% | ||||
C3+ NGLs (per Bbl) |
$ |
14.07 |
$ |
29.52 |
$ |
15.45 |
110 |
% | ||||
Oil (per Bbl) |
$ |
21.56 |
$ |
41.96 |
$ |
20.40 |
95 |
% | ||||
Combined (per Mcfe) |
$ |
2.11 |
$ |
3.57 |
$ |
1.46 |
69 |
% | ||||
Average realized prices after effects of derivative settlements: |
||||||||||||
Natural gas (per Mcf) |
$ |
4.54 |
$ |
3.89 |
$ |
(0.65) |
(14) |
% | ||||
C2 Ethane (per Bbl) |
$ |
6.68 |
$ |
8.73 |
$ |
2.05 |
31 |
% | ||||
C3+ NGLs (per Bbl) |
$ |
18.88 |
$ |
24.01 |
$ |
5.13 |
27 |
% | ||||
Oil (per Bbl) |
$ |
21.56 |
$ |
43.17 |
$ |
21.61 |
100 |
% | ||||
Combined (per Mcfe) |
$ |
4.14 |
$ |
3.80 |
$ |
(0.34) |
(8) |
% | ||||
Average Costs (per Mcfe): |
||||||||||||
Lease operating |
$ |
0.07 |
$ |
0.08 |
$ |
0.01 |
14 |
% | ||||
Gathering, compression, processing, and transportation |
$ |
1.30 |
$ |
1.38 |
$ |
0.08 |
6 |
% | ||||
Production and ad valorem taxes |
$ |
0.12 |
$ |
0.13 |
$ |
0.01 |
8 |
% | ||||
Marketing, net |
$ |
0.24 |
$ |
0.12 |
$ |
(0.12) |
(50) |
% | ||||
Depletion, depreciation, amortization, and accretion |
$ |
1.20 |
$ |
1.05 |
$ |
(0.15) |
(13) |
% | ||||
General and administrative (before equity-based compensation) |
$ |
0.21 |
$ |
0.20 |
$ |
(0.01) |
(5) |
% |
(1) |
Please see "Non-GAAP Financial Measures" for a description of Adjusted EBITDAX |
*Not meaningful or applicable |
SOURCE Antero Resources Corporation
DENVER, May 3, 2017 /PRNewswire/ -- Antero Midstream GP LP ("AMGP") today announced the pricing of its initial public offering of 37,250,000 common shares representing limited partner interests in AMGP by Antero Resources Investment LLC (the "Selling Shareholder"), at a public offering price of $23.50 per common share for total gross proceeds (before underwriters' fees and estimated expenses) of approximately $875 million. AMGP will not receive any of the proceeds from the common shares to be sold by the Selling Shareholder. The underwriters have been granted a 30-day option to purchase up to an additional 5,587,500 common shares from the Selling Shareholder. The common shares are expected to begin trading on May 4, 2017 on the New York Stock Exchange under the symbol "AMGP." The offering is expected to close on May 9, 2017, subject to customary closing conditions. AMGP will own the general partner of Antero Midstream Partners LP (NYSE:AM) ("Antero Midstream") and incentive distribution rights in Antero Midstream and has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes.
Upon closing of the offering, the public will hold an approximate 20% limited partner interest in AMGP, or an approximate 23% limited partner interest if the underwriters exercise in full their option to purchase additional common shares. Antero Resources Investment LLC will own the remaining approximate 80% limited partner interest in AMGP, or an approximate 77% limited partner interest if the underwriters exercise in full their option to purchase additional common shares.
Morgan Stanley, Barclays and J.P. Morgan have acted as joint book-running managers for the offering. Baird, Citigroup, Goldman Sachs & Co. LLC and Wells Fargo Securities have acted as book-running managers.
In connection with the offering, Antero Resources Midstream Management LLC ("ARMM") will be converted into a Delaware limited partnership, and, in connection with such conversion, will change its name to Antero Midstream GP LP. ARMM has filed a registration statement relating to these securities with the U.S. Securities and Exchange Commission (the "SEC"), which has been declared effective. The offering of these securities is being made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. A copy of the prospectus for the offering may be obtained, when available, from:
Morgan Stanley & Co. LLC |
Barclays |
J.P. Morgan | |
Attn: Prospectus Department |
c/o Broadridge Financial Solutions |
c/o Broadridge Financial Solutions | |
180 Varick Street, 2nd Floor |
1155 Long Island Avenue |
1155 Long Island Avenue | |
New York, NY 10014 |
Edgewood, New York 11717 |
Edgewood, NY, 11717 | |
barclaysprospectus@broadridge.com |
1-866-803-9204 | ||
Toll-Free: (888) 603-5847 |
Email: prospectus-eq_fi@jpmchase.com | ||
Baird |
Citigroup |
Goldman Sachs & Co. LLC f/k/a | |
Attention: Syndicate Department |
c/o Broadridge Financial Solutions |
Goldman, Sachs & Co. | |
777 East Wisconsin Avenue |
1155 Long Island Avenue |
Attention: Prospectus Department | |
Milwaukee, WI 53202-5391 |
Edgewood, NY 11717 |
200 West Street | |
Telephone: 1-800-792-2473 |
Telephone: 1-800-831-9146 |
New York, NY 10282 | |
Email: syndicate@rwbaird.com. |
Telephone: 1-866-471-2526 | ||
Facsimile: 212-902-9316 | |||
Wells Fargo Securities |
|||
c/o Equity Syndicate Department |
|||
375 Park Avenue |
|||
New York, NY 10152 |
|||
Telephone: 1-800-326-5897 |
|||
cmclientsupport@wellsfargo.com |
A copy of the prospectus may be obtained free of charge by visiting the SEC's website at www.sec.gov.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream GP LP will be a Delaware limited partnership that, following the completion of the offering, will own the general partner of Antero Midstream and incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AMGPs control. All statements, other than historical facts, included in this release are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although AMGP believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
AMGP cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond AMGP's and Antero Midstream's control, incident to Antero Midstream's business. These risks include, but are not limited to, commodity price volatility, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital and the timing of development expenditures.
For more information, contact Michael Kennedy – CFO of Antero Midstream GP LP at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream GP LP
DENVER, April 24, 2017 /PRNewswire/ -- Antero Midstream GP LP ("AMGP") today announced the commencement of its initial public offering of 37,250,000 common shares representing limited partner interests in AMGP, at an anticipated initial public offering price between $22.00 and $25.00 per common share, pursuant to a registration statement on Form S-1 previously filed with the U.S. Securities and Exchange Commission (the "SEC"). The underwriters will be granted a 30-day option to purchase up to an additional 5,587,500 common shares. AMGP has been approved to list its common shares on the New York Stock Exchange under the symbol "AMGP", subject to official notice of issuance. AMGP will own the general partner of Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream") and incentive distribution rights in Antero Midstream and has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes.
The common shares being offered represent an approximate 20% limited partner interest in AMGP (or approximately 23% if the underwriters exercise in full their option to purchase additional common shares). Immediately following the offering, Antero Resources Investment LLC will own the remaining approximate 80% limited partner interest in AMGP (or approximately 77% if the underwriters exercise in full their option to purchase additional common shares).
Morgan Stanley, Barclays and J.P. Morgan will act as joint book-running managers for the offering. Baird, Citigroup, Goldman Sachs and Wells Fargo Securities will act as book-running managers.
In connection with the offering, Antero Resources Midstream Management LLC ("ARMM") will be converted into a Delaware limited partnership, and, in connection with such conversion, will change its name to Antero Midstream GP LP. ARMM has filed a registration statement relating to these securities with the SEC, which has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This offering will be made only by means of a written prospectus. A copy of the preliminary prospectus for the offering may be obtained, when available, from:
Morgan Stanley & Co. LLC Attention: Prospectus Department 180 Varick Street, 2nd Floor New York, NY 10014 |
Barclays c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 barclaysprospectus@broadridge.com Toll-Free: 1-888-603-5847
|
J.P. Morgan c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY, 11717 1-866-803-9204 Email: prospectus-eq_fi@jpmchase.com |
Baird Attention: Syndicate Department 777 East Wisconsin Avenue Milwaukee, WI 53202-5391 Telephone: 1-800-792-2473 Email: syndicate@rwbaird.com. |
Citigroup c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 Telephone: 1-800-831-9146 |
Goldman, Sachs & Co. Attention: Prospectus Department 200 West Street New York, NY 10282 Telephone: 1-866-471-2526 Facsimile: 212-902-9316 prospectus-ny@ny.email.gs.com |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, NY 10152 Telephone: 1-800-326-5897 cmclientsupport@wellsfargo.com |
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream GP LP will be a Delaware limited partnership that, following the completion of the offering, will own the general partner of Antero Midstream and all of the incentive distribution rights in Antero Midstream.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AMGPs control. All statements, other than historical facts, included in this release are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although AMGP believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Midstream.
AMGP cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond AMGP's and Antero Midstream's control, incident to Antero Midstream's business. These risks include, but are not limited to, commodity price volatility, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital and the timing of development expenditures.
For more information, contact Michael Kennedy – CFO of Antero Midstream GP LP at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream GP LP
DENVER, April 24, 2017 /PRNewswire/ -- Antero Midstream (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today that the Partnership plans to issue its first quarter 2017 earnings release on Monday, May 8, 2017 after the close of trading on the New York Stock Exchange.
A conference call is scheduled on Tuesday May 9, 2017 at 10:00 am MT to discuss the 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Wednesday, May 17, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10103995.
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 on the Partnership's website until Wednesday, May 17, 2017 at 10:00 am MT.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
For more information, contact Michael Kennedy – CFO, at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream
DENVER, April 18, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced that John C. Mollenkopf has been appointed to the board of directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream (the "Board").
Appointment of John C. Mollenkopf to the Board of Directors
Mr. Mollenkopf retired from MPLX, L.P. (NYSE: MPLX) in October 2016. He previously served MPLX as Executive Vice President and Chief Operating Officer, MarkWest operations, from December 2015 through September 2016 following the merger of MPLX and MarkWest Energy Partners, L.P. ("MarkWest Energy Partners"). From 2011 through 2015, he served as Executive Vice President and Chief Operating Officer of MarkWest Energy Partners. Between 2002 and 2011, Mr. Mollenkopf served MarkWest Energy Partners as Vice President – Business Development, Senior Vice President – Southwest Business Unit, Senior Vice President and Chief Operations Officer, Senior Vice President and Chief Operating Officer. Mr. Mollenkopf holds a Bachelor of Science degree in mechanical engineering from the University of Colorado at Boulder 1983. He serves on the Engineering Advisory Council for the college of engineering at the University of Colorado at Boulder.
The Board has determined that John C. Mollenkopf qualifies as an independent director under the director independence standards set forth in the rules and regulations of the Securities and Exchange Commission and the applicable listing standards of the New York Stock Exchange ("NYSE").
Paul M. Rady, Chairman and CEO of Antero Midstream commented, "We are very excited to announce the addition of John to the board of directors. We have known and worked with John for many years in his various roles with MarkWest and MPLX. He has a deep knowledge of and expertise in midstream operations and business development, particularly in the Northeast, and will be a valuable asset for Antero Midstream and its unitholders."
Conditional Resignation of Brooks J. Klimley from the Board of Directors
In connection with the proposed offering of Common Shares representing limited partner interests ("Common Shares") in Antero Midstream GP LP ("AMGP"), effective as of and conditioned upon the listing of the Common Shares on the NYSE and his appointment to the board of directors of AMGP GP LLC, a Delaware limited liability company that will serve as general partner of AMGP, Brooks J. Klimley resigned as a member of the Board. If the Common Shares are not listed on the NYSE, Mr. Klimley will remain a member of the Board of Antero Midstream. This resignation was not the result of any disagreements with the Partnership regarding any matter related to its operations, policies, practices or otherwise.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, April 10, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased first quarter 2017 distribution.
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.30 per unit ($1.20 per unit annualized) for the first quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially. The distribution is the Partnership's ninth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on May 10, 2017 to unitholders of record as of May 3, 2017.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, March 10, 2017 /PRNewswire/ -- Pursuant to Section 203.01 of the New York Stock Exchange Listed Company Manual, Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced that its Annual Report on Form 10-K (the "10-K") for the fiscal year ended December 31, 2016 was filed with the Securities and Exchange Commission on February 28, 2017. A copy of the 10-K, which includes the Partnership's complete audited financial statements, may be found on Antero Midstream's website, www.anteromidstream.com, by selecting the "Investor Relations" tab, then "SEC Filings." Antero Midstream unitholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado, 80202.
Antero Midstream is a limited partnership 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 located in West Virginia and Ohio.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Feb. 28, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its fourth quarter and full year 2016 financial and operational results. The relevant combined consolidated financial statements are included in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016, which has been filed with the Securities and Exchange Commission ("SEC").
Fourth Quarter Highlights Include:
Full Year 2016 Highlights Include:
Recent Developments
Strategic Processing and Fractionation Joint Venture
During the first quarter of 2017, Antero Midstream announced the formation of a joint venture (the "Joint Venture") to develop processing and fractionation assets in Appalachia with MarkWest Energy Partners, L.P., a wholly owned subsidiary of MPLX, L.P. Antero Midstream and MarkWest will jointly develop processing assets at the Sherwood Processing Facility in Doddridge County, WV, and a facility at an additional site still to be designated, also located in West Virginia in the southwestern core of the Marcellus Shale. Since the Joint Venture announcement, Antero Resources committed to plant 10 at the Sherwood facility, which is expected to be placed in service in the third quarter of 2018. The Joint Venture is underpinned by long-term fee-based agreements with Antero Resources. Additionally, the Joint Venture will own C3+ fractionation capacity at the Hopedale complex in Harrison County, Ohio supported by Antero Resources and other third party producers and will have the option to participate in incremental fractionation capacity anticipated to be built in the future as needed.
Capital Budget and Guidance Increase
Concurrent with the Joint Venture announcement, Antero Midstream increased its 2017 capital budget from $525 million to $800 million. Additionally, Antero Midstream increased its 2017 Adjusted EBITDA guidance to $520 million to $560 million and reaffirmed its compound annual distribution growth target of 28% to 30% and increased its DCF coverage target to greater than 1.25x through 2020. Antero Midstream is targeting leverage in the low 2-times range over the corresponding period.
Primary Unit Offering
In conjunction with the Joint Venture announcement, Antero Midstream issued 6,900,000 common units, including the underwriter's purchase option, resulting in net proceeds of approximately $223 million. Proceeds from the offering were used to fund the initial $155 million capital contribution for the Joint Venture and general partnership purposes.
Distribution for the Fourth Quarter of 2016 and Conversion of Subordinated Units
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared and paid a cash distribution of $0.28 per unit ($1.12 per unit annualized) for the fourth quarter of 2016. The distribution represented a 27% increase compared to the prior year quarter and a 6% increase sequentially. The distribution was the Partnership's eighth consecutive quarterly distribution increase since its initial public offering in November 2014 and was paid on February 8, 2017 to unitholders of record as of February 1, 2017. Upon payment of this distribution, the 75,940,957 subordinated units owned by Antero Resources were converted into common units on a one-for-one basis under the terms of the Partnership agreement.
Commenting on the Joint Venture, Paul Rady, Chairman and CEO, said, "Antero Midstream took another step in becoming a full value chain Appalachian midstream provider and diversifying its cash flow contribution with the addition of processing and fractionation services. The Joint Venture supports Antero Midstream's long term annual distribution growth target of 28% to 30% through 2020 while targeting a DCF coverage ratio greater than 1.25x and leverage in the low 2-times. In addition, the Joint Venture increases Antero Midstream's organic investment opportunity set to $2.7 billion from 2017 through 2020 and is another example of leveraging Antero Resources' status as the leader in C3+ NGL production and drilling inventory in Appalachia."
Fourth Quarter 2016 Financial and Operational Results
Low pressure gathering volumes for the fourth quarter of 2016 averaged 1,522 MMcf/d, a 35% increase from the fourth quarter of 2015 and a 6% increase sequentially from the third quarter of 2016. Compression volumes for the fourth quarter of 2016 averaged 920 MMcf/d, a 92% increase from the fourth quarter of 2015 and an 18% increase sequentially. High pressure gathering volumes for the fourth quarter of 2016 averaged 1,437 MMcf/d, a 20% increase from the fourth quarter of 2015 and a 6% increase sequentially. The increase in throughput volumes was driven by Antero Resources' production growth in Antero Midstream's area of dedication.
Fresh water delivery volumes averaged 149,682 Bbl/d during the quarter, a 25% increase compared to the prior year quarter and a 7% increase sequentially. The increase in volumes was driven by an increase in wells serviced by the fresh water delivery system and higher water intensity advanced completions.
Three Months Ended December 31, |
||||||
Average Daily Throughput: |
2015 |
2016 |
% Change | |||
Low Pressure Gathering (MMcf/d) |
1,124 |
1,522 |
35% | |||
Compression (MMcf/d) |
478 |
920 |
92% | |||
High Pressure Gathering (MMcf/d) |
1,195 |
1,437 |
20% | |||
Average Daily Volumes: |
||||||
Fresh Water Delivery (Bbl/d) |
119,671 |
149,682 |
25% |
For the three months ended December 31, 2016, the Partnership reported revenues of $167 million, comprised of $88 million from the Gathering and Processing segment and $79 million from the Water Handling and Treatment segment. Revenues increased 27% compared to the prior year quarter, primarily driven by growth in natural gas throughput volumes and fresh water delivery volumes. Gathering and Processing revenues included a $4 million gain on asset sale related to the divestiture of certain gathering and compression assets in Pennsylvania during the quarter. Water Handling and Treatment segment revenues include $28 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $8 million and $29 million, respectively, for a total of $37 million compared to $40 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $27 million from fluid handling and high rate water transfer services. The decrease in direct operating expenses was driven primarily by a reduction in fluid handling and high rate transfer expenses. General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the fourth quarter of 2015. General and administrative expenses excluding equity-based compensation were $8 million during the fourth quarter of 2016, in line with the fourth quarter of 2015. Total operating expenses were $83 million, including $26 million of depreciation, $7 million of equity-based compensation, and $6 million of accretion of contingent acquisition consideration.
Net income for the fourth quarter of 2016 was $73 million, a 50% increase compared to the prior year quarter. Net income per limited partner unit was $0.37 per unit, a 37% increase compared to the prior year quarter. Adjusted EBITDA was $126 million, a 52% increase compared to the prior year quarter. Adjusted EBITDA for the fourth quarter included an $8 million distribution from unconsolidated affiliates related to Antero Midstream's 15% interest in Stonewall Gathering, LLC. The distribution represents 2016 cash received from Stonewall operations since acquiring the 15% interest in May of 2016. The increase in net income and Adjusted EBITDA from the prior year is primarily driven by increased gathering and compression volumes and fresh water delivery volumes. Cash interest paid and cash reserved for bond interest were $2 million and $10 million during the quarter, respectively. Income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $3 million. Maintenance capital expenditures during the quarter totaled $5 million and distributable cash flow was $103 million, resulting in a DCF coverage ratio of 1.8x.
Commenting on Antero Midstream's quarterly results, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream closed out another strong year operationally and financially, driven by the growth in throughput volumes from Antero Resources. Additionally, during the fourth quarter, Antero Midstream benefitted from Antero Resources' accelerated completions, resulting in increased throughput and fresh water delivery volumes that are projected to continue into 2017."
Gathering and Processing — Antero Midstream increased compression capacity by placing into service a 145 MMcf/d compressor station in Tyler County, West Virginia late during the fourth quarter of 2016. Antero's current compression capacity is approximately 1.1 Bcf/d in the Marcellus and Utica combined and compression capacity was approximately 90% utilized in the fourth quarter. Additionally, Antero Midstream connected 41 wells to its Marcellus and Utica gathering systems during the quarter, bringing total wells connected to 440. Antero Resources is currently operating six drilling rigs in the Marcellus and Utica.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 35 well completions in the fourth quarter of 2016, in line with the prior year quarter. As a result of pilot tests utilizing advanced completions, Antero Midstream's fresh water delivery volumes increased 25% as compared to the prior year quarter despite servicing the same number of wells. Antero's completions during the fourth quarter averaged 46 barrels per foot in the Marcellus and 39 barrels per foot in the Utica, for a quarterly weighted average of 44 barrels per foot. Antero Resources is currently operating six completion crews in the Marcellus and Utica.
Antero Midstream continued construction on the Antero Clearwater Facility, which is expected to be placed into service during the fourth quarter of 2017. Through year-end 2016, Antero Midstream has invested $217 million, or approximately 70% of the total estimated project cost, in the Antero Clearwater Facility. The Antero Clearwater Facility will be the largest advanced wastewater treatment facility in the world designed for oil and gas operations.
Fourth Quarter Capital Spending
Antero Midstream's capital expenditures for the three months ended December 31, 2016 were $126 million as compared to $128 million during the prior year quarter. Capital expenditures included $75 million that was invested in gathering and compression and $51 million invested in water handling and treatment infrastructure. Water handling and treatment infrastructure capital expenditures included $36 million for the continued construction of the Antero Clearwater Facility. Additionally, Antero Midstream made a $30 million capital contribution to Stonewall Gathering LLC to repay outstanding debt, thereby releasing restrictions on cash distributions to equity interest holders.
2016 Financial and Operational Results
Low pressure gathering volumes for 2016 averaged 1,403 MMcf/d, a 38% increase from the prior year. Compression volumes and high pressure gathering volumes for 2016 averaged 741 MMcf/d and 1,316 MMcf/d representing a 72% and 11% increase, respectively, from the prior year. The increase in gathering and compression volumes was due to production growth from Antero Resources in Antero Midstream's area of dedication. Fresh water delivery volumes for 2016 averaged 123,258 Bbl/d, a 29% increase compared to the prior year. The increase in volumes was driven by an increase in wells serviced by the fresh water delivery system and higher water intensity advanced completions.
Total revenues for 2016 were $590 million, a 52% increase over the prior year, and were comprised of $308 million from the Gathering and Processing segment and $282 million from the Water Handling and Treatment segment. Water Handling and Treatment segment revenues include $116 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%. Direct operating expenses for 2016 for the Gathering and Processing and Water Handling and Treatment segments were $27 million and $135 million, respectively, for a total of $162 million. Water Handling and Treatment direct operating expenses include $113 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%. Direct operating expenses increased 105% from the prior year, driven by the commencement of fluid handling and high rate transfer services provided to Antero Resources for a full twelve month period. General and administrative expenses including equity-based compensation were $54 million, a 6% increase compared to the prior year. General and administrative expenses excluding equity-based compensation for 2016 were $28 million, a 2% decrease from the prior year. Total operating expenses were $332 million, including $100 million of depreciation, $26 million of equity-based compensation, and $16 million of accretion of contingent acquisition consideration, representing a 51% increase over the prior year.
Net income for 2016 was $237 million, a 49% increase compared to the prior year. Net income per limited partner unit was $1.24 per unit, a 63% increase over the prior year. Adjusted EBITDA was $404 million, a 45% increase compared to the prior year. The increases in net income and Adjusted EBITDA were primarily driven by increased throughput volumes and fresh water delivery volumes. Cash interest paid and cash reserved for bond interest for 2016 were $13 million and $10 million, respectively. Income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $6 million. Maintenance capital expenditures for 2016 totaled $22 million and distributable cash flow was $353 million, resulting in a DCF coverage ratio of 1.8x.
2016 Capital Spending
Antero Midstream's capital expenditures for the year ended December 31, 2016, including the $75 million investment in Stonewall Gathering LLC, totaled $475 million as compared to $452 million during the prior year. Capital expenditures included $228 million in gathering and compression and $188 million in water handling and treatment infrastructure. Water handling and treatment infrastructure capital expenditures include $149 million for the continued construction of the Antero Clearwater Facility.
The following table reconciles net income to Adjusted EBITDA and distributable cash flow as used in this release (in thousands):
Three months ended |
Years ended | ||||||||||
December 31, |
December 31, | ||||||||||
2015 |
2016 |
2015 |
2016 | ||||||||
Net income |
$ |
49,008 |
73,351 |
$ |
159,105 |
$ |
236,703 | ||||
Interest expense |
2,892 |
9,008 |
8,158 |
21,893 | |||||||
Depreciation expense |
23,155 |
25,761 |
86,670 |
99,861 | |||||||
Accretion of contingent acquisition consideration |
3,333 |
6,105 |
3,333 |
16,489 | |||||||
Equity-based compensation |
4,807 |
6,683 |
22,470 |
26,049 | |||||||
Equity in (earnings) loss of unconsolidated affiliate |
— |
1,542 |
— |
(485) | |||||||
Distributions from unconsolidated affiliate |
— |
7,702 |
— |
7,702 | |||||||
Gain on asset sale |
— |
(3,859) |
— |
(3,859) | |||||||
Adjusted EBITDA |
$ |
83,195 |
$ |
126,293 |
$ |
279,736 |
$ |
404,353 | |||
Pre-Water Acquisition net income attributed to parent |
— |
— |
(40,193) |
— | |||||||
Pre-Water Acquisition depreciation expense attributed to parent |
— |
— |
(18,767) |
— | |||||||
Pre-Water Acquisition equity-based compensation expense attributed to parent |
— |
— |
(3,445) |
— | |||||||
Pre-Water Acquisition interest expense attributed to parent |
— |
— |
(2,326) |
— | |||||||
Adjusted EBITDA attributable to the Partnership |
$ |
83,195 |
$ |
126,293 |
$ |
215,005 |
$ |
404,353 | |||
Cash interest paid, net - attributable to the Partnership |
(2,934) |
(1,743) |
(5,149) |
(13,494) | |||||||
Income tax withholding upon vesting of Antero Midstream LP equity-based compensation awards |
(4,806) |
(2,636) |
(4,806) |
(5,636) | |||||||
Cash received from unconsolidated affiliate |
— |
(2,998) |
— |
— | |||||||
Cash reserved for bond interest (1) |
— |
(10,481) |
— |
(10,481) | |||||||
Maintenance capital expenditures(2) |
(3,096) |
(5,466) |
(13,097) |
(21,622) | |||||||
Distributable cash flow |
$ |
72,359 |
$ |
102,969 |
$ |
191,953 |
$ |
353,120 | |||
Total distributions declared |
$ |
39,725 |
$ |
57,634 |
$ |
132,651 |
$ |
200,355 | |||
DCF coverage ratio |
1.82x |
1.79x |
1.45x |
1.76x |
1) |
Cash reserved for bond interest represents accrued interest expense on Antero Midstream's 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year. |
2) |
Maintenance capital expenditures represent that portion of our estimated capital expenditures associated with (i) the connection of new wells to our gathering and compression 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 distribution to new wells necessary to maintain the average throughput volume on our systems. |
Balance Sheet and Liquidity
As of December 31, 2016, Antero Midstream had $210 million drawn on its $1.5 billion bank credit facility with current borrowing capacity of $1.4 billion, resulting in approximately $1.2 billion in available credit facility capacity. Antero Midstream had $14 million of cash on its balance sheet and a consolidated net debt to trailing twelve months Adjusted EBITDA ratio of 2.1x as of December 31, 2016. Pro forma for the initial capital contribution to the Joint Venture and the 6.9 million common unit offering, Antero Midstream's consolidated net debt to trailing twelve months Adjusted EBITDA ratio was 1.9x. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Full Year 2016 Capacity Additions
During 2016, Antero Midstream added 315 MMcf/d of compression capacity, resulting in significant growth in compression volumes during the year. Additionally, the Partnership placed into service 12 miles of low pressure pipeline and 22 miles of high pressure pipeline. The below table summarizes the Partnership's cumulative miles of pipeline and compression capacity at year-end 2015 and 2016:
Gathering and Compression System |
|||||||||||||||
Low |
High |
Compression |
|||||||||||||
As of December 31, |
|||||||||||||||
Marcellus |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 |
|||||||||
106 |
115 |
76 |
98 |
700 |
1,015 |
||||||||||
Utica |
55 |
58 |
36 |
36 |
120 |
120 |
|||||||||
Total |
161 |
173 |
112 |
134 |
820 |
1,135 |
|||||||||
During 2016, Antero Midstream added 27 miles of buried and surface fresh water pipelines in the Marcellus and Ohio Utica Shale plays combined. Additionally, the Partnership built one fresh water storage impoundment in the Ohio Utica Shale. The below table summarizes the Partnership's cumulative miles of fresh water pipeline and fresh water storage impoundments at year-end 2015 and 2016, in addition to wells serviced by fresh water delivery and water per foot used in completions during the period:
Water Handling System | ||||||||||||||||
Fresh Water Pipeline |
Fresh Water |
Wells Serviced by |
Water Per Foot Used (Bbls/ft) | |||||||||||||
As of December 31, | ||||||||||||||||
2015 |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
2016 | |||||||||
Marcellus |
184 |
203 |
22 |
22 |
62 |
99 |
33 |
41 | ||||||||
Utica |
75 |
83 |
13 |
14 |
62 |
32 |
34 |
37 | ||||||||
Total |
259 |
286 |
35 |
36 |
124 |
131 |
34 |
40 |
Conference Call
A conference call is scheduled on Wednesday, March 1, 2017 at 10:00 am MT to discuss the 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, March 10 , 2017 at 10:00 am MT at 1-877-870-5176 (U.S.) or 1-858-384-5517 (International) using the passcode 10098008.
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 on the Partnership's website until Friday, March 10, 2017 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Partnership's website before the March 1, 2017 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, gain on asset sale, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate, and including cash distributions from unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent less cash received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream does not provide guidance on equity earnings, among other items, that are reconciling items between forecasted Adjusted EBITDA and forecasted Net Income due to the uncertainty regarding timing and estimates of reconciling items. Antero Midstream provides a range for the forecasts or targets of Net Income, Adjusted EBITDA, and Distributable Cash Flow to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Adjusted EBITDA and forecasted Net Income. Therefore, the Partnership cannot reconcile Adjusted EBITDA to forecasted Net Income without unreasonable effort.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
December 31, | ||||||
2015 |
2016 | |||||
Bank credit facility |
$ |
620,000 |
$ |
210,000 | ||
5.375% AM senior notes due 2024 |
— |
650,000 | ||||
Net unamortized debt issuance costs |
— |
(10,086) | ||||
Consolidated total debt |
$ |
620,000 |
$ |
849,914 | ||
Cash and cash equivalents |
6,883 |
14,042 | ||||
Consolidated net debt |
$ |
613,117 |
$ |
835,872 |
Antero Midstream is a limited partnership 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' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and processing and fresh water and waste water treatment businesses. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2016.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||||
2015 |
2016 |
||||||
Assets | |||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
6,883 |
$ |
14,042 |
|||
Accounts receivable–Antero Resources |
65,712 |
64,139 |
|||||
Accounts receivable–third party |
2,707 |
1,240 |
|||||
Prepaid expenses |
— |
529 |
|||||
Total current assets |
75,302 |
79,950 |
|||||
Property and equipment: |
|||||||
Gathering and compression systems |
1,485,835 |
1,705,839 |
|||||
Water handling and treatment systems |
565,616 |
744,682 |
|||||
2,051,451 |
2,450,521 |
||||||
Less accumulated depreciation |
(157,625) |
(254,642) |
|||||
Property and equipment, net |
1,893,826 |
2,195,879 |
|||||
Investment in unconsolidated affiliate |
— |
68,299 |
|||||
Other assets, net |
10,904 |
5,767 |
|||||
Total assets |
$ |
1,980,032 |
$ |
2,349,895 |
|||
Liabilities and Partners' Capital | |||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
10,941 |
$ |
16,979 |
|||
Accounts payable–Antero Resources |
2,138 |
3,193 |
|||||
Accrued liabilities |
85,385 |
61,641 |
|||||
Other current liabilities |
150 |
200 |
|||||
Total current liabilities |
98,614 |
82,013 |
|||||
Long-term liabilities: |
|||||||
Long-term debt |
620,000 |
849,914 |
|||||
Contingent acquisition consideration |
178,049 |
194,538 |
|||||
Other |
624 |
620 |
|||||
Total liabilities |
897,287 |
1,127,085 |
|||||
Partners' capital: |
|||||||
Common unitholders - public (59,286 units and 70,020 units issued and outstanding at December 31, 2015 and 2016, respectively) |
1,351,317 |
1,458,410 |
|||||
Common unitholder - Antero Resources (40,929 units and 32,929 units issued and outstanding at December 31, 2015 and 2016, respectively) |
30,186 |
26,820 |
|||||
Subordinated unitholder - Antero Resources (75,941 units issued and outstanding at December 31, 2015 and 2016) |
(299,727) |
(269,963) |
|||||
General partner |
969 |
7,543 |
|||||
Total partners' capital |
1,082,745 |
1,222,810 |
|||||
Total liabilities and partners' capital |
$ |
1,980,032 |
$ |
2,349,895 |
ANTERO MIDSTREAM PARTNERS LP | |||||
2015 |
2016 | ||||
Revenue: |
|||||
Gathering and compression–Antero Resources |
$ |
62,154 |
$ |
84,312 | |
Water handling and treatment–Antero Resources |
69,195 |
78,517 | |||
Gathering and compression–third party |
344 |
166 | |||
Water handling and treatment–third party |
— |
— | |||
Gain on sale of assets |
— |
3,859 | |||
Total revenue |
131,693 |
166,854 | |||
Operating expenses: |
|||||
Direct operating |
40,022 |
36,636 | |||
General and administrative (including $4,807 and $6,683 of equity-based compensation in 2015 and 2016, respectively) |
13,283 |
14,451 | |||
Depreciation |
23,155 |
25,761 | |||
Accretion of contingent acquisition consideration |
3,333 |
6,105 | |||
Total operating expenses |
79,793 |
82,953 | |||
Operating income |
51,900 |
83,901 | |||
Interest expense, net |
(2,892) |
(9,008) | |||
Equity in earnings (loss) of unconsolidated affiliate |
— |
(1,542) | |||
Net income and comprehensive income |
49,008 |
73,351 | |||
General partner interest in net income attributable to incentive distribution rights |
(969) |
(7,557) | |||
Limited partners' interest in net income |
$ |
48,039 |
$ |
65,794 | |
Net income per limited partner unit: |
|||||
Basic: |
|||||
Common units |
$ |
0.27 |
$ |
0.37 | |
Subordinated units |
$ |
0.27 |
$ |
0.37 | |
Diluted: |
|||||
Common units |
$ |
0.27 |
$ |
0.37 | |
Subordinated units |
$ |
0.27 |
$ |
0.37 | |
Weighted average number of limited partner units outstanding: |
|||||
Basic: |
|||||
Common units |
100,036 |
101,910 | |||
Subordinated units |
75,941 |
75,941 | |||
Diluted: |
|||||
Common units |
100,075 |
102,254 | |||
Subordinated units |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||
2014 |
2015 |
2016 | ||||||
Revenue: |
||||||||
Gathering and compression–Antero Resources |
$ |
95,746 |
$ |
230,210 |
$ |
303,250 | ||
Water handling and treatment–Antero Resources |
162,283 |
155,954 |
282,267 | |||||
Gathering and compression–third party |
— |
382 |
835 | |||||
Water handling and treatment–third party |
8,245 |
778 |
— | |||||
Gain on sale of assets |
— |
— |
3,859 | |||||
Total revenue |
266,274 |
387,324 |
590,211 | |||||
Operating expenses: |
||||||||
Direct operating |
48,821 |
78,852 |
161,587 | |||||
General and administrative (including $11,618, $22,470 and $26,049 of equity-based compensation in 2014, 2015, and 2016, respectively) |
30,366 |
51,206 |
54,163 | |||||
Depreciation |
53,029 |
86,670 |
99,861 | |||||
Accretion of contingent acquisition consideration |
— |
3,333 |
16,489 | |||||
Total operating expenses |
132,216 |
220,061 |
332,100 | |||||
Operating income |
134,058 |
167,263 |
258,111 | |||||
Interest expense, net |
(6,183) |
(8,158) |
(21,893) | |||||
Equity in earnings of unconsolidated affiliate |
— |
— |
485 | |||||
Net income and comprehensive income |
127,875 |
159,105 |
236,703 | |||||
Pre-IPO net income attributed to parent |
(98,219) |
— |
— | |||||
Pre-Water Acquisition net income attributed to parent |
(22,234) |
(40,193) |
— | |||||
General partner interest in net income attributable to incentive distribution rights |
— |
(1,264) |
(16,944) | |||||
Limited partners' interest in net income |
$ |
7,422 |
$ |
117,648 |
$ |
219,759 | ||
Net income per limited partner unit: |
||||||||
Basic: |
||||||||
Common units |
$ |
0.05 |
$ |
0.76 |
$ |
1.24 | ||
Subordinated units |
$ |
0.05 |
$ |
0.73 |
$ |
1.24 | ||
Diluted: |
||||||||
Common units |
$ |
0.05 |
$ |
0.76 |
$ |
1.24 | ||
Subordinated units |
$ |
0.05 |
$ |
0.73 |
$ |
1.24 | ||
Weighted average number of limited partner units outstanding: |
||||||||
Basic: |
||||||||
Common units |
75,941 |
82,538 |
100,706 | |||||
Subordinated units |
75,941 |
75,941 |
75,941 | |||||
Diluted: |
||||||||
Common units |
75,941 |
82,586 |
100,860 | |||||
Subordinated units |
75,941 |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Three Months Ended December 31, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
62,154 |
$ |
69,195 |
$ |
131,349 | |||
Revenue - third-party |
344 |
— |
344 | ||||||
Total revenues |
62,498 |
69,195 |
131,693 | ||||||
Operating expenses: |
|||||||||
Direct operating |
5,966 |
34,056 |
40,022 | ||||||
General and administrative (before equity-based compensation) |
6,141 |
2,335 |
8,476 | ||||||
Equity-based compensation |
3,622 |
1,185 |
4,807 | ||||||
Depreciation |
16,090 |
7,065 |
23,155 | ||||||
Accretion of contingent acquisition consideration |
— |
3,333 |
3,333 | ||||||
Total expenses |
31,819 |
47,974 |
79,793 | ||||||
Operating income |
$ |
30,679 |
$ |
21,221 |
$ |
51,900 | |||
Segment and consolidated Adjusted EBITDA |
$ |
50,391 |
$ |
32,804 |
$ |
83,195 | |||
Three Months Ended December 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
84,312 |
$ |
78,517 |
$ |
162,829 | |||
Revenue - third-party |
166 |
— |
166 | ||||||
Gain on sale of assets |
3,859 |
— |
3,859 | ||||||
Total revenues |
88,337 |
78,517 |
166,854 | ||||||
Operating expenses: |
|||||||||
Direct operating |
7,531 |
29,105 |
36,636 | ||||||
General and administrative (before equity-based compensation) |
5,265 |
2,503 |
7,768 | ||||||
Equity-based compensation |
4,812 |
1,871 |
6,683 | ||||||
Depreciation |
17,837 |
7,924 |
25,761 | ||||||
Accretion of contingent acquisition consideration |
— |
6,105 |
6,105 | ||||||
Total expenses |
35,445 |
47,508 |
82,953 | ||||||
Operating income |
$ |
52,892 |
$ |
31,009 |
$ |
83,901 | |||
Segment and consolidated Adjusted EBITDA |
$ |
79,384 |
$ |
46,909 |
$ |
126,293 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Processing |
Treatment |
Total | |||||||
Year Ended December 31, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
230,210 |
$ |
155,954 |
$ |
386,164 | |||
Revenue - third-party |
382 |
778 |
1,160 | ||||||
Total revenues |
230,592 |
156,732 |
387,324 | ||||||
Operating expenses: |
|||||||||
Direct operating |
25,783 |
53,069 |
78,852 | ||||||
General and administrative (before equity-based compensation) |
22,608 |
6,128 |
28,736 | ||||||
Equity-based compensation |
17,840 |
4,630 |
22,470 | ||||||
Depreciation |
60,838 |
25,832 |
86,670 | ||||||
Accretion of contingent acquisition consideration |
— |
3,333 |
3,333 | ||||||
Total expenses |
127,069 |
92,992 |
220,061 | ||||||
Operating income |
$ |
103,523 |
$ |
63,740 |
$ |
167,263 | |||
Segment and consolidated Adjusted EBITDA |
$ |
182,201 |
$ |
97,535 |
$ |
279,736 | |||
Year Ended December 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero Resources |
$ |
303,250 |
$ |
282,267 |
$ |
585,517 | |||
Revenue - third-party |
835 |
— |
835 | ||||||
Gain on sale of assets |
3,859 |
— |
3,859 | ||||||
Total revenues |
307,944 |
282,267 |
590,211 | ||||||
Operating expenses: |
|||||||||
Direct operating |
27,289 |
134,298 |
161,587 | ||||||
General and administrative (before equity-based compensation) |
20,118 |
7,996 |
28,114 | ||||||
Equity-based compensation |
19,714 |
6,335 |
26,049 | ||||||
Depreciation |
69,962 |
29,899 |
99,861 | ||||||
Accretion of contingent acquisition consideration |
— |
16,489 |
16,489 | ||||||
Total expenses |
137,083 |
195,017 |
332,100 | ||||||
Operating income |
$ |
170,861 |
$ |
87,250 |
$ |
258,111 | |||
Segment and consolidated Adjusted EBITDA |
$ |
264,380 |
$ |
139,973 |
$ |
404,353 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||||
Three months ended December 31, |
Amount of Increase |
Percentage | |||||||||||||
2015 |
2016 |
(Decrease) |
Change | ||||||||||||
Revenue: |
|||||||||||||||
Revenue - Antero Resources |
$ |
131,349 |
$ |
162,829 |
$ |
31,480 |
24 |
% | |||||||
Revenue - third-party |
344 |
166 |
(178) |
(52) |
% | ||||||||||
Gain on sale of assets |
— |
3,859 |
3,859 |
* |
|||||||||||
Total revenue |
131,693 |
166,854 |
35,161 |
27 |
% | ||||||||||
Operating expenses: |
|||||||||||||||
Direct operating |
40,022 |
36,636 |
(3,386) |
(8) |
% | ||||||||||
General and administrative (before equity-based compensation) |
8,476 |
7,768 |
(708) |
(8) |
% | ||||||||||
Equity-based compensation |
4,807 |
6,683 |
1,876 |
39 |
% | ||||||||||
Depreciation |
23,155 |
25,761 |
2,606 |
11 |
% | ||||||||||
Accretion of contingent acquisition consideration |
3,333 |
6,105 |
2,772 |
83 |
% | ||||||||||
Total operating expenses |
79,793 |
82,953 |
3,160 |
4 |
% | ||||||||||
Operating income |
51,900 |
83,901 |
32,003 |
62 |
% | ||||||||||
Interest expense |
(2,892) |
(9,008) |
(6,116) |
211 |
% | ||||||||||
Equity in earnings of unconsolidated affiliate |
— |
(1,542) |
(1,542) |
* |
|||||||||||
Net income |
$ |
49,008 |
$ |
73,351 |
$ |
24,343 |
50 |
% | |||||||
Adjusted EBITDA |
$ |
83,195 |
$ |
126,293 |
$ |
43,098 |
52 |
% | |||||||
Operating Data: |
|||||||||||||||
Gathering—low pressure (MMcf) |
103,388 |
140,052 |
36,664 |
35 |
% | ||||||||||
Gathering—high pressure (MMcf) |
109,931 |
132,206 |
22,275 |
20 |
% | ||||||||||
Compression (MMcf) |
43,932 |
84,654 |
40,722 |
93 |
% | ||||||||||
Condensate gathering (MBbl) |
366 |
5 |
(361) |
(99) |
% | ||||||||||
Fresh water distribution (MBbl) |
11,011 |
13,771 |
2,760 |
25 |
% | ||||||||||
Wells serviced by fresh water delivery |
35 |
35 |
— |
0 |
% | ||||||||||
Gathering—low pressure (MMcf/d) |
1,124 |
1,522 |
398 |
35 |
% | ||||||||||
Gathering—high pressure (MMcf/d) |
1,195 |
1,437 |
242 |
20 |
% | ||||||||||
Compression (MMcf/d) |
478 |
920 |
442 |
93 |
% | ||||||||||
Condensate gathering (MBbl/d) |
3,978 |
— |
(3,978) |
(99) |
% | ||||||||||
Fresh water delivery (MBbl/d) |
120 |
150 |
30 |
32 |
% | ||||||||||
Average realized fees: |
|||||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
— |
* |
||||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.16 |
$ |
4.17 |
$ |
0.01 |
* |
||||||||
Average fresh water delivery fee - Antero Resources ($/Bbl) |
$ |
3.66 |
$ |
3.68 |
$ |
0.02 |
1 |
% | |||||||
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Amount of |
||||||||||||
Year ended December 31, |
Increase |
Percentage | ||||||||||
2015 |
2016 |
(Decrease) |
Change | |||||||||
Revenue: |
||||||||||||
Revenue - Antero Resources |
$ |
386,164 |
$ |
585,517 |
$ |
199,353 |
52 |
% | ||||
Revenue - third-party |
1,160 |
835 |
(325) |
(28) |
% | |||||||
Gain on sale of assets |
— |
3,859 |
3,859 |
* |
||||||||
Total revenue |
387,324 |
590,211 |
202,887 |
52 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
78,852 |
161,587 |
82,735 |
105 |
% | |||||||
General and administrative (before equity-based compensation) |
28,736 |
28,114 |
(622) |
(2) |
% | |||||||
Equity-based compensation |
22,470 |
26,049 |
3,579 |
16 |
% | |||||||
Depreciation |
86,670 |
99,861 |
13,191 |
15 |
% | |||||||
Accretion of contingent acquisition consideration |
3,333 |
16,489 |
13,156 |
395 |
% | |||||||
Total operating expenses |
220,061 |
332,100 |
112,039 |
51 |
% | |||||||
Operating income |
167,263 |
258,111 |
90,848 |
54 |
% | |||||||
Interest expense |
(8,158) |
(21,893) |
(13,735) |
168 |
% | |||||||
Equity in earnings of unconsolidated affiliate |
— |
485 |
485 |
* |
||||||||
Net income |
$ |
159,105 |
$ |
236,703 |
$ |
77,598 |
49 |
% | ||||
Adjusted EBITDA(1) |
$ |
279,736 |
$ |
404,353 |
$ |
124,617 |
45 |
% | ||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
370,830 |
513,390 |
142,560 |
38 |
% | |||||||
Gathering—high pressure (MMcf) |
432,861 |
481,646 |
48,785 |
11 |
% | |||||||
Compression (MMcf) |
157,515 |
271,060 |
113,545 |
72 |
% | |||||||
Condensate gathering (MBbl) |
1,117 |
503 |
(614) |
(55) |
% | |||||||
Fresh water delivery (MBbl) |
35,044 |
45,112 |
10,068 |
29 |
% | |||||||
Wells serviced by fresh water delivery |
124 |
131 |
7 |
6 |
% | |||||||
Gathering—low pressure (MMcf/d) |
1,016 |
1,403 |
387 |
38 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,186 |
1,316 |
130 |
11 |
% | |||||||
Compression (MMcf/d) |
432 |
741 |
309 |
72 |
% | |||||||
Condensate gathering (MBbl/d) |
3 |
1 |
(2) |
(55) |
% | |||||||
Fresh water delivery (MBbl/d) |
96 |
123 |
27 |
29 |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
— |
* |
|||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
|||||
Average compression fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
|||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.16 |
$ |
4.17 |
$ |
0.01 |
* |
|||||
Average fresh water delivery fee - Antero Resources ($/Bbl) |
$ |
3.64 |
$ |
3.68 |
$ |
0.04 |
1 |
% |
* |
Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | ||||||||
2014 |
2015 |
2016 | ||||||
Cash flows provided by (used in) operating activities: |
||||||||
Net income |
$ |
127,875 |
$ |
159,105 |
$ |
236,703 | ||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
53,029 |
86,670 |
99,861 | |||||
Accretion of contingent acquisition consideration |
— |
3,333 |
16,489 | |||||
Equity-based compensation |
11,618 |
22,470 |
26,049 | |||||
Equity in earnings of unconsolidated affiliate |
— |
— |
(485) | |||||
Distribution of earnings from unconsolidated affiliate |
— |
— |
7,702 | |||||
Amortization of deferred financing costs |
135 |
1,144 |
1,814 | |||||
Gain on sale of assets |
— |
— |
(3,859) | |||||
Changes in assets and liabilities: |
||||||||
Accounts receivable–Antero Resources |
(29,988) |
(35,148) |
1,573 | |||||
Accounts receivable–third party |
(5,574) |
2,867 |
1,467 | |||||
Prepaid expenses |
(518) |
518 |
(529) | |||||
Accounts payable |
863 |
2,803 |
95 | |||||
Accounts payable–Antero Resources |
1,059 |
475 |
1,055 | |||||
Accrued liabilities |
10,934 |
15,441 |
(9,328) | |||||
Net cash provided by operating activities |
169,433 |
259,678 |
378,607 | |||||
Cash flows provided by (used in) investing activities: |
||||||||
Additions to gathering and compression systems |
(553,582) |
(320,002) |
(228,100) | |||||
Additions to water handling and treatment systems |
(200,116) |
(132,633) |
(188,220) | |||||
Amounts paid to Antero Resources for gathering and compression systems |
(40,277) |
— |
— | |||||
Investment in unconsolidated affiliate |
— |
— |
(75,516) | |||||
Proceeds from sale of assets |
— |
— |
10,000 | |||||
Change in other assets |
(3,530) |
7,180 |
3,673 | |||||
Net cash used in investing activities |
(797,505) |
(445,455) |
(478,163) | |||||
Cash flows provided by (used in) financing activities: |
||||||||
Deemed distribution to Antero Resources, net |
(5,375) |
(52,669) |
— | |||||
Distributions to Antero Resources |
(332,500) |
(620,997) |
— | |||||
Distributions to unitholders |
— |
(107,248) |
(182,446) | |||||
Issuance of senior notes |
— |
— |
650,000 | |||||
Borrowings (repayments) on bank credit facilities, net |
115,000 |
505,000 |
(410,000) | |||||
Issuance of common units, net of offering costs |
1,087,224 |
240,703 |
65,395 | |||||
Payments of deferred financing costs |
(4,871) |
(2,059) |
(10,435) | |||||
Employee tax witholding for settlement of equity compensation awards |
— |
— |
(5,636) | |||||
Other |
(1,214) |
(262) |
(163) | |||||
Net cash provided by (used in) financing activities |
858,264 |
(37,532) |
106,715 | |||||
Net increase (decrease) in cash and cash equivalents |
230,192 |
(223,309) |
7,159 | |||||
Cash and cash equivalents, beginning of period |
— |
230,192 |
6,883 | |||||
Cash and cash equivalents, end of period |
$ |
230,192 |
$ |
6,883 |
$ |
14,042 | ||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the period for interest |
$ |
5,864 |
$ |
7,765 |
$ |
13,494 | ||
Supplemental disclosure of noncash investing activities: |
||||||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
37,596 |
$ |
4,552 |
$ |
(8,471) |
SOURCE Antero Midstream Partners LP
DENVER, Feb. 6, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today the pricing of an upsized underwritten public offering of 6,000,000 common units representing limited partner interests in Antero Midstream (the "Offering") at a public offering price of $33.00 per common unit for aggregate gross proceeds of approximately $198 million before estimated offering expenses. In addition, the Partnership has also granted the underwriters a 30-day option to purchase up to an additional 900,000 common units.
The Partnership expects to use the net proceeds from the Offering, including the proceeds from any exercise of the underwriters' option to purchase additional common units, for general partnership purposes, including to repay a portion of the outstanding borrowings under its revolving credit facility. These borrowings include amounts incurred on February 6, 2017 to fund the recently announced Appalachian processing and fractionation joint venture with MPLX, LP (NYSE: MPLX).
Barclays and Wells Fargo Securities are acting as joint book-running managers for the Offering.
The Offering is being made pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission ("SEC"). The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Barclays c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, New York 11717 barclaysprospectus@broadridge.com Toll-Free: (888) 603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, New York 10152 cmclientsupport@wellsfargo.com Toll-Free: (800) 326-5897 |
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and fresh water and waste water treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Feb. 6, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today that it has commenced an underwritten public offering of 5,000,000 common units representing limited partner interests in Antero Midstream (the "Offering"). In addition, the Partnership anticipates granting the underwriters a 30-day option to purchase up to an additional 750,000 common units.
The Partnership expects to use the net proceeds from the Offering, including the proceeds from any exercise of the underwriters' option to purchase additional common units, for general partnership purposes, including to repay a portion of the outstanding borrowings under our revolving credit facility. These borrowings include amounts incurred on February 6, 2017 to fund the recently announced Appalachian processing and fractionation joint venture with MPLX, LP (NYSE: MPLX).
Barclays and Wells Fargo Securities will act as joint book-running managers for the Offering.
The Offering is being made pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission ("SEC"). The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Barclays c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, New York 11717 barclaysprospectus@broadridge.com Toll-Free: (888) 603-5847 |
Wells Fargo Securities c/o Equity Syndicate Department 375 Park Avenue New York, New York 10152 cmclientsupport@wellsfargo.com Toll-Free: (800) 326-5897 |
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and fresh water and waste water treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Feb. 6, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced the formation of a joint venture to develop processing and fractionation assets in Appalachia (the "Joint Venture" or the "JV") with MarkWest Energy Partners, L.P. ("MarkWest"), a wholly owned subsidiary of MPLX, LP (NYSE: MPLX) ("MPLX"). Antero Midstream and MarkWest will each own a 50% interest in the Joint Venture and MarkWest will operate the Joint Venture assets. Antero Midstream also announced increased 2017 guidance.
Highlights Include:
Joint Venture
Antero Midstream and MarkWest will jointly develop processing assets at the Sherwood processing facility in Doddridge County, WV, and an additional still to be designated facility also located in West Virginia in the southwestern core of the Marcellus Shale. The assets are underpinned by long-term, fee-based agreements pursuant to which the Joint Venture will process Antero Resources Corporation's ("Antero Resources") (NYSE: AR) liquids-rich production from the Marcellus Shale. As part of the agreement, Antero Midstream will release to the Joint Venture its right to provide processing services on 195,000 gross acres held by Antero Resources in Ritchie, Tyler, and Wetzel Counties in West Virginia.
The Joint Venture participation will begin with the next three plants at the Sherwood processing facility, which are under development and scheduled to be placed into service during the first quarter of 2017, third quarter of 2017, and first quarter of 2018. The Joint Venture will not participate in the six existing Sherwood plants, which will continue to be owned and operated solely by MarkWest. The existing plants have the capacity to process over 1.2 Bcf per day of liquids-rich gas and are currently running at full capacity. The Joint Venture processing facilities, starting with the seventh plant, will be operated by MarkWest and have the potential to support an incremental eleven plants, or 2.2 Bcf per day of capacity, to facilitate liquids-rich production growth from Antero Resources.
In addition to the processing assets, the Joint Venture will own C3+ fractionation capacity at the Hopedale complex in Harrison County, Ohio supported by Antero Resources and other third party producers. The Hopedale complex, which is operated by MarkWest and its affiliates, currently includes three 60,000 Bbl/d fractionators that fractionate natural gas liquids from both the Marcellus and Ohio Utica Shales, and provides access to strategic liquids pipelines including Mariner East, Mariner West, TEPPCO, and Cornerstone. The Joint Venture will own a 33 1/3% interest in the recently commissioned third fractionator at the Hopedale complex. The Joint Venture will have the option to participate in additional fractionation capacity in the future, contingent on further C3+ NGL production growth.
Antero Midstream expects to invest up to $800 million through 2020, net to its 50% ownership interest in the joint venture. Approximately $155 million of the $800 million investment was made upon execution of the definitive agreements and represented capital related to the Sherwood processing plants and the Hopedale fractionation facility.
Paul Rady, Chairman and CEO of Antero Midstream said, "We are very excited about the opportunity to invest in the largest processing and fractionation footprint in the Northeast and support it with the largest core liquids-rich resource base in Appalachia. The accretive Joint Venture represents a big step towards executing Antero Midstream's full value chain organic growth strategy supporting Antero Resources."
Mr. Rady further added, "The joint venture capitalizes on the strong relationship between Antero and MarkWest, and now MPLX, and the long track record and deep expertise in developing processing and fractionation assets, particularly in the Northeast. This premier partnership will economically align a dominant resource and infrastructure footprint unparalleled in Appalachia."
Increased 2017 Guidance and Long-Term Targets
Driven by the Joint Venture, Antero Midstream is increasing its forecast for net income to $305 million to $345 million, adjusted EBITDA to $520 million to $560 million and distributable cash flow ("DCF") to $405 million to $445 million for 2017. Additionally, Antero Midstream's peer-leading distribution growth of 28% to 30% as compared to 2016 remains unchanged, resulting in an average DCF coverage ratio of 1.30x to 1.45x on an annual basis. Antero Midstream has also revised its 2017 capital expenditure budget to $800 million.
Below is a comparison of the 2017 updated guidance and long-term targets to previously provided 2017 guidance and long-term targets.
Previous Guidance |
Updated Guidance |
||||||||
2017 Financial Guidance |
Low |
High |
Low |
High |
% Change | ||||
Net Income ($MM) |
$295 |
— |
$335 |
$305 |
— |
$345 |
3% | ||
Adjusted EBITDA ($MM) |
$510 |
— |
$550 |
$520 |
— |
$560 |
2% | ||
Distributable Cash Flow ($MM) |
$395 |
— |
$435 |
$405 |
— |
$445 |
2% | ||
Year-Over-Year Distribution Growth |
28% |
— |
30% |
28% |
— |
30% |
— | ||
DCF Coverage Ratio |
1.30x |
— |
1.45x |
1.30x |
— |
1.45x |
— | ||
Capital Expenditures ($MM) |
$525 |
$800 |
52% | ||||||
2018 – 2020 Long-Term Targets |
Previous Target |
Updated Target |
% Change | ||||||
Annual Distribution Growth |
28% — 30% |
28% — 30% |
— | ||||||
DCF Coverage Ratio |
>1.20x |
>1.25x |
4% | ||||||
Leverage |
Low 2-times range |
Low 2-times range |
— |
Michael Kennedy, CFO of Antero Midstream said, "The visibility into Antero Resources' development plan allows Antero Midstream and MPLX to invest in attractive rate of return projects with 4-times to 6-times investment to buildout EBITDA multiples. Additionally, Antero Midstream is benefitting from investing in significant projects that will be placed in-service almost immediately, improving overall project returns and resulting in accretion to distributable cash flow. This attractive organic expansion opportunity allows Antero Midstream to target peer-leading compound annual distribution growth of 28% to 30% through 2020, while maintaining a healthy balance sheet and increasing its DCF coverage to over 1.25x in the corresponding period."
Presentation
An updated presentation will be posted to the Partnership's website. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate, and including cash distributions from unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent plus cash distribution to be received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream does not provide guidance on equity earnings, among other items, that are reconciling items between forecasted Adjusted EBITDA and forecasted Net Income due to the uncertainty regarding timing and estimates of reconciling items. Antero Midstream provides a range for the forecasts of Net Income, Adjusted EBITDA, and Distributable Cash Flow to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Adjusted EBITDA and forecasted Net Income. Therefore, the Partnership cannot reconcile Adjusted EBITDA to forecasted Net Income without unreasonable effort.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia and Ohio, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and fresh water and waste water treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Jan. 11, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased fourth quarter 2016 distribution and fourth quarter 2016 earnings release date and conference call.
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.28 per unit ($1.12 per unit annualized) for the fourth quarter of 2016. The distribution represents a 27% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is the Partnership's eighth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on February 8, 2017 to unitholders of record as of February 1, 2017.
Antero Midstream Fourth Quarter and Full-Year Earnings Release and Call
Antero Midstream plans to issue its fourth quarter and full-year 2016 earnings release on Tuesday, February 28, 2017 after the close of trading on the New York Stock Exchange.
A conference call is scheduled on Wednesday, March 1, 2017 at 10:00 am MT to discuss the 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 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, March 10 , 2017 at 10:00 am MT at 1-877-870-5176 (U.S.) or 1-858-384-5517 (International) using the passcode 10098008.
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 on the Partnership's website until Friday, March 10, 2017 at 10:00 am MT.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering, compression and integrated water assets located in West Virginia and Ohio. The Partnership's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Jan. 4, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today announced its 2017 capital budget and guidance and provided a long-term outlook through 2020.
Highlights Include:
2017 Capital Budget
Antero's capital budget for 2017 is $1.5 billion, including $1.3 billion for drilling and completion and $200 million for core leasehold additions and extensions. Net production is expected to average 2,160 to 2,250 MMcfe/d in 2017, representing year-over-year growth of 20% to 25% relative to 2016 guidance. Approximately 70% of the drilling and completion budget for 2017 is allocated to the Marcellus Shale and the remaining 30% is allocated to the Ohio Utica Shale.
Antero's 2017 capital budget excludes Antero Midstream's (NYSE: AM) $525 million capital budget relating to low and high pressure gathering pipelines, compressor stations, fresh water and advanced wastewater treatment infrastructure. Antero Midstream announced its 2017 capital budget and guidance today in a separate news release, which can be found at www.anteromidstream.com.
Antero plans to operate an average of four drilling rigs in the Marcellus Shale in West Virginia in 2017 and expects to complete 135 wells with an average lateral length of 9,200 feet. Forty of the 135 completions are previously drilled but uncompleted wells carried over from 2016. The development plan in the Marcellus averages nine wells per pad in 2017, up from six wells per pad in 2016, as the Company continues to drive well efficiencies. Antero is currently drilling and completing wells at an average budgeted cost of $0.84 million per 1,000' of lateral in the Marcellus, a 30% decrease from 2015 completed well costs. During the fourth quarter of 2016, Antero averaged 12 drilling days per well in the Marcellus, a 52% improvement compared to the average drilling days per well for the 2015 development program. Additionally, Antero averaged 4.0 completion stages per day in the fourth quarter of 2016, a 15% increase over the 2015 completion program average while increasing proppant concentration per stage. The significant drilling improvements were driven by multiple enhancements, including rotary steerable drilling and increased mud pump circulation rates. Additionally, completion improvements were the result of more efficient completion stage sequencing ("zipper fracs") and proppant placement.
Antero plans to operate an average of three drilling rigs in the Ohio Utica Shale in 2017 and expects to complete 35 wells with an average lateral length of 9,700 feet. The development plan in the Utica averages six wells per pad in 2017. Antero is currently drilling and completing wells at an average budgeted cost of $0.99 million per 1,000' of lateral in the Utica, a 28% improvement over 2015 well costs. During the fourth quarter of 2016, Antero averaged 13 drilling days per well, a 58% improvement compared to the average drilling days per well of the 2015 development program. Additionally, Antero averaged 6.0 completion stages per day during the fourth quarter of 2016, a 62% increase over the 2015 completion program average while increasing proppant concentration per stage. The Marcellus operational improvements have also been applied in the Ohio Utica Shale, generating similar efficiency gains. Antero expects further improvements in drilling and completion efficiencies in the Ohio Utica in 2017 as Antero plans to be more active in the play than it was in 2016. The Company's activity in the Ohio Utica is contingent on the construction timetable for the Rover Pipeline for which Antero is an anchor shipper. If the Rover Pipeline project is delayed beyond the second half of 2017 planned in-service date, Antero intends to shift the appropriate amount of budgeted drilling and completion activity from the Ohio Utica to the Marcellus. The Company has additional firm transportation capacity to current favorably priced markets in the Marcellus beyond the 2017 forecasted growth.
Commenting on the 2017 capital budget and guidance, Glen Warren, Antero's President and CFO, said, "While we plan to live within cash flow from a drilling and completion capital standpoint in 2017, we are forecasting a more than 50% increase in consolidated cash flow from operations in 2018. This significant cash flow step-up is driven by targeted production growth in 2018 of 20% to 22%, assuming current strip pricing, with over 70% of production hedged in 2018 at $3.91 per MMBtu. Combined with an expected moderate increase in drilling and completion capital spend in 2018, we forecast a significant decrease in leverage ratios to the mid 2.0-times net debt to EBITDAX on both a stand-alone and a consolidated basis by year-end 2018."
As a follow-up to the material expansion of our Marcellus footprint in 2016, Antero plans to continue consolidating acreage in the core of its Marcellus and Ohio Utica leasehold positions in 2017. Antero has budgeted $200 million for core leasehold additions and extensions. Consistent with historical practices, the Company does not budget for acquisitions.
The following is a comparison of the 2017 capital budget to 2016 guidance.
($ in MM) |
Year Ended December 31, | |||||||||
Capital Comparison |
2016 |
2017 |
% Change | |||||||
Drilling & Completion |
$1,300 |
$1,300 |
0% | |||||||
Land |
100 |
200 |
100% | |||||||
Total Capital |
$1,400 |
$1,500 |
7% | |||||||
Average Operated Drilling Rigs |
7 |
7 |
0% | |||||||
Operated Wells Completed(1) |
140 |
170 |
22% | |||||||
Deferred Completions at Year End(1) |
40 |
30 |
(25)% | |||||||
1) Adjusted for 2016 actuals. |
The 2017 capital budget is expected to be fully funded through cash flow from operations and available borrowing capacity within Antero's bank credit facility. As of September 30, 2016, Antero had $4.1 billion of available consolidated liquidity, pro forma for the October 2016 private placement of common stock which raised $175 million and the $170 million non-core acreage divestiture which closed on December 16, 2016.
2017 Guidance
Antero's 2017 net daily production, including liquids, is forecast to grow 20% to 25% as compared to 2016 guidance of 1.8 Bcfe/d. Net liquids production is forecast to increase approximately 27% to an average of 92,500 Bbl/d in 2017, including 67,500 Bbl/d of C3+ NGLs, 19,000 Bbl/d of ethane and 6,000 Bbl/d of condensate at the midpoint of 2017 guidance. Antero expects to recover 19,000 Bbl/d of ethane, 11,500 Bbl/d of which will service an ethane sales agreement with Borealis once Mariner East 2 is in service, which is currently expected in the fourth quarter of 2017.
Price Realizations and Cash Costs
Antero projects that substantially all natural gas production in 2017 will be sold at current favorably priced indices, resulting in natural gas price realizations at a premium compared to Nymex. Driven by improved local differentials, Antero is forecasting an average realized price for C3+ NGLs of 45% to 50% of WTI oil prices in 2017 compared to a 40% of WTI oil price realization for the first nine months of 2016. Once the Mariner East 2 pipeline is placed in service, Antero will have the ability to market 61,500 Bbl/d of ethane, propane and normal butane volumes to international buyers at netback prices that are currently superior to the aforementioned 2017 guidance, based on today's strip pricing and international shipping rates. Antero is also forecasting an improvement to its oil price realizations, from approximately a $10.00 differential to WTI oil in 2016 to a $7.00 to $9.00 differential to WTI oil in 2017. Combining the expected improvement in pricing for NGLs and oil results in an overall increase in expected EBITDA of approximately $85 million in 2017, before the impact of hedging.
Antero expects a modest increase in cash production expense entirely driven by an increase in expected production taxes and fuel costs due to higher commodity prices. Net marketing expense is expected to decline to $0.075 to $0.125 per Mcfe due to a reduction in unutilized firm transportation capacity in 2017.
The Company is using the following key assumptions in its projections for 2017:
Guidance |
2017 | |||
Low |
High | |||
Production |
||||
Net Daily Production (MMcfe/d) |
2,160 |
2,250 | ||
Net Daily Residue Natural Gas Production (MMcf/d) |
1,625 |
1,675 | ||
Net Daily Liquids Production (Bbl/d) |
88,500 |
96,500 | ||
Net Daily C3+ NGL Production (Bbl/d) |
65,000 |
70,000 | ||
Net Daily Ethane Production (Bbl/d) |
18,000 |
20,000 | ||
Net Daily Oil Production (Bbl/d) |
5,500 |
6,500 | ||
Realized Pricing |
||||
Natural Gas Realized Price Premium to Nymex Henry Hub Before Hedging ($/Mcf)(1)(2) |
$0.00 |
$0.10 | ||
Oil Realized Price Differential to Nymex WTI Oil Before Hedging ($/Bbl) |
$(7.00) |
$(9.00) | ||
C3+ NGL Realized Price Before Hedging (% of Nymex WTI) (1) |
45% |
50% | ||
Ethane Realized Price Before Hedging (Differential to Mont Belvieu) ($/Gal) |
$0.00 |
$0.00 | ||
Cash Expenses |
||||
Cash Production Expense ($/Mcfe)(3) |
$1.55 |
$1.65 | ||
Marketing Expense, Net of Marketing Revenue ($/Mcfe) |
$0.075 |
$0.125 | ||
G&A Expense ($/Mcfe) |
$0.15 |
$0.20 |
(1) |
Based on strip pricing as of December 30, 2016 |
(2) |
Includes Btu upgrade as Antero's processed tailgate and unprocessed dry gas production is greater than 1000 Btu on average |
(3) |
Includes lease operating expenses, gathering, compression, transportation expenses and production taxes |
Long-Term Outlook
As a result of materially improved capital efficiency and expected well recoveries, favorable price realizations due to firm transportation arrangements, significant production sold forward at attractively hedged prices, and Appalachian-leading core drilling inventory, Antero is targeting 20% to 22% compound annual growth in net gas equivalent production for the years 2018 through 2020. This growth rate includes liquids contribution to overall equivalent production ranging from 24% to 26%. Antero plans to deliver this long-term growth while keeping its aggregate drilling and completion budget within consolidated cash flow from operations, resulting in a declining leverage profile through 2020. Antero's long-term targets exclude the impact of any future acquisitions or divestitures, consistent with historical practices.
Additionally, Antero's firm transportation portfolio, which is contracted to grow to 4.85 Bcf/d by year-end 2018, allows the Company to transport and sell virtually all of its natural gas production at current favorably priced indices, including TCO, Chicago, MichCon and Gulf Coast hubs. Antero forecasts the percentage of natural gas production sold at current favorably priced indices through 2020 to remain in line with 2017 guidance resulting in natural gas price realizations, before hedges, at a $0.05 to $0.15 per Mcf premium to Nymex. Further enhancing price realizations, Antero has hedged approximately 66% of production targets for the years 2017 through 2020 at an average hedged price of $3.68 per MMBtu. The Company now has 3.5 Tcfe hedged through 2022.
Antero has an inventory of approximately 4,100 undrilled economic 3P locations including over 2,400 locations that deliver breakeven economics defined as a pre-tax rate of return of 20% at below $3.00 per MMBtu Nymex prices. The 2,400 highly economic locations have an average lateral length of 8,600 feet and represent a 14 year drilling inventory assuming the 2017 rate of completions.
Supported by Antero Resources' long-term production growth target, Antero Midstream today announced a long-term distribution growth target of 28% to 30% per year through 2020. As of December 31, 2016, Antero Resources owned approximately 61% of Antero Midstream.
Commenting on Antero's long-term targets, Paul Rady, Chairman and CEO, said, "Based on current strip prices, we are targeting 20% to 22% compound annual production growth from 2018 through 2020. This is driven by a modest annual increase in drilling and completion capital beginning in 2018, while maintaining significant liquidity and a declining leverage profile. Antero's ability to target top-tier production growth speaks to our high quality drilling inventory, the magnitude of our hedge book and the cash flow protection it provides, and our ability to consistently deliver peer leading EBITDAX margins. In addition, our development plan benefits from the flexibility to adjust to in-service dates of future firm transportation projects by modifying development between our two world-class plays, which enhances our ability to achieve 2017 guidance as well as our long-term targets."
Presentation
An updated presentation including details regarding Antero's 4,100 economic locations and over 2,400 locations delivering 20% rates of return at below $3.00 per MMBtu Nymex prices has been posted to the Company's website, which can be found at www.anteroresources.com on the homepage. Information on the Company's website does not constitute a portion of this press release.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia and Ohio. The Company's website is located at www.anteroresources.com.
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, maximized realized natural gas and natural gas liquids prices, acreage quality, access to multiple gas markets, expected drilling and development plans, drilling inventory and estimated rates of return, future financial position, future technical improvements and future marketing opportunities, 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 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.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, Antero's ability to meet development and drilling plans, Antero's ability to implement its hedge strategy and results, risks regarding the timing and amount of future production of natural gas, NGLs and oil, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, marketing and transportation risks, the ability to satisfy applicable minimum volume requirements, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2015.
SOURCE Antero Resources Corporation
DENVER, Jan. 4, 2017 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced its 2017 capital budget and guidance and provided a long-term outlook through 2020.
Highlights Include:
2017 Capital Budget
During 2017, Antero Midstream plans to expand its existing Marcellus and Ohio Utica Shale gathering, compression, fresh water and advanced wastewater treatment infrastructure to accommodate Antero Resources Corporation's (NYSE: AR) ("Antero Resources") development plans. Today in a separate news release, Antero Resources announced its 2017 drilling and completion capital budget of $1.3 billion, which is forecast to generate production growth of 20% to 25% over 2016 guided production, and that it is targeting a 20% to 22% compound annual growth rate for net production for the years 2018 through 2020. For 2017, Antero Resources plans to operate an average of four drilling rigs in the Marcellus Shale and three drilling rigs in the Ohio Utica Shale. Antero Resources plans to complete 135 wells in the Marcellus Shale and 35 wells in the Ohio Utica Shale utilizing advanced completion designs. Antero Resources' release can be found at www.anteroresources.com.
Commenting on the Antero Resources 2017 capital budget and guidance and long-term production growth targets, along with its impact on Antero Midstream's growth, Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream, said, "In addition to the 20% to 25% expected production growth in 2017, Antero Resources is targeting 20% to 22% compound annual production growth for 2018 through 2020, which in turn supports Antero Midstream throughput growth and a best-in-class distribution growth target of 28% to 30% annually through 2020. We believe that we can achieve this long-term distribution growth target strictly through the organic buildout of infrastructure to support Antero Resources. Importantly, we do not anticipate that this organic infrastructure buildout will require any external financing beyond our current ATM program and we expect to maintain debt to adjusted EBITDA in the 2.0-times range. Antero Resources' increased capital efficiency, premium price realizations driven by its firm transportation portfolio, production sold forward at attractively hedged prices, and more than 14 years of highly economic core drilling inventory at the 2017 completion pace, all contribute to the ability to deliver strong long-term growth which will benefit Antero Midstream."
The Partnership has budgeted an investment of $460 million and $65 million in expansion and maintenance capital, respectively, resulting in a total Antero Midstream capital budget of $525 million in 2017. This capital budget includes $350 million of capital for gathering and compression infrastructure, resulting in 490 MMcf/d of incremental compression capacity and over 35 miles of gathering pipelines in the Marcellus and Ohio Utica Shales combined. Approximately 75% of the gathering and compression capital is planned to be invested in the Marcellus Shale and the remaining 25% invested in the Ohio Utica Shale. This mix is driven by Antero Resources' focus on Marcellus Shale drilling and completions in the first half of 2017 until incremental firm transportation to favorable markets in the Ohio Utica Shale is placed into service, which is expected in the second half of 2017. Antero Midstream has the ability to adjust its investments based on Antero Resources' development plan which has the flexibility to shift focus between the Marcellus Shale and Ohio Utica Shale due to firm transportation constraints.
In addition to capital expenditures for gathering and compression, Antero Midstream has budgeted investment of $75 million for water infrastructure to construct four fresh water storage impoundments as well as 37 miles of additional fresh water trunklines and surface pipelines to support Antero's completion activities. Approximately 67% of the water infrastructure budget will be allocated to the Marcellus Shale and the remaining 33% will be allocated to the Ohio Utica Shale. This excludes $100 million of capital to be invested in the construction of the Antero Clearwater Facility, which at 60,000 Bbl/d is expected to be the largest advanced wastewater treatment facility in the world for oil and gas operations. The Antero Clearwater Facility is expected to be placed into service in the fourth quarter of 2017.
The year-over-year increase to $65 million in maintenance capital is primarily driven by an increase in low pressure gathering and surface water pipeline investment as compared to 2016.
Antero Midstream expects to fund all 2017 capital expenditures through cash flow from operations, available borrowing capacity within Antero Midstream's existing $1.5 billion bank credit facility, and proceeds from its at-the-market unit offering program. As of September 30, 2016, Antero Midstream had approximately $1.0 billion of liquidity to fund organic growth opportunities.
Below is a comparison of the 2017 capital budget to 2016 guidance.
Year Ended December 31, |
||||||
Capital Comparison ($MM) |
2016 |
2017 |
% Change | |||
Gathering and Compression Infrastructure |
$255 |
$350 |
37% | |||
Fresh Water Infrastructure |
50 |
75 |
50% | |||
Advanced Wastewater Treatment Facility |
130 |
100 |
(23)% | |||
Stonewall Gathering Pipeline |
45 |
— |
(100)% | |||
Total Capital |
$480 |
$525 |
9% | |||
Expansion Capital |
$455 |
$460 |
1% | |||
Maintenance Capital |
25 |
65 |
160% | |||
Total Capital |
$480 |
$525 |
9% |
2017 Guidance
Antero Midstream is forecasting net income of $295 million to $335 million, adjusted EBITDA of $510 million to $550 million and distributable cash flow ("DCF") of $395 million to $435 million for 2017. Additionally, Antero Midstream is forecasting annual distribution growth of 28% to 30% as compared to 2016, resulting in an average DCF coverage ratio of 1.30x to 1.45x on an annual basis. Antero Midstream's 2017 guidance excludes any impact from potential third party volumes or transactions.
Below is a comparison of the 2017 guidance to 2016 guidance.
2016 |
2017 |
|||||||||
Low |
High |
Low |
High |
% Change | ||||||
Net Income ($MM) |
$205 |
— |
$225 |
$295 |
— |
$335 |
47% | |||
Adjusted EBITDA ($MM) |
$365 |
— |
$385 |
$510 |
— |
$550 |
41% | |||
Distributable Cash Flow ($MM) |
$315 |
— |
$335 |
$395 |
— |
$435 |
28% | |||
Year-Over-Year Distribution Growth |
30% |
28% |
— |
30% |
(3)% | |||||
DCF Coverage Ratio |
1.55x |
— |
1.65x |
1.30x |
— |
1.45x |
(14)% | |||
Long-Term Growth Targets
Antero Midstream is targeting compound annual distribution growth of 28% to 30% through 2020 based on Antero Resources' corresponding 2017 guidance of 20% to 25% production growth and 20% to 22% compound annual production growth target from 2018 through 2020. Additionally, Antero Midstream expects DCF coverage in excess of 1.2x over the corresponding period. Antero Midstream's distribution growth target excludes the impact of any third party service revenues and any future acquisitions or divestitures, consistent with historical practice.
Commenting on the Antero Midstream 2017 capital budget and guidance, Michael Kennedy, Antero Midstream's CFO, said, "Antero Midstream's ability to provide best-in-class distribution growth guidance and targets through 2020, while maintaining DCF coverage in excess of 1.2-times, speaks to the superior visibility into Antero Resources' development plan and Antero Midstream's return on invested capital. Looking forward, Antero Midstream has over $2.4 billion in organic growth opportunities from 2016 through 2020, providing an extended runway for long-term growth and infrastructure development, ultimately benefiting our unitholders."
Presentation
An updated presentation will be posted to the Partnership's website. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as Net Income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate, and including cash distributions from unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent plus cash distribution to be received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream does not provide guidance on equity earnings, among other items, that are reconciling items between forecasted Adjusted EBITDA and forecasted Net Income due to the uncertainty regarding timing and estimates of reconciling items. Antero Midstream provides a range for the forecasts of Net Income, Adjusted EBITDA, and Distributable Cash Flow to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Adjusted EBITDA and forecasted Net Income. Therefore, the Partnership cannot reconcile Adjusted EBITDA to forecasted Net Income without unreasonable effort.
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia and Ohio, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions. Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved. For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and fresh water and waste water treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
SOURCE Antero Midstream Partners LP
DENVER, Oct. 26, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its third quarter 2016 financial and operational results. The relevant condensed combined consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which has been filed with the Securities and Exchange Commission.
Third Quarter Highlights Include:
Recent Developments
Distribution for the Third Quarter of 2016
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.265 per unit ($1.06 per unit annualized) for the third quarter of 2016. The distribution represents a 29% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is the Partnership's seventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 24, 2016 to unitholders of record as of November 10, 2016.
Private Placement of Senior Notes
On September 13, 2016, Antero Midstream completed a private placement of $650 million of 5.375% senior unsecured notes due 2024 at par. In connection with the private placement, Antero Midstream received its initial corporate credit ratings of Ba2 and BB by Moody's and S&P, respectively. Proceeds from the private placement were used to repay a portion of the outstanding borrowings under the Partnership's credit facility. As of September 30, 2016, Antero Midstream had $170 million of borrowings outstanding under its $1.5 billion credit facility and $9 million of cash, resulting in approximately $1.0 billion of available liquidity(1).
Increase in Acreage Dedicated to Antero Midstream
Year-to-date, Antero Resources has acquired approximately 65,000 net leasehold acres in West Virginia in the high-graded core of the Marcellus Shale, 71% of which includes Utica rights. Substantially all of the acquired acreage is dedicated to Antero Midstream for gathering, compression, processing, and water services.
On October 25, 2016, Antero Resources signed a definitive agreement for the sale of approximately 17,000 net acres primarily located in Washington and Westmoreland Counties, Pennsylvania for $170 million. Approximately 20% of the 17,000 net acres was dedicated to a third party and $10 million of the proceeds is expected to be allocated to Antero Midstream as consideration for the release of its existing gathering and compression dedication concurrent with the acreage sale. The acreage is not included in Antero Midstream's five year infrastructure development plan based on Antero Resources' current five year drilling plan. The transaction is expected to close in the fourth quarter of 2016.
1. |
Liquidity calculation assumes Antero Midstream's borrowings under its credit facility limited to EBITDA covenant of 5.0x LTM EBITDA, less Senior Note Issuances as of September 30, 2016. |
Commenting on consolidation activity by Antero Resources, Paul Rady, Chairman and CEO said, "Antero Resources continues to be the most active operator and a leading consolidator in Appalachia, adding over 65,000 net acres in the high-graded core of the Marcellus year-to-date, substantially all of which is dedicated to Antero Midstream. Looking ahead, Antero Resources remains well capitalized to fund further consolidation in the Appalachian Basin and in turn, increase organic growth opportunities for Antero Midstream."
Third Quarter 2016 Financial Results
Antero Midstream's acquisition of Antero Resources' integrated water business in 2015 was accounted for as a transfer of entities under common control. As a result, the Partnership recast its condensed combined consolidated financial statements to retrospectively reflect the integrated water business as if the assets and liabilities were owned for all past periods presented. Beginning in the third quarter of 2015, and as a result of the acquisition, Antero Midstream began reporting its results through two business segments, Gathering and Compression and Water Handling and Treatment. To facilitate year over year comparison and discussion, the third quarter 2016 and third quarter 2015 results discussed below include both the Gathering and Compression and Water Handling and Treatment segment operations.
The term "Adjusted EBITDA" discussed below reflects the Gathering and Compression and Water Handling and Treatment segments on a recast combined basis, while the term "Adjusted EBITDA attributable to the Partnership" reflects contribution from the Water Handling and Treatment segments only after the third quarter of 2015 based on the actual timing of the acquired assets. For a reconciliation of net income to Adjusted EBITDA, please read "Non-GAAP Financial Measures".
Low pressure gathering volumes for the third quarter of 2016 averaged 1,431 MMcf/d, a 38% increase from the third quarter of 2015 and a 6% increase sequentially. High pressure gathering volumes for the third quarter of 2016 averaged 1,351 MMcf/d, an 11% increase from the third quarter of 2015 and an 8% increase sequentially. Compression volumes for the third quarter of 2016 averaged 777 MMcf/d, a 78% increase from the third quarter of 2015 and an 18% increase sequentially. The increase in gathering and compression volumes was due to production growth from Antero Resources in Antero Midstream's area of dedication. Condensate gathering volumes averaged 521 Bbl/d during the quarter, an 82% decrease compared to the prior year quarter and a 74% decrease sequentially. The sequential decrease in condensate gathering volumes was primarily driven by Antero shifting its Ohio Utica Shale development from its Highly-Rich Gas/Condensate area to currently higher rate of return drilling in the Highly-Rich Gas areas.
Fresh water delivery volumes averaged 140,162 Bbl/d during the quarter, a 109% increase compared to the prior year quarter and a 33% increase sequentially. The increase in volumes was driven by an increase in the average water used per foot in Marcellus completions to 43 barrels per foot, a 35% increase as compared to 2015 and a 5% increase compared to the second quarter of 2016 as Antero piloted higher water and sand concentration completions.
Three Months Ended September 30, |
|||||||
Average Daily Throughput: |
2015 |
2016 |
% Change |
||||
Low Pressure Gathering (MMcf/d) |
1,038 |
1,431 |
38% |
||||
Compression (MMcf/d) |
435 |
777 |
78% |
||||
High Pressure Gathering (MMcf/d) |
1,216 |
1,351 |
11% |
||||
Condensate Gathering (Bbl/d) |
2,856 |
521 |
(82)% |
||||
Average Daily Volumes: |
|||||||
Fresh Water Delivery (Bbl/d) |
67,049 |
140,162 |
109% |
For the three months ended September 30, 2016, the Partnership reported revenues of $150 million, comprised of $78 million from the Gathering and Compression segment and $72 million from the Water Handling and Treatment segment. Revenues increased 84% compared to the prior year quarter, primarily driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $25 million from produced water handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $5 million and $28 million, respectively, for a total of $33 million compared to $2 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $24 million from produced water handling and high rate water transfer services. The increase in direct operating expenses was driven primarily by the inclusion of produced water handling and high rate water transfer services, as well as the expansion of the Partnership's gathering and compression and fresh water delivery systems to support the production growth of Antero Resources. General and administrative expenses including equity-based compensation were $13 million, a $0.5 million decrease compared to the third quarter of 2015. General and administrative expenses excluding equity-based compensation were $7 million during the third quarter of 2016, a 22% decrease compared to the third quarter of 2015, which included additional expenses from the integrated water business drop-down transaction. Total operating expenses were $76 million, including $26 million of depreciation, $7 million of equity-based compensation, and $4 million of accretion of contingent acquisition consideration.
Net income for the third quarter of 2016 was $71 million, a 65% increase compared to the prior year quarter. Net income per limited partner unit was $0.37 per unit, a 61% increase compared to the prior year quarter. Adjusted EBITDA was $111 million, a 55% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is primarily driven by increased gathering and compression volumes and fresh water delivery volumes. Cash interest expense and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards were $4 million and $1 million, respectively. Cash distribution to be received from unconsolidated affiliate for the third quarter was $2 million. Maintenance capital expenditures during the quarter totaled $5 million and distributable cash flow was $103 million, resulting in a DCF coverage ratio of 2.0x.
Commenting on Antero Midstream's quarterly results, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream reported another strong quarter, driven by increased throughput and completion activities driving higher water volumes. Additionally, Antero Midstream continues to drive down operating expenses in both the gathering and compression and water businesses from optimizing the systems and enhanced efficiencies. The combination of growth and attractive EBITDA margins is a direct result of Antero Midstream's organic growth strategy delivering strong returns to our unitholders, exhibited by our peer leading distribution growth and coverage."
Reconciliation of Net Income to Adjusted EBITDA and DCF (Dollars in thousands): |
Three months ended | ||||||
September 30, | |||||||
2015 |
2016 | ||||||
Net income |
$ |
42,648 |
$ |
70,524 | |||
Add: |
|||||||
Interest expense |
2,044 |
5,303 | |||||
Depreciation expense |
21,561 |
26,136 | |||||
Accretion of contingent acquisition consideration |
— |
3,527 | |||||
Equity-based compensation |
5,284 |
6,599 | |||||
Less: |
|||||||
Equity in earnings of unconsolidated affiliate |
— |
(1,544) | |||||
Adjusted EBITDA |
$ |
71,537 |
$ |
110,545 | |||
Less: |
|||||||
Pre-water acquisition net income attributed to parent |
(7,841) |
— | |||||
Pre-water acquisition depreciation expense attributed to parent |
(6,485) |
— | |||||
Pre-water acquisition equity-based compensation expense attributed to parent |
(1,079) |
— | |||||
Pre-water acquisition interest expense attributed to parent |
(770) |
— | |||||
Adjusted EBITDA attributable to the Partnership |
$ |
55,362 |
$ |
110,545 | |||
Less: |
|||||||
Cash interest paid, net – attributable to the Partnership |
(1,038) |
(4,043) | |||||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity–based compensation awards(1) |
— |
(1,000) | |||||
Maintenance capital expenditures |
(4,214) |
(4,638) | |||||
Add: |
|||||||
Cash distribution to be received from unconsolidated affiliate(2) |
— |
2,221 | |||||
Distributable cash flow |
$ |
50,110 |
$ |
103,085 | |||
Total distributions declared |
$ |
36,333 |
$ |
51,702 | |||
DCF coverage ratio |
1.38x |
1.99x | |||||
1) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Antero Midstream LTIP equity-based compensation awards to be paid in the fourth quarter of 2016. |
2) |
Based on management estimate for the three months ended September 30, 2016. |
Gathering and Compression — During the third quarter, Antero Midstream added a total of 170 MMcf/d of compression capacity by adding additional horsepower to existing stations and placing in-service a 120 MMcf/d compressor station in the Marcellus Shale play. Antero's current compression capacity is approximately 1.0 Bcf/d in the Marcellus and Utica combined and compression capacity was 90% utilized in the third quarter. Additionally, Antero Midstream connected 21 wells from 6 pads to its Marcellus and Utica gathering systems during the quarter. Antero Resources is currently operating five drilling rigs on Antero Midstream dedicated acreage.
Water Handling and Treatment — Antero Midstream's Marcellus and Utica fresh water delivery systems serviced 35 well completions during the third quarter of 2016, a 25% increase from the third quarter of 2015 and 13% increase sequentially. Antero Resources is currently operating six completion crews on Antero Midstream dedicated acreage.
Balance Sheet and Liquidity
As of September 30, 2016, Antero Midstream had $170 million drawn on its $1.5 billion bank credit facility with current borrowing capacity of $1.2 billion, resulting in approximately $1.0 billion in available credit facility capacity. Antero Midstream had $9 million of cash on its balance sheet and a consolidated net debt to trailing twelve months EBITDA of 2.2x as of September 30, 2016. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Capital Spending
Capital expenditures were $115 million in the third quarter of 2016 as compared to $103 million in the third quarter of 2015. Capital invested in gathering and compression assets was $56 million and capital invested in water handling and treatment assets was $59 million, including $52 million invested in the Antero Clearwater Facility.
Conference Call
Antero Midstream will hold a call on Thursday, October 27, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, November 4, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10091485.
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 on the Partnership's website until Friday, November 4, 2016 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Partnership's website before the October 27, 2016 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as net income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent, plus cash distributions to be received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of net income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect net income. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):
December 31, |
September 30, | ||||||
2015 |
2016 | ||||||
Bank credit facility |
$ |
620,000 |
$ |
170,000 | |||
5.375% AM senior notes due 2024 |
— |
650,000 | |||||
Net unamortized debt issuance costs |
— |
(10,234) | |||||
Consolidated total debt |
$ |
620,000 |
$ |
809,766 | |||
Cash and cash equivalents |
6,883 |
9,221 | |||||
Consolidated net debt |
$ |
613,117 |
$ |
800,545 |
The following table reconciles net income to adjusted EBITDA for the twelve months ended September 30, 2016 as used in this release (in thousands):
Twelve Months Ended September 30, | ||
2016 | ||
Net income |
$ |
212,360 |
Add: |
||
Interest expense |
15,777 | |
Depreciation expense |
97,251 | |
Accretion of contingent acquisition consideration |
13,717 | |
Equity-based compensation |
24,176 | |
Less: |
||
Equity in earnings of unconsolidated affiliate |
(2,027) | |
Adjusted EBITDA |
$ |
361,254 |
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | ||||||
Condensed Combined Consolidated Balance Sheets | ||||||
December 31, 2015 and September 30, 2016 | ||||||
(Unaudited) | ||||||
(In thousands) | ||||||
December 31, |
September 30, | |||||
2015 |
2016 | |||||
Assets | ||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
6,883 |
$ |
9,221 | ||
Accounts receivable–Antero |
65,712 |
58,398 | ||||
Accounts receivable–third party |
2,707 |
1,243 | ||||
Prepaid expenses |
— |
53 | ||||
Total current assets |
75,302 |
68,915 | ||||
Property and equipment: |
||||||
Gathering and compressions systems |
1,485,835 |
1,638,748 | ||||
Water handling and treatment systems |
565,616 |
681,062 | ||||
2,051,451 |
2,319,810 | |||||
Less accumulated depreciation |
(157,625) |
(231,724) | ||||
Property and equipment, net |
1,893,826 |
2,088,086 | ||||
Investment in unconsolidated affiliate |
— |
47,071 | ||||
Other assets, net |
10,904 |
12,215 | ||||
Total assets |
$ |
1,980,032 |
$ |
2,216,287 | ||
Liabilities and partners' capital | ||||||
Current liabilities: |
||||||
Accounts payable |
$ |
10,941 |
$ |
19,203 | ||
Accounts payable–Antero |
2,138 |
2,237 | ||||
Accrued capital expenditures |
50,022 |
21,256 | ||||
Accrued ad valorem taxes |
7,195 |
3,272 | ||||
Accrued liabilities |
28,168 |
15,956 | ||||
Other current liabilities |
150 |
197 | ||||
Total current liabilities |
98,614 |
62,121 | ||||
Long-term liabilities: |
||||||
Long-term debt |
620,000 |
809,766 | ||||
Contingent acquisition consideration |
178,049 |
188,433 | ||||
Other |
624 |
669 | ||||
Total liabilities |
897,287 |
1,060,989 | ||||
Partners' capital: |
||||||
Common unitholders – public (59,286 units and 68,071 units issued and outstanding at December 31, 2015 and September 30, 2016, respectively) |
1,351,317 |
1,394,727 | ||||
Common unitholder – Antero (40,929 units and 32,929 units issued and outstanding at December 31, 2015 and September 30, 2016, respectively) |
30,186 |
36,086 | ||||
Subordinated unitholder - Antero (75,941 units issued and outstanding at December 31, 2015 and September 30, 2016) |
(299,727) |
(280,322) | ||||
General partner |
969 |
4,807 | ||||
Total partners' capital |
1,082,745 |
1,155,298 | ||||
Total liabilities and partners' capital |
$ |
1,980,032 |
$ |
2,216,287 |
ANTERO MIDSTREAM PARTNERS LP | ||||||
Three months ended September 30, | ||||||
2015 |
2016 | |||||
Revenue: |
||||||
Gathering and compression–Antero |
$ |
59,220 |
$ |
77,871 | ||
Water handling and treatment–Antero |
21,819 |
72,411 | ||||
Gathering and compression–third party |
38 |
193 | ||||
Water handling and treatment–third party |
627 |
— | ||||
Total revenue |
81,704 |
150,475 | ||||
Operating expenses: |
||||||
Direct operating |
1,609 |
33,213 | ||||
General and administrative (including $5,284 and $6,599 of equity-based compensation in 2015 and 2016, respectively) |
13,842 |
13,316 | ||||
Depreciation |
21,561 |
26,136 | ||||
Accretion of contingent acquisition consideration |
— |
3,527 | ||||
Total operating expenses |
37,012 |
76,192 | ||||
Operating income |
44,692 |
74,283 | ||||
Interest expense, net |
(2,044) |
(5,303) | ||||
Equity in earnings of unconsolidated affiliate |
— |
1,544 | ||||
Net income and comprehensive income |
42,648 |
70,524 | ||||
Pre-Water Acquisition net income attributed to parent |
(7,841) |
— | ||||
General partner interest in net income attributable to incentive distribution rights |
(295) |
(4,807) | ||||
Limited partners' interest in net income |
$ |
34,512 |
$ |
65,717 | ||
Net income per limited partner unit: |
||||||
Basic: |
||||||
Common units |
$ |
0.23 |
$ |
0.37 | ||
Subordinated units |
$ |
0.22 |
$ |
0.37 | ||
Diluted: |
||||||
Common units |
$ |
0.23 |
$ |
0.37 | ||
Subordinated units |
$ |
0.22 |
$ |
0.37 | ||
Weighted average number of limited partner units outstanding: |
||||||
Basic: |
||||||
Common units |
78,018 |
100,454 | ||||
Subordinated units |
75,941 |
75,941 | ||||
Diluted: |
||||||
Common units |
78,034 |
100,825 | ||||
Subordinated units |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | ||||||
Nine months ended September 30, | ||||||
2015 |
2016 | |||||
Revenue: |
||||||
Gathering and compression–Antero |
$ |
168,056 |
$ |
218,938 | ||
Water handling and treatment–Antero |
86,759 |
203,750 | ||||
Gathering and compression–third party |
38 |
669 | ||||
Water handling and treatment–third party |
778 |
— | ||||
Total revenue |
255,631 |
423,357 | ||||
Operating expenses: |
||||||
Direct operating |
38,830 |
124,951 | ||||
General and administrative (including $17,663 and $19,366 of equity-based compensation in 2015 and 2016, respectively) |
37,923 |
39,712 | ||||
Depreciation |
63,515 |
74,100 | ||||
Accretion of contingent acquisition consideration |
— |
10,384 | ||||
Total operating expenses |
140,268 |
249,147 | ||||
Operating income |
115,363 |
174,210 | ||||
Interest expense, net |
(5,266) |
(12,885) | ||||
Equity in earnings of unconsolidated affiliate |
— |
2,027 | ||||
Net income and comprehensive income |
110,097 |
163,352 | ||||
Pre-Water Acquisition net income attributed to parent |
(40,193) |
— | ||||
General partner interest in net income attributable to incentive distribution rights |
(295) |
(9,387) | ||||
Limited partners' interest in net income |
$ |
69,609 |
$ |
153,965 | ||
Net income per limited partner unit: |
||||||
Basic: |
||||||
Common units |
$ |
0.46 |
$ |
0.87 | ||
Subordinated units |
$ |
0.45 |
$ |
0.87 | ||
Diluted: |
||||||
Common units |
$ |
0.46 |
$ |
0.87 | ||
Subordinated units |
$ |
0.45 |
$ |
0.87 | ||
Weighted average number of limited partner units outstanding: |
||||||
Basic: |
||||||
Common units |
76,641 |
100,302 | ||||
Subordinated units |
75,941 |
75,941 | ||||
Diluted: |
||||||
Common units |
76,657 |
100,365 | ||||
Subordinated units |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Compression |
Treatment |
Total | |||||||
Three months ended September 30, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
59,220 |
$ |
21,819 |
$ |
81,039 | |||
Revenue - third-party |
38 |
627 |
665 | ||||||
Total revenues |
59,258 |
22,446 |
81,704 | ||||||
Operating expenses: |
|||||||||
Direct operating |
(3,164) |
4,773 |
1,609 | ||||||
General and administrative |
11,265 |
2,577 |
13,842 | ||||||
Depreciation |
15,076 |
6,485 |
21,561 | ||||||
Total expenses |
23,177 |
13,835 |
37,012 | ||||||
Operating income |
$ |
36,081 |
$ |
8,611 |
$ |
44,692 | |||
Total assets |
$ |
1,395,057 |
$ |
487,734 |
$ |
1,882,791 | |||
Additions to property and equipment |
$ |
82,751 |
$ |
48,381 |
$ |
131,132 | |||
Three months ended September 30, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
77,871 |
$ |
72,411 |
$ |
150,282 | |||
Revenue - third-party |
193 |
- |
193 | ||||||
Total revenues |
78,064 |
72,411 |
150,475 | ||||||
Operating expenses: |
|||||||||
Direct operating |
4,692 |
28,521 |
33,213 | ||||||
General and administrative |
10,281 |
3,035 |
13,316 | ||||||
Depreciation |
18,298 |
7,838 |
26,136 | ||||||
Accretion of contingent acquisition consideration |
- |
3,527 |
3,527 | ||||||
Total expenses |
33,271 |
42,921 |
76,192 | ||||||
Operating income |
$ |
44,793 |
$ |
29,490 |
$ |
74,283 | |||
Total assets |
$ |
1,653,292 |
$ |
562,995 |
$ |
2,216,287 | |||
Additions to property and equipment |
$ |
55,800 |
$ |
58,730 |
$ |
114,530 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Compression |
Treatment |
Total | |||||||
Nine months ended September 30, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
168,056 |
$ |
86,759 |
$ |
254,815 | |||
Revenue - third-party |
38 |
778 |
816 | ||||||
Total revenues |
168,094 |
87,537 |
255,631 | ||||||
Operating expenses: |
|||||||||
Direct operating |
19,817 |
19,013 |
38,830 | ||||||
General and administrative |
30,685 |
7,238 |
37,923 | ||||||
Depreciation |
44,748 |
18,767 |
63,515 | ||||||
Total expenses |
95,250 |
45,018 |
140,268 | ||||||
Operating income |
$ |
72,844 |
$ |
42,519 |
$ |
115,363 | |||
Total assets |
$ |
1,395,057 |
$ |
487,734 |
$ |
1,882,791 | |||
Additions to property and equipment |
$ |
242,549 |
$ |
81,646 |
$ |
324,195 | |||
Nine months ended September 30, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
218,938 |
$ |
203,750 |
$ |
422,688 | |||
Revenue - third-party |
669 |
— |
669 | ||||||
Total revenues |
219,607 |
203,750 |
423,357 | ||||||
Operating expenses: |
|||||||||
Direct operating |
19,758 |
105,193 |
124,951 | ||||||
General and administrative |
29,755 |
9,957 |
39,712 | ||||||
Depreciation |
52,125 |
21,975 |
74,100 | ||||||
Accretion of contingent acquisition consideration |
— |
10,384 |
10,384 | ||||||
Total expenses |
101,638 |
147,509 |
249,147 | ||||||
Operating income |
$ |
117,969 |
$ |
56,241 |
$ |
174,210 | |||
Total assets |
$ |
1,653,292 |
$ |
562,995 |
$ |
2,216,287 | |||
Additions to property and equipment |
$ |
152,769 |
$ |
137,355 |
$ |
290,124 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Amount of |
|||||||||||||
Three months ended September 30, |
Increase |
Percentage | |||||||||||
2015 |
2016 |
(Decrease) |
Change | ||||||||||
($ in thousands, except average realized fees) |
|||||||||||||
Revenue: |
|||||||||||||
Revenue - Antero |
$ |
81,039 |
$ |
150,282 |
$ |
69,243 |
85 |
% | |||||
Revenue - third-party |
665 |
193 |
(472) |
(71) |
% | ||||||||
Total revenue |
81,704 |
150,475 |
68,771 |
84 |
% | ||||||||
Operating expenses: |
|||||||||||||
Direct operating |
1,609 |
33,213 |
31,604 |
1,964 |
% | ||||||||
General and administrative (before equity-based compensation) |
8,558 |
6,717 |
(1,841) |
(22) |
% | ||||||||
Equity-based compensation |
5,284 |
6,599 |
1,315 |
25 |
% | ||||||||
Depreciation |
21,561 |
26,136 |
4,575 |
21 |
% | ||||||||
Accretion of contingent acquisition consideration |
— |
3,527 |
3,527 |
* |
|||||||||
Total operating expenses |
37,012 |
76,192 |
39,180 |
106 |
% | ||||||||
Operating income |
44,692 |
74,283 |
29,591 |
66 |
% | ||||||||
Interest expense |
(2,044) |
(5,303) |
(3,259) |
159 |
% | ||||||||
Equity in earnings of unconsolidated affiliate |
— |
1,544 |
1,544 |
* |
|||||||||
Net income |
$ |
42,648 |
$ |
70,524 |
$ |
27,876 |
65 |
% | |||||
Adjusted EBITDA |
$ |
71,537 |
$ |
110,545 |
$ |
39,008 |
55 |
% | |||||
Operating Data: |
|||||||||||||
Gathering—low pressure (MMcf) |
95,471 |
131,625 |
36,154 |
38 |
% | ||||||||
Gathering—high pressure (MMcf) |
111,896 |
124,266 |
12,370 |
11 |
% | ||||||||
Compression (MMcf) |
40,063 |
71,470 |
31,407 |
78 |
% | ||||||||
Condensate gathering (MBbl) |
263 |
48 |
(215) |
(82) |
% | ||||||||
Fresh water distribution (MBbl) |
6,168 |
12,895 |
6,727 |
109 |
% | ||||||||
Waste water handling and treatment (MBbl) |
— |
2,577 |
2,577 |
* |
|||||||||
Wells serviced by fresh water distribution |
28 |
35 |
7 |
25 |
% | ||||||||
Gathering—low pressure (MMcf/d) |
1,038 |
1,431 |
393 |
38 |
% | ||||||||
Gathering—high pressure (MMcf/d) |
1,216 |
1,351 |
135 |
11 |
% | ||||||||
Compression (MMcf/d) |
435 |
777 |
342 |
78 |
% | ||||||||
Condensate gathering (MBbl/d) |
3 |
1 |
(2) |
(82) |
% | ||||||||
Fresh water distribution (MBbl/d) |
67 |
140 |
73 |
109 |
% | ||||||||
Waste water handling and treatment (MBbl/d) |
— |
28 |
28 |
* |
|||||||||
Average realized fees: |
|||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
— |
* |
||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.16 |
$ |
4.17 |
$ |
0.01 |
* |
||||||
Average fresh water distribution fee - Antero ($/Bbl) |
$ |
3.62 |
$ |
3.68 |
$ |
0.06 |
2 |
% | |||||
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Amount of |
|||||||||||||
Nine months ended September 30, |
Increase |
Percentage | |||||||||||
2015 |
2016 |
(Decrease) |
Change | ||||||||||
($ in thousands, except average realized fees) |
|||||||||||||
Revenue: |
|||||||||||||
Revenue - Antero |
$ |
254,815 |
$ |
422,688 |
$ |
167,873 |
66 |
% | |||||
Revenue - third-party |
816 |
669 |
(147) |
(18) |
% | ||||||||
Total revenue |
255,631 |
423,357 |
167,726 |
66 |
% | ||||||||
Operating expenses: |
|||||||||||||
Direct operating |
38,830 |
124,951 |
86,121 |
222 |
% | ||||||||
General and administrative (before equity-based compensation) |
20,260 |
20,346 |
86 |
* |
|||||||||
Equity-based compensation |
17,663 |
19,366 |
1,703 |
10 |
% | ||||||||
Depreciation |
63,515 |
74,100 |
10,585 |
17 |
% | ||||||||
Accretion of contingent acquisition consideration |
— |
10,384 |
10,384 |
* |
|||||||||
Total operating expenses |
140,268 |
249,147 |
108,879 |
78 |
% | ||||||||
Operating income |
115,363 |
174,210 |
58,847 |
51 |
% | ||||||||
Interest expense |
(5,266) |
(12,885) |
(7,619) |
145 |
% | ||||||||
Equity in earnings of unconsolidated affiliate |
— |
2,027 |
2,027 |
* |
|||||||||
Net income |
$ |
110,097 |
$ |
163,352 |
$ |
53,255 |
48 |
% | |||||
Adjusted EBITDA |
$ |
196,541 |
$ |
278,060 |
$ |
81,519 |
41 |
% | |||||
Operating Data: |
|||||||||||||
Gathering—low pressure (MMcf) |
267,442 |
373,338 |
105,896 |
40 |
% | ||||||||
Gathering—high pressure (MMcf) |
322,930 |
349,440 |
26,510 |
8 |
% | ||||||||
Compression (MMcf) |
113,583 |
186,406 |
72,823 |
64 |
% | ||||||||
Condensate gathering (MBbl) |
751 |
498 |
(253) |
(34) |
% | ||||||||
Fresh water distribution (MBbl) |
24,034 |
31,341 |
7,307 |
30 |
% | ||||||||
Waste water handling and treatment (MBbl) |
— |
7,621 |
7,621 |
* |
|||||||||
Wells serviced by fresh water distribution |
89 |
96 |
7 |
8 |
% | ||||||||
Gathering—low pressure (MMcf/d) |
980 |
1,363 |
383 |
40 |
% | ||||||||
Gathering—high pressure (MMcf/d) |
1,183 |
1,275 |
92 |
8 |
% | ||||||||
Compression (MMcf/d) |
416 |
680 |
264 |
64 |
% | ||||||||
Condensate gathering (MBbl/d) |
3 |
2 |
(1) |
(34) |
% | ||||||||
Fresh water distribution (MBbl/d) |
88 |
114 |
26 |
30 |
% | ||||||||
Waste water handling and treatment (MBbl/d) |
— |
28 |
28 |
* |
|||||||||
Average realized fees: |
|||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
— |
* |
||||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||
Average compression fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
— |
* |
||||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.16 |
$ |
4.17 |
$ |
0.01 |
* |
||||||
Average fresh water distribution fee - Antero ($/Bbl) |
$ |
3.63 |
$ |
3.68 |
$ |
0.05 |
1 |
% |
ANTERO MIDSTREAM PARTNERS LP (In thousands) | |||||||
Nine months ended September 30, |
|||||||
2015 |
2016 |
||||||
Cash flows provided by (used in) operating activities: |
|||||||
Net income |
$ |
110,097 |
$ |
163,352 |
|||
Adjustment to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation |
63,515 |
74,100 |
|||||
Accretion of contingent acquisition consideration |
— |
10,384 |
|||||
Equity-based compensation |
17,663 |
19,366 |
|||||
Equity in earnings of unconsolidated affiliate |
— |
(2,027) |
|||||
Amortization of deferred financing costs |
774 |
1,185 |
|||||
Changes in assets and liabilities: |
|||||||
Accounts receivable–Antero |
1,963 |
7,314 |
|||||
Accounts receivable–third party |
4,910 |
1,464 |
|||||
Prepaid expenses |
457 |
(53) |
|||||
Accounts payable |
673 |
1,467 |
|||||
Accounts payable–Antero |
781 |
99 |
|||||
Accrued ad valorem tax |
62 |
(3,923) |
|||||
Accrued liabilities |
(1,336) |
(13,593) |
|||||
Net cash provided by operating activities |
199,559 |
259,135 |
|||||
Cash flows provided by (used in) investing activities: |
|||||||
Additions to gathering and compression systems |
(242,549) |
(152,769) |
|||||
Additions to water handling and treatment systems |
(81,646) |
(137,355) |
|||||
Investment in unconsolidated affiliate |
— |
(45,044) |
|||||
Change in other assets |
10,883 |
(2,409) |
|||||
Net cash used in investing activities |
(313,312) |
(337,577) |
|||||
Cash flows provided by (used in) financing activities: |
|||||||
Deemed distribution to Antero, net |
(43,723) |
— |
|||||
Distributions to Antero |
(633,457) |
— |
|||||
Distributions to unitholders |
(70,519) |
(129,752) |
|||||
Issuance of senior notes |
— |
650,000 |
|||||
Borrowings (repayments) on bank credit facilities, net |
410,000 |
(450,000) |
|||||
Issuance of common units, net of offering costs |
240,972 |
19,605 |
|||||
Payments of deferred financing costs |
(1,956) |
(8,940) |
|||||
Other |
(246) |
(133) |
|||||
Net cash provided by (used in) financing activities |
(98,929) |
80,780 |
|||||
Net increase (decrease) in cash and cash equivalents |
(212,682) |
2,338 |
|||||
Cash and cash equivalents, beginning of period |
230,192 |
6,883 |
|||||
Cash and cash equivalents, end of period |
$ |
17,510 |
$ |
9,221 |
|||
Supplemental disclosure of cash flow information: |
|||||||
Cash paid during the period for interest |
$ |
4,725 |
$ |
11,751 |
|||
Supplemental disclosure of noncash investing activities: |
|||||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
21,962 |
$ |
(21,971) |
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SOURCE Antero Midstream Partners LP
DENVER, Oct. 12, 2016 /PRNewswire/ --Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased third quarter 2016 distribution as well as its third quarter 2016 earnings release date and conference call.
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.265 per unit ($1.06 per unit annualized) for the third quarter of 2016. The distribution represents a 29% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is the Partnership's seventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 24, 2016 to unitholders of record as of November 10, 2016.
Antero Midstream Third Quarter Earnings Release and Call
Antero Midstream plans to issue its third quarter 2016 earnings release on Wednesday, October 26, 2016 after the close of trading on the New York Stock Exchange.
A conference call is scheduled on Thursday, October 27, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, November 4, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10091485.
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 on the Partnership's website until Friday, November 4, 2016 at 10:00 am MT.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets located in West Virginia and Ohio. The Partnership's website is located at www.anteromidstream.com.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Sept. 8, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today the pricing of its private placement to eligible purchasers of $650 million in aggregate principal amount of 5.375% senior unsecured notes due 2024 at par. The offering is expected to close on September 13, 2016, subject to customary closing conditions.
Antero Midstream estimates that it will receive net proceeds of approximately $640 million, after deducting the initial purchaser's discounts and estimated expenses, which it intends to use to repay a portion of the outstanding borrowings under its credit facility.
The securities to be offered have not been registered under the Securities Act of 1933 as amended, (the "Securities Act"), or any state securities laws; and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Sept. 6, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") announced today that, subject to market conditions, it intends to offer $500 million in aggregate principal amount of senior unsecured notes due 2024 (the "Notes") in a private placement to eligible purchasers.
Antero Midstream intends to use the net proceeds of the offering to repay a portion of the outstanding borrowings under its credit facility. The securities to be offered have not been registered under the Securities Act of 1933 as amended, (the "Securities Act"), or any state securities laws; and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and outside the United States pursuant to Regulation S.
This press release is being issued pursuant to Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Sept. 6, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced increased 2016 guidance.
Highlights Include:
Increased 2016 Guidance
Antero Midstream is forecasting net income of $205 million to $225 million, a 21% increase from previous guidance. The Partnership is forecasting 2016 adjusted EBITDA of $365 million to $385 million and distributable cash flow of $315 million to $335 million, increases of $35 to $40 million, or 11% and 13%, respectively, compared to the previous 2016 guidance. The increase in guidance is primarily due to an increase in expected fresh water delivery volumes to Antero Resources driven by higher proppant intensity requirements for advanced completions as well as increased gathering and compression throughput. In a separate release, Antero Resources announced an increase in 2016 production guidance from 1.75 Bcfe/d to 1.80 Bcfe/d, which represents 20% year-over-year production growth. The Partnership expects year over year distribution growth in 2016 of 30% and estimated DCF coverage of 1.55x to 1.65x. In addition, the Partnership is targeting 2017 year-over-year distribution growth of 28% to 30%.
Full Year 2016 |
||||||
Updated |
Prior |
Increase | ||||
Net Income ($MM) |
$205 – $225 |
$165 – $190 |
$35 – $40 | |||
Adjusted EBITDA ($MM) |
$365 – $385 |
$325 – $350 |
$35 – $40 | |||
Distributable Cash Flow ($MM) |
$315 – $335 |
$275 – $300 |
$35 – $40 | |||
Year over Year Distribution Growth |
30% |
30% |
– | |||
2016 DCF Coverage Ratio |
1.55x – 1.65x |
1.40x – 1.50x |
0.15x | |||
Capital Expenditures ($MM) |
$480 |
$480 |
– |
Please see the Non-GAAP disclosures section of this news release.
Commenting on increased guidance, Paul Rady, Chairman of the Board and CEO said, "Antero Midstream continues to benefit from the operational improvements and efficiencies at Antero Resources, which continues to be the most active operator in Appalachia. Focusing on the second half of 2016, we expect Antero Midstream's water business to benefit from increased water volumes as Antero Resources pilots additional advanced completion techniques utilizing more water and sand per lateral foot in completions compared to the previous forecast. Additionally, Antero Resources' increased production guidance for 2016 increases expected throughput at Antero Midstream and builds further momentum heading into 2017."
In conjunction with Antero Midstream's guidance update, Antero Resources released a guidance update which can be found at www.anteroresources.com.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as net income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent plus cash distribution to be received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of net income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect net income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream does not provide guidance on equity earnings, among other items, that are reconciling items between forecasted Adjusted EBITDA and forecasted net income due to the uncertainty regarding timing and estimates of reconciling items. Antero Midstream provides a range for the forecasts of net income, Adjusted EBITDA, and Distributable Cash Flow to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Adjusted EBITDA and forecasted net income. Therefore, the Partnership cannot reconcile Adjusted EBITDA to forecasted net income without unreasonable effort.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Aug. 2, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its second quarter 2016 financial results. The relevant condensed combined consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which has been filed with the Securities and Exchange Commission.
Highlights Include:
Recent Developments
Distribution for the Second Quarter of 2016
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.25 per unit ($1.00 per unit annualized) for the second quarter of 2016. The distribution represents a 32% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is the Partnership's sixth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 24, 2016 to unitholders of record as of August 10, 2016.
Exercise of Option to Acquire Stonewall Gathering Pipeline
On May 26, 2016, Antero Midstream exercised its option to acquire a 15% non-operated equity interest in the Stonewall Gathering Pipeline for $45 million. The 1.4 Bcf/d pipeline was placed into service on November 30, 2015 and is currently gathering approximately 1.0 Bcf/d. Antero Resources is an anchor shipper on the Stonewall Gathering Pipeline, with a minimum volume commitment of 900 MMcf/d. The pipeline connects Antero Resources' Marcellus production with an interconnect that feeds a firm sales agreement as well as additional firm transportation to current favorably priced markets. The transaction was financed with borrowings on Antero Midstream's revolving credit facility and had an effective date of May 26, 2016.
Second Quarter 2016 Financial Results
Antero Midstream's acquisition of Antero Resources' integrated water business in 2015 was accounted for as a transfer of entities under common control. As a result, the Partnership recast its condensed combined consolidated financial statements to retrospectively reflect the integrated water business as if the assets and liabilities were owned for all past periods presented. Beginning in the third quarter of 2015, and as a result of the acquisition, Antero Midstream began reporting its results through two business segments, Gathering and Compression and Water Handling and Treatment. To facilitate year over year comparison and discussion, the second quarter 2016 and second quarter 2015 results discussed below include both the Gathering and Compression and Water Handling and Treatment segment operations.
The term "Adjusted EBITDA" discussed below reflects the Gathering and Compression and Water Handling and Treatment segments on a recast combined basis, while the term "Adjusted EBITDA attributable to the Partnership" reflects contribution from the Water Handling and Treatment segments only after the third quarter of 2015 based on the actual timing of the acquired assets. For a reconciliation of net income to Adjusted EBITDA, please read "Non-GAAP Financial Measures".
Low pressure gathering volumes for the second quarter of 2016 averaged 1,353 MMcf/d, a 40% increase from the second quarter of 2015 and a 4% increase sequentially. High pressure gathering volumes for the second quarter of 2016 averaged 1,253 MMcf/d, a 5% increase from the second quarter of 2015 and a 3% increase sequentially. Compression volumes for the second quarter of 2016 averaged 658 MMcf/d, a 45% increase from the second quarter of 2015 and a 9% increase sequentially. The increase in gathering and compression volumes was due to production growth from Antero Resources in Antero Midstream's area of dedication. Condensate gathering volumes averaged 1,983 Bbl/d during the quarter, a 34% decrease compared to the prior year quarter and a 33% decrease sequentially. The sequential decrease in condensate gathering volumes was driven by Antero shifting Ohio Utica Shale development from its Highly-Rich Gas/Condensate area to higher rate of return drilling in the Highly-Rich Gas area, as well as the shifting of Antero Resources' development program to the Marcellus Shale from the Utica Shale, due to the firm transportation constraints to favorable markets in the Utica Shale. Fresh water delivery volumes averaged 105,379 Bbl/d during the quarter, an 11% increase compared to the prior year quarter and an 8% increase sequentially. The increase in volumes was driven by accelerated Marcellus completions and an increase in the average water used per foot in completions to 41 barrels, a 25% increase as compared to 2015 and 11% increase compared to the first quarter of 2016.
Three Months Ended June 30, |
|||||||
Average Daily Throughput: |
2015 |
2016 |
% Change |
||||
Low Pressure Gathering (MMcf/d) |
965 |
1,353 |
40% |
||||
Compression (MMcf/d) |
454 |
658 |
45% |
||||
High Pressure Gathering (MMcf/d) |
1,197 |
1,253 |
5% |
||||
Condensate Gathering (Bbl/d) |
2,989 |
1,983 |
(34)% |
||||
Average Daily Volumes: |
|||||||
Fresh Water Delivery (Bbl/d) |
95,228 |
105,379 |
11% |
For the three months ended June 30, 2016, the Partnership reported revenues of $137 million, comprised of $72 million in revenues from the Gathering and Compression segment and $65 million in revenues from the Water Handling and Treatment segment. Revenues increased 55% compared to the prior year quarter, primarily driven by the startup of produced water handling and high rate transfer services in the first quarter of 2016. Water Handling and Treatment segment revenues include $30 million from produced water handling and high rate water transfer services provided to Antero Resources billed at cost plus 3%.
Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $8 million and $35 million, respectively, for a total of $43 million. Water Handling and Treatment direct operating expenses include $29 million from produced water handling and high rate water transfer services. Direct operating expenses increased 138% year over year, driven primarily by the inclusion of produced water handling and high rate water transfer services, as well as the expansion of the Partnership's gathering and compression and fresh water delivery assets to support the production growth of Antero Resources. General and administrative expenses were $7 million during the second quarter of 2016, an increase of 17% compared to the second quarter of 2015. Total cash and non-cash operating expenses were $84 million, including $24 million of depreciation, $7 million of equity-based compensation, and $3 million of accretion of contingent acquisition consideration.
Net income for the second quarter of 2016 was $50 million, a 42% increase compared to the prior year quarter. Adjusted EBITDA was $88 million, a 36% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is due to increased gathering and compression volumes and fresh water delivery volumes. Cash interest expense and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards were $4 million and $1 million, respectively. Maintenance capital expenditures during the quarter totaled $6 million and distributable cash flow was $78 million, resulting in a DCF coverage ratio of 1.7x.
Reconciliation of Net Income to Adjusted EBITDA and DCF (Dollars in thousands): |
Three months ended | ||||||
June 30, | |||||||
2015 |
2016 | ||||||
Net income |
$ |
35,124 |
$ |
49,912 | |||
Add: |
|||||||
Interest expense |
1,636 |
3,879 | |||||
Depreciation expense |
21,253 |
24,140 | |||||
Accretion of contingent acquisition consideration |
— |
3,461 | |||||
Equity-based compensation |
6,597 |
6,793 | |||||
Less: |
|||||||
Equity in earnings of unconsolidated affiliate |
— |
484 | |||||
Adjusted EBITDA |
$ |
64,610 |
$ |
87,701 | |||
Less: |
|||||||
Pre-water acquisition net income attributed to parent |
15,674 |
— | |||||
Pre-water acquisition depreciation expense attributed to parent |
6,162 |
— | |||||
Pre-water acquisition equity-based compensation expense attributed to parent |
1,209 |
— | |||||
Pre-water acquisition interest expense attributed to parent |
793 |
— | |||||
Adjusted EBITDA attributable to the Partnership |
$ |
40,772 |
$ |
87,701 | |||
Less: |
|||||||
Cash interest paid, net - attributable to the Partnership |
598 |
4,264 | |||||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards(1) |
— |
1,000 | |||||
Maintenance capital expenditures |
3,379 |
5,710 | |||||
Add: |
|||||||
Cash distribution to be received from unconsolidated affiliate(2) |
— |
778 | |||||
Distributable cash flow |
$ |
36,795 |
$ |
77,505 | |||
Total distributions declared |
$ |
28,858 |
$ |
46,775 | |||
DCF coverage ratio |
1.28x |
1.66x | |||||
1) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Antero Midstream LTIP equity-based compensation awards to be paid in the fourth quarter of 2016. | ||||||||||||||||||||||||||||||||
2) |
Based on management estimate from exercise date of May 26, 2016 through June 30, 2016. |
Balance Sheet and Liquidity
As of June 30, 2016, Antero Midstream had $9 million of cash on its balance sheet and $760 million drawn on its $1.5 billion bank credit facility, resulting in $749 million in available liquidity.
Capital Spending
Capital expenditures, excluding acquisitions, were $90 million in the second quarter of 2016 as compared to $86 million in the second quarter of 2015. Capital invested in gathering and compression assets was $48 million and capital invested in water handling and treatment assets was $42 million, including $33 million invested in the Antero Clearwater Facility. Additionally, Antero Midstream's capital investment for acquiring a 15% interest in the Stonewall Gathering Pipeline was $45 million during the quarter.
Conference Call
Antero Midstream will hold a call on Wednesday, August 3, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, August 12, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10086426.
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 on the Partnership's website until Friday, August 12, 2016 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Partnership's website before the August 3, 2016 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership's performance. Antero Midstream defines Adjusted EBITDA as net income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate.
Antero Midstream uses Adjusted EBITDA to assess:
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent plus cash distribution to be received from unconsolidated affiliate. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders. Distributable Cash Flow does not reflect changes in working capital balances.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of net income. Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect net income and Adjusted EBITDA. You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||||||||||||||||||||||||||||||||||
Condensed Combined Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||||||||||||
December 31, 2015 and June 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||||||||||
December 31, |
June 30, | ||||||||||||||||||||||||||||||||||||||||||||
2015 |
2016 | ||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||
Current assets: |
|||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ |
6,883 |
$ |
8,684 | |||||||||||||||||||||||||||||||||||||||||
Accounts receivable–Antero |
65,712 |
54,794 | |||||||||||||||||||||||||||||||||||||||||||
Accounts receivable–third party |
2,707 |
1,259 | |||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses |
— |
106 | |||||||||||||||||||||||||||||||||||||||||||
Total current assets |
75,302 |
64,843 | |||||||||||||||||||||||||||||||||||||||||||
Property and equipment: |
|||||||||||||||||||||||||||||||||||||||||||||
Gathering and compressions systems |
1,485,835 |
1,579,568 | |||||||||||||||||||||||||||||||||||||||||||
Water handling and treatment systems |
565,616 |
655,251 | |||||||||||||||||||||||||||||||||||||||||||
2,051,451 |
2,234,819 | ||||||||||||||||||||||||||||||||||||||||||||
Less accumulated depreciation |
(157,625) |
(205,588) | |||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net |
1,893,826 |
2,029,231 | |||||||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated affiliate |
— |
45,528 | |||||||||||||||||||||||||||||||||||||||||||
Other assets, net |
10,904 |
13,268 | |||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ |
1,980,032 |
$ |
2,152,870 | |||||||||||||||||||||||||||||||||||||||||
Liabilities and partners' capital | |||||||||||||||||||||||||||||||||||||||||||||
Current liabilities: |
|||||||||||||||||||||||||||||||||||||||||||||
Accounts payable |
$ |
10,941 |
$ |
19,206 | |||||||||||||||||||||||||||||||||||||||||
Accounts payable–Antero |
2,138 |
2,142 | |||||||||||||||||||||||||||||||||||||||||||
Accrued capital expenditures |
50,022 |
54,043 | |||||||||||||||||||||||||||||||||||||||||||
Accrued ad valorem taxes |
7,195 |
9,737 | |||||||||||||||||||||||||||||||||||||||||||
Accrued liabilities |
28,168 |
16,789 | |||||||||||||||||||||||||||||||||||||||||||
Other current liabilities |
150 |
158 | |||||||||||||||||||||||||||||||||||||||||||
Total current liabilities |
98,614 |
102,075 | |||||||||||||||||||||||||||||||||||||||||||
Long-term liabilities: |
|||||||||||||||||||||||||||||||||||||||||||||
Long-term debt |
620,000 |
760,000 | |||||||||||||||||||||||||||||||||||||||||||
Contingent acquisition consideration |
178,049 |
184,906 | |||||||||||||||||||||||||||||||||||||||||||
Other |
624 |
543 | |||||||||||||||||||||||||||||||||||||||||||
Total liabilities |
897,287 |
1,047,524 | |||||||||||||||||||||||||||||||||||||||||||
Partners' capital: |
|||||||||||||||||||||||||||||||||||||||||||||
Common unitholders - public (59,286 units and 67,302 units issued and outstanding at December 31, 2015 and June 30, 2016, respectively) |
1,351,317 |
1,364,766 | |||||||||||||||||||||||||||||||||||||||||||
Common unitholder - Antero (40,929 units and 32,929 units issued and outstanding at December 31, 2015 and June 30, 2016, respectively) |
30,186 |
29,799 | |||||||||||||||||||||||||||||||||||||||||||
Subordinated unitholder - Antero (75,941 units issued and outstanding at December 31, 2015 and June 30, 2016) |
(299,727) |
(291,950) | |||||||||||||||||||||||||||||||||||||||||||
General partner |
969 |
2,731 | |||||||||||||||||||||||||||||||||||||||||||
Total partners' capital |
1,082,745 |
1,105,346 | |||||||||||||||||||||||||||||||||||||||||||
Total liabilities and partners' capital |
$ |
1,980,032 |
$ |
2,152,870 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||||||||||||||||||||||||||||||
Condensed Combined Consolidated Statements of Operations and Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2015, and 2016 | ||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||
(In thousands, except per unit amounts) | ||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, | ||||||||||||||||||||||||||||||||||||||||
2015 |
2016 | |||||||||||||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||||||||||
Gathering and compression–Antero |
$ |
56,593 |
$ |
71,715 | ||||||||||||||||||||||||||||||||||||
Water handling and treatment–Antero |
31,500 |
64,893 | ||||||||||||||||||||||||||||||||||||||
Gathering and compression–third party |
— |
202 | ||||||||||||||||||||||||||||||||||||||
Total revenue |
88,093 |
136,810 | ||||||||||||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||||||
Direct operating |
17,921 |
42,597 | ||||||||||||||||||||||||||||||||||||||
General and administrative (including $6,597 and $6,793 of equity-based compensation in 2015 and 2016, respectively) |
12,159 |
13,305 | ||||||||||||||||||||||||||||||||||||||
Depreciation |
21,253 |
24,140 | ||||||||||||||||||||||||||||||||||||||
Accretion of contingent acquisition consideration |
— |
3,461 | ||||||||||||||||||||||||||||||||||||||
Total operating expenses |
51,333 |
83,503 | ||||||||||||||||||||||||||||||||||||||
Operating income |
36,760 |
53,307 | ||||||||||||||||||||||||||||||||||||||
Interest expense, net |
(1,636) |
(3,879) | ||||||||||||||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate |
— |
484 | ||||||||||||||||||||||||||||||||||||||
Net income and comprehensive income |
35,124 |
49,912 | ||||||||||||||||||||||||||||||||||||||
Pre-water acquisition net income attributed to parent |
(15,674) |
— | ||||||||||||||||||||||||||||||||||||||
General partner interest in net income attributable to incentive distribution rights |
— |
(2,731) | ||||||||||||||||||||||||||||||||||||||
Limited partners' interest in net income |
$ |
19,450 |
$ |
47,181 | ||||||||||||||||||||||||||||||||||||
Net income per limited partner unit: |
||||||||||||||||||||||||||||||||||||||||
Basic: |
||||||||||||||||||||||||||||||||||||||||
Common units |
$ |
0.13 |
$ |
0.27 | ||||||||||||||||||||||||||||||||||||
Subordinated units |
$ |
0.13 |
$ |
0.27 | ||||||||||||||||||||||||||||||||||||
Diluted: |
||||||||||||||||||||||||||||||||||||||||
Common units |
$ |
0.13 |
$ |
0.27 | ||||||||||||||||||||||||||||||||||||
Subordinated units |
$ |
0.13 |
$ |
0.27 | ||||||||||||||||||||||||||||||||||||
Weighted average number of limited partner units outstanding: |
||||||||||||||||||||||||||||||||||||||||
Basic: |
||||||||||||||||||||||||||||||||||||||||
Common units |
75,941 |
100,231 | ||||||||||||||||||||||||||||||||||||||
Subordinated units |
75,941 |
75,941 | ||||||||||||||||||||||||||||||||||||||
Diluted: |
||||||||||||||||||||||||||||||||||||||||
Common units |
75,958 |
100,285 | ||||||||||||||||||||||||||||||||||||||
Subordinated units |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||||||||||||||||||||||||||||||
Condensed Combined Consolidated Statements of Operations and Comprehensive Income | |||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2015, and 2016 | |||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||
2015 |
2016 | ||||||||||||||||||||||||||||||||||||||||
Revenue: |
|||||||||||||||||||||||||||||||||||||||||
Gathering and compression–Antero |
$ |
108,836 |
$ |
141,066 | |||||||||||||||||||||||||||||||||||||
Water handling and treatment–Antero |
64,941 |
131,339 | |||||||||||||||||||||||||||||||||||||||
Gathering and compression–third party |
— |
477 | |||||||||||||||||||||||||||||||||||||||
Water handling and treatment–third party |
151 |
— | |||||||||||||||||||||||||||||||||||||||
Total revenue |
173,928 |
272,882 | |||||||||||||||||||||||||||||||||||||||
Operating expenses: |
|||||||||||||||||||||||||||||||||||||||||
Direct operating |
37,222 |
91,738 | |||||||||||||||||||||||||||||||||||||||
General and administrative (including $12,376 and $12,766 of equity-based compensation in 2015 and 2016, respectively) |
24,078 |
26,397 | |||||||||||||||||||||||||||||||||||||||
Depreciation |
41,955 |
47,963 | |||||||||||||||||||||||||||||||||||||||
Accretion of contingent acquisition consideration |
— |
6,857 | |||||||||||||||||||||||||||||||||||||||
Total operating expenses |
103,255 |
172,955 | |||||||||||||||||||||||||||||||||||||||
Operating income |
70,673 |
99,927 | |||||||||||||||||||||||||||||||||||||||
Interest expense, net |
(3,222) |
(7,582) | |||||||||||||||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate |
— |
484 | |||||||||||||||||||||||||||||||||||||||
Net income and comprehensive income |
67,451 |
92,829 | |||||||||||||||||||||||||||||||||||||||
Pre-Water Acquisition net income attributed to parent |
(32,353) |
— | |||||||||||||||||||||||||||||||||||||||
General partner interest in net income attributable to incentive distribution rights |
— |
(4,581) | |||||||||||||||||||||||||||||||||||||||
Limited partners' interest in net income |
$ |
35,098 |
$ |
88,248 | |||||||||||||||||||||||||||||||||||||
Net income per limited partner unit: |
|||||||||||||||||||||||||||||||||||||||||
Basic: |
|||||||||||||||||||||||||||||||||||||||||
Common units |
$ |
0.23 |
$ |
0.50 | |||||||||||||||||||||||||||||||||||||
Subordinated units |
$ |
0.23 |
$ |
0.50 | |||||||||||||||||||||||||||||||||||||
Diluted: |
|||||||||||||||||||||||||||||||||||||||||
Common units |
$ |
0.23 |
$ |
0.50 | |||||||||||||||||||||||||||||||||||||
Subordinated units |
$ |
0.23 |
$ |
0.50 | |||||||||||||||||||||||||||||||||||||
Weighted average number of limited partner units outstanding: |
|||||||||||||||||||||||||||||||||||||||||
Basic: |
|||||||||||||||||||||||||||||||||||||||||
Common units |
75,941 |
100,226 | |||||||||||||||||||||||||||||||||||||||
Subordinated units |
75,941 |
75,941 | |||||||||||||||||||||||||||||||||||||||
Diluted: |
|||||||||||||||||||||||||||||||||||||||||
Common units |
75,956 |
100,262 | |||||||||||||||||||||||||||||||||||||||
Subordinated units |
75,941 |
75,941 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||||||||||||||||||||||||||||||||
Combined Consolidated Results of Segment Operations | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2015, and 2016 | ||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||
Water |
||||||||||||||||||||||||||||||||||||||||||
Gathering and |
Handling and |
Consolidated | ||||||||||||||||||||||||||||||||||||||||
Compression |
Treatment |
Total | ||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2015 |
||||||||||||||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||||
Revenue - Antero |
$ |
56,593 |
$ |
31,500 |
$ |
88,093 | ||||||||||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||||||||
Direct operating |
11,292 |
6,629 |
17,921 | |||||||||||||||||||||||||||||||||||||||
General and administrative (before equity-based compensation) |
4,529 |
1,033 |
5,562 | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation |
5,388 |
1,209 |
6,597 | |||||||||||||||||||||||||||||||||||||||
Depreciation |
15,091 |
6,162 |
21,253 | |||||||||||||||||||||||||||||||||||||||
Total expenses |
36,300 |
15,033 |
51,333 | |||||||||||||||||||||||||||||||||||||||
$ |
20,293 |
$ |
16,467 |
$ |
36,760 | |||||||||||||||||||||||||||||||||||||
Operating income |
||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ |
1,392,898 |
$ |
416,909 |
$ |
1,809,807 | ||||||||||||||||||||||||||||||||||||
Additions to property and equipment |
$ |
74,061 |
$ |
11,950 |
$ |
86,011 | ||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2016 |
||||||||||||||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||||
Revenue - Antero |
$ |
71,715 |
$ |
64,893 |
$ |
136,608 | ||||||||||||||||||||||||||||||||||||
Revenue - third-party |
202 |
— |
202 | |||||||||||||||||||||||||||||||||||||||
Total revenues |
71,917 |
64,893 |
136,810 | |||||||||||||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||||||||
Direct operating |
7,447 |
35,150 |
42,597 | |||||||||||||||||||||||||||||||||||||||
General and administrative (before equity-based compensation) |
4,837 |
1,675 |
6,512 | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation |
5,301 |
1,492 |
6,793 | |||||||||||||||||||||||||||||||||||||||
Depreciation |
16,964 |
7,176 |
24,140 | |||||||||||||||||||||||||||||||||||||||
Contingent acquisition consideration accretion |
- |
3,461 |
3,461 | |||||||||||||||||||||||||||||||||||||||
Total expenses |
34,549 |
48,954 |
83,503 | |||||||||||||||||||||||||||||||||||||||
$ |
37,368 |
53,307 | ||||||||||||||||||||||||||||||||||||||||
Operating income |
$ |
15,939 |
$ | |||||||||||||||||||||||||||||||||||||||
Total assets |
$ |
1,583,246 |
$ |
569,624 |
$ |
2,152,870 | ||||||||||||||||||||||||||||||||||||
Additions to property and equipment |
$ |
48,283 |
$ |
41,589 |
$ |
89,872 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||||||||||||||||||||||||||||||||||
Combined Consolidated Results of Segment Operations | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2015, and 2016 | ||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Water |
||||||||||||||||||||||||||||||||||||||||||||
Gathering and |
Handling and |
Consolidated | ||||||||||||||||||||||||||||||||||||||||||
Compression |
Treatment |
Total | ||||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, 2015 |
||||||||||||||||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||||||
Revenue - Antero |
$ |
108,836 |
$ |
64,941 |
$ |
173,777 | ||||||||||||||||||||||||||||||||||||||
Revenue - third-party |
— |
151 |
151 | |||||||||||||||||||||||||||||||||||||||||
Total revenues |
108,836 |
65,092 |
173,928 | |||||||||||||||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||||||||||
Direct operating |
22,981 |
14,241 |
37,222 | |||||||||||||||||||||||||||||||||||||||||
General and administrative (before equity-based compensation) |
9,407 |
2,295 |
11,702 | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation |
10,011 |
2,365 |
12,376 | |||||||||||||||||||||||||||||||||||||||||
Depreciation |
29,673 |
12,282 |
41,955 | |||||||||||||||||||||||||||||||||||||||||
Total expenses |
72,072 |
31,183 |
103,255 | |||||||||||||||||||||||||||||||||||||||||
$ |
36,764 |
$ |
33,909 |
$ |
70,673 | |||||||||||||||||||||||||||||||||||||||
Operating income |
||||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ |
1,392,898 |
$ |
416,909 |
$ |
1,809,807 | ||||||||||||||||||||||||||||||||||||||
Additions to property and equipment |
$ |
159,798 |
$ |
33,265 |
$ |
193,063 | ||||||||||||||||||||||||||||||||||||||
Six months ended June 30, 2016 |
||||||||||||||||||||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||||||||||||||
Revenue - Antero |
$ |
141,066 |
$ |
131,339 |
$ |
272,405 | ||||||||||||||||||||||||||||||||||||||
Revenue - third-party |
477 |
— |
477 | |||||||||||||||||||||||||||||||||||||||||
Total revenues |
141,543 |
131,339 |
272,882 | |||||||||||||||||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||||||||||
Direct operating |
15,066 |
76,672 |
91,738 | |||||||||||||||||||||||||||||||||||||||||
General and administrative (before equity-based compensation) |
9,785 |
3,846 |
13,631 | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation |
9,688 |
3,078 |
12,766 | |||||||||||||||||||||||||||||||||||||||||
Depreciation |
33,826 |
14,137 |
47,963 | |||||||||||||||||||||||||||||||||||||||||
Accretion of contingent acquisition consideration |
— |
6,857 |
6,857 | |||||||||||||||||||||||||||||||||||||||||
Total expenses |
68,365 |
104,590 |
172,955 | |||||||||||||||||||||||||||||||||||||||||
$ |
73,178 |
$ |
26,749 |
$ |
99,927 | |||||||||||||||||||||||||||||||||||||||
Operating income |
||||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ |
1,583,246 |
$ |
569,624 |
$ |
2,152,870 | ||||||||||||||||||||||||||||||||||||||
Additions to property and equipment |
$ |
96,969 |
$ |
78,625 |
$ |
175,594 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||||||||||||||||||||||||||||||||||
Condensed Combined Consolidated Statements of Cash Flows | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2015, and 2016 | ||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, |
||||||||||||||||||||||||||||||||||||||||||||
2015 |
2016 |
|||||||||||||||||||||||||||||||||||||||||||
Cash flows provided by operating activities: |
||||||||||||||||||||||||||||||||||||||||||||
Net income |
$ |
67,451 |
$ |
92,829 |
||||||||||||||||||||||||||||||||||||||||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||||||||||||||||||||||||||||||||||||||
Depreciation |
41,955 |
47,963 |
||||||||||||||||||||||||||||||||||||||||||
Accretion of contingent acquisition consideration |
— |
6,857 |
||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation |
12,376 |
12,766 |
||||||||||||||||||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate |
— |
(484) |
||||||||||||||||||||||||||||||||||||||||||
Amortization of deferred financing costs |
489 |
726 |
||||||||||||||||||||||||||||||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable–Antero |
6,375 |
10,918 |
||||||||||||||||||||||||||||||||||||||||||
Accounts receivable–third party |
5,574 |
1,448 |
||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses |
309 |
(106) |
||||||||||||||||||||||||||||||||||||||||||
Accounts payable |
1,103 |
4,515 |
||||||||||||||||||||||||||||||||||||||||||
Accounts payable–Antero |
50 |
4 |
||||||||||||||||||||||||||||||||||||||||||
Accrued ad valorem tax |
9,517 |
2,542 |
||||||||||||||||||||||||||||||||||||||||||
Accrued liabilities |
(107) |
(11,379) |
||||||||||||||||||||||||||||||||||||||||||
Net cash provided by operating activities |
145,092 |
168,599 |
||||||||||||||||||||||||||||||||||||||||||
Cash flows used in investing activities: |
||||||||||||||||||||||||||||||||||||||||||||
Additions to gathering and compression systems |
(159,798) |
(96,969) |
||||||||||||||||||||||||||||||||||||||||||
Additions to water handling and treatment systems |
(33,265) |
(78,625) |
||||||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated affiliate |
— |
(45,044) |
||||||||||||||||||||||||||||||||||||||||||
Change in other assets |
(126) |
(3,090) |
||||||||||||||||||||||||||||||||||||||||||
Net cash used in investing activities |
(193,189) |
(223,728) |
||||||||||||||||||||||||||||||||||||||||||
Cash flows provided by (used in) financing activities: |
||||||||||||||||||||||||||||||||||||||||||||
Deemed distribution to Antero, net |
(65,385) |
— |
||||||||||||||||||||||||||||||||||||||||||
Distributions to unitholders |
(41,660) |
(82,977) |
||||||||||||||||||||||||||||||||||||||||||
Borrowings on bank credit facilities, net |
38,000 |
140,000 |
||||||||||||||||||||||||||||||||||||||||||
Payments of deferred financing costs |
(19) |
— |
||||||||||||||||||||||||||||||||||||||||||
Other |
(164) |
(93) |
||||||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) financing activities |
(69,228) |
56,930 |
||||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
(117,325) |
1,801 |
||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, beginning of period |
230,192 |
6,883 |
||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, end of period |
$ |
112,867 |
$ |
8,684 |
||||||||||||||||||||||||||||||||||||||||
Supplemental disclosure of cash flow information: |
||||||||||||||||||||||||||||||||||||||||||||
Cash paid during the period for interest |
$ |
2,784 |
$ |
7,708 |
||||||||||||||||||||||||||||||||||||||||
Supplemental disclosure of noncash investing activities: |
||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment |
$ |
(27,984) |
$ |
7,770 |
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SOURCE Antero Midstream Partners LP
DENVER, July 14, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased second quarter 2016 distribution and provided its second quarter 2016 operations update.
Highlights Include:
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.25 per unit ($1.00 per unit annualized) for the second quarter of 2016. The distribution represents a 32% increase compared to the prior year quarter and a 6% increase sequentially. The distribution is the Partnership's sixth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 24, 2016 to unitholders of record as of August 10, 2016.
Antero Resources Core Acreage Acquisition
On June 9, 2016, Antero Resources Corporation ("Antero Resources") announced the acquisition of 55,000 net acres in the core of the Marcellus Shale, primarily located in Wetzel, Tyler and Doddridge Counties. Substantially all of the approximately 106,000 gross acre footprint will be dedicated to Antero Midstream for gathering, compression, and water services. The acquisition translates to approximately $500 million of identified organic growth opportunities over the next five years for Antero Midstream to invest in gathering, compression and water services infrastructure at attractive organic EBITDA build-out multiples ranging from 4-times to 7-times. In addition, Antero Resources increased its 2017 production growth target to 20% to 25%, providing further support for Antero Midstream's 2017 distribution growth target of 28% to 30%.
Exercise of Option in Stonewall Gathering Pipeline
On May 26, 2016, Antero Midstream exercised its option to acquire a 15% non-operated equity interest in the Stonewall Gathering Pipeline for $45 million. The 1.4 Bcf/d Stonewall Gathering Pipeline was placed into service on November 30, 2015 and is currently gathering approximately 1.0 Bcf/d. Antero Resources is an anchor shipper on the Stonewall Gathering Pipeline, with a minimum volume commitment of 900 BBtu/d. The pipeline connects Antero Resources' Marcellus production with downstream firm sales agreements and additional firm transportation to currently favorably priced markets. The transaction was financed with borrowings on Antero Midstream's revolving credit facility and has an effective date of May 26, 2016.
Paul Rady, Chairman and CEO of Antero Midstream commented, "The investment in the Stonewall Pipeline represents another step in Antero Midstream's strategy of becoming a full value chain midstream provider in Appalachia. The investment enhances Antero Midstream's overall portfolio of attractive infrastructure projects, with the volume being driven by Antero Resources' development plan. Based on estimated midstream cash flows over the next twelve months, we expect attractive capital investment to cash flow multiples of 4.5-times to 5.5-times."
Operations Update
All operational figures are as of the date of this release unless otherwise noted.
Low pressure gathering volumes for the second quarter of 2016 averaged 1,353 MMcf/d, a 40% increase from the second quarter of 2015 and a 4% increase from the first quarter of 2016. Compression volumes for the second quarter of 2016 averaged 657 MMcf/d, a 45% increase from the second quarter of 2015 and a 9% increase from the first quarter of 2016. High pressure gathering volumes for the second quarter of 2016 averaged 1,253 MMcf/d, a 5% increase from the second quarter of 2015 and a 3% increase compared to the first quarter of 2016. The increase in gathering and compression volumes was due to production growth from Antero Resources. Condensate gathering volumes averaged 1,983 Bbl/d during the quarter, a 34% decrease compared to the prior year quarter and a 33% decrease sequentially. The sequential decrease in condensate gathering volumes was driven by Antero Resources shifting Ohio Utica Shale development from its Highly-Rich Gas/Condensate area to higher rate of return locations in the Highly-Rich Gas area, as well as the shifting of Antero Resources' development program to the Marcellus Shale from the Utica Shale, given the firm transportation constraints in the Utica Shale.
Fresh water delivery volumes averaged 105,379 Bbl/d during the quarter, an 11% increase compared to the prior year quarter and an 8% increase sequentially. The increase in volumes was driven by operational efficiencies and Marcellus completions averaging 41 barrels of water per foot, a 25% increase as compared to 2015 and 11% increase compared to the first quarter of 2016.
Commenting on the second quarter, Mr. Rady said, "Antero Midstream continued to deliver strong volumetric growth during the quarter ahead of expectations, driven by the operational efficiencies and strong well results at Antero Resources. Antero Midstream continues to reap the benefits of having a full service midstream platform, benefitting from larger volume completion techniques enhancing water services, and improved well results and estimated recoveries benefitting gathering and compression throughput."
Three Months Ended June 30, |
|||||||
% |
|||||||
Average Daily Throughput: |
2016 |
2015 |
Change |
||||
Low Pressure Gathering (MMcf/d) |
1,353 |
965 |
40% |
||||
Compression (MMcf/d) |
657 |
454 |
45% |
||||
High Pressure Gathering (MMcf/d) |
1,253 |
1,197 |
5% |
||||
Condensate Gathering (Bbl/d) |
1,983 |
2,989 |
(34)% |
||||
Average Daily Volumes: |
|||||||
Fresh Water Delivery (Bbl/d) |
105,379 |
95,228 |
11% |
In conjunction with Antero Midstream's operations update, Antero Resources released a second quarter 2016 operations update, which can be found at www.anteroresources.com.
Antero Midstream Second Quarter Earnings Release and Call
Antero Midstream plans to issue its second quarter 2016 earnings release on Tuesday, August 2, 2016 after the close of trading on the New York Stock Exchange.
Antero Midstream will hold a call on Wednesday, August 3, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, August 12, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10086426.
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 on the Partnership's website until Friday, August 12, 2016 at 10:00 am MT.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream
DENVER, April 27, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its first quarter 2016 financial results and announced increased guidance. The relevant condensed combined consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which has been filed with the Securities and Exchange Commission.
Highlights for the First Quarter of 2016:
Recent Developments
Increased 2016 Guidance
Antero Midstream is forecasting 2016 adjusted EBITDA of $325 million to $350 million, which represents a $25 million increase as compared to the previous 2016 adjusted EBITDA guidance. The Partnership is forecasting distributable cash flow of $275 million to $300 million, a $25 million increase compared to the previous 2016 distributable cash flow guidance. Driven by the increase in adjusted EBITDA and distributable cash flow guidance, the Partnership expects year over year distribution growth in 2016 of 30%, at the top end of the Partnership's previous distribution growth guidance range, while still maintaining DCF coverage in excess of the Partnership's 1.1x to 1.2x target.
Full Year 2016 |
||||||
Updated Guidance |
Prior Guidance |
Increase | ||||
Adjusted EBITDA ($MM) |
$325 – $350 |
$300 – $325 |
$25 | |||
Distributable Cash Flow ($MM) |
$275 – $300 |
$250 – $275 |
$25 | |||
Year over Year Distribution Growth |
30% |
28% – 30% |
0% – 2% | |||
DCF Coverage Ratio |
>1.1x – 1.2x |
>1.1x – 1.2x |
– |
Commenting on increased guidance, Paul Rady, Chairman of the Board and CEO said, "The increase in adjusted EBITDA guidance is primarily driven by an increase in expected fresh water delivery volumes, as Antero Resources plans to utilize approximately 25% higher water volumes in its completions in 2016 compared to 2015 completion designs. Early well results from the new completion designs are encouraging. Higher EURs and production per well would also benefit Antero Midstream's gathering and compression business. The increased volumetric throughput further highlights the benefit of being a full cycle value chain midstream provider."
Commenting on first quarter results and the outlook for the remainder of 2016, Michael Kennedy, Chief Financial Officer of Antero Midstream said, "Antero Midstream's strong first quarter puts us on track to deliver 30% year over year distribution growth in 2016, while continuing to maintain significant excess DCF coverage. Looking ahead to the second quarter, we expect cash flows to be relatively in line with the first quarter results as an increase in gathering and compression volumes from recently completed wells is offset by a modest decline in fresh water delivery volumes as a result of reduced completion activity by Antero Resources. In the second half of 2016, Antero Resources plans to reaccelerate completion activities similar to its completion and production profile in 2015. The acceleration in completion activity in the second half of 2016 is expected to drive an increase in fresh water delivery volumes, gathering volumes and cash flow."
Distribution for the First Quarter of 2016
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.235 per unit ($0.94 per unit annualized) for the first quarter of 2016. The distribution represents a 31% increase compared to the prior year quarter and a 7% increase sequentially. The distribution represents the Partnership's fifth consecutive quarterly distribution increase since its initial public offering in November 2014. The distribution will be payable on May 25, 2016 to unitholders of record as of May 11, 2016.
First Quarter 2016 Financial Results
Antero Midstream's acquisition of Antero Resources' integrated water business was accounted for as a transfer of entities under common control. As a result, the Partnership recast its combined consolidated financial statements to retrospectively reflect the integrated water business as if the assets and liabilities were owned for all past periods presented. Beginning in the third quarter of 2015, and as a result of the acquisition, Antero Midstream began reporting its results through two business segments, Gathering and Compression and Water Handling and Treatment. To facilitate year over year comparison and discussion, the first quarter 2016 and first quarter 2015 results discussed below include both the Gathering and Compression and Water Handling and Treatment segment operations.
The term "Adjusted EBITDA" discussed below reflects the Gathering and Compression and Water Handling and Treatment segments on a recast combined basis, while the term "Adjusted EBITDA attributable to the Partnership" reflects contribution from the Water Handling and Treatment segments only after the third quarter of 2015 based on the actual timing of the acquired assets. For a reconciliation of net income to Adjusted EBITDA and distributable cash flow, please read "Non-GAAP Financial Measures
Low pressure gathering volumes for the first quarter of 2016 averaged 1,303 MMcf/d, a 39% increase from the first quarter of 2015 and a 16% increase sequentially. High pressure gathering volumes for the first quarter of 2016 averaged 1,222 MMcf/d, an 8% increase from the first quarter of 2015 and a 2% increase sequentially. Compression volumes for the first quarter of 2016 averaged 606 MMcf/d, a 69% increase from the first quarter of 2015 and a 27% increase sequentially. Year over year volumetric throughput growth was driven by production growth from Antero Resources. Condensate gathering volumes averaged 2,965 Bbl/d during the quarter, a 23% increase from the first quarter of 2015 and 25% decrease sequentially. The sequential decrease was driven by Antero Resources shifting Ohio Utica Shale development from its Highly-Rich Gas / Condensate area to estimated higher rate of return locations in the Highly-Rich Gas area. Fresh water delivery volumes averaged 97,331 Bbl/d during the first quarter of 2016, a 7% decrease from the first quarter of 2015 and 19% decrease sequentially. The year over year and sequential decrease in fresh water delivery volumes was driven by reduced completion activity by Antero Resources.
Three Months Ended March 31, |
||||||
Average Daily Throughput: |
2015 |
2016 |
% Change | |||
Low Pressure Gathering (MMcf/d) |
935 |
1,303 |
39% | |||
High Pressure Gathering (MMcf/d) |
1,134 |
1,222 |
8% | |||
Compression (MMcf/d) |
358 |
606 |
69% | |||
Condensate Gathering (Bbl/d) |
2,407 |
2,965 |
23% | |||
Average Daily Volumes: |
||||||
Fresh Water Delivery (Bbl/d) |
104,781 |
97,331 |
(7)% |
For the three months ended March 31, 2016, the Partnership reported revenues of $136 million, comprised of $69 million in revenues from the Gathering and Compression segment and $67 million in revenues from the Water Handling and Treatment segment. Revenues increased 58% compared to the prior year quarter, primarily driven by the startup of produced water handling and high rate transfer services in the fourth quarter of 2015. Water Handling and Treatment segment revenues include $34 million from produced water handling and high rate water transfer services Antero Midstream provides to Antero Resources billed at cost plus 3%.
Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $8 million and $41 million, respectively, for a total of $49 million in direct operating expenses. Water Handling and Treatment direct operating expenses include $33 million from produced water handling and high rate water transfer services. Direct operating expenses increased 155% year over year, driven primarily by the inclusion of produced water handling and high rate water transfer services, as well as the expansion of the Partnership's gathering and compression and fresh water delivery assets to support the production growth of Antero Resources. General and administrative expenses were $7 million during the first quarter of 2016. General and administrative expenses increased $1 million, or 16%, as compared to the first quarter of 2015. Total cash and non-cash operating expenses increased by 72% year over year totaling $89 million, including $24 million of depreciation.
Adjusted EBITDA for the first quarter of 2016 was $80 million, a 32% increase compared to the prior year quarter due to increased gathering and compression volumes and associated revenue. Cash interest expense and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards were $3 million and $1 million, respectively. Maintenance capital expenditures during the quarter totaled $6 million and distributable cash flow was $69 million, resulting in a DCF coverage ratio of 1.6x.
Reconciliation of Net Income to Adjusted EBITDA and DCF (Dollars in thousands): |
Three months ended | ||||||
March 31, | |||||||
2015 |
2016 | ||||||
Net income |
$ |
32,327 |
$ |
42,918 | |||
Add: |
|||||||
Interest expense |
1,586 |
3,461 | |||||
Depreciation expense |
20,702 |
23,823 | |||||
Contingent acquisition consideration accretion |
— |
3,396 | |||||
Equity-based compensation |
5,779 |
5,972 | |||||
Adjusted EBITDA |
$ |
60,394 |
$ |
79,570 | |||
Less: |
|||||||
Pre-water acquisition net income attributed to parent |
(16,679) |
— | |||||
Pre-water acquisition depreciation expense attributed to parent |
(6,120) |
— | |||||
Pre-water acquisition equity-based compensation expense attributed to parent |
(1,156) |
— | |||||
Pre-water acquisition interest expense attributed to parent |
(763) |
— | |||||
Adjusted EBITDA attributable to the Partnership |
$ |
35,676 |
$ |
79,570 | |||
Less: |
|||||||
Cash interest paid - attributable to Partnership |
(579) |
(3,444) | |||||
Cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards(1) |
— |
(1,000) | |||||
Maintenance capital expenditures |
(2,408) |
(5,808) | |||||
Distributable cash flow |
$ |
32,689 |
$ |
69,318 | |||
Total distributions declared |
$ |
27,338 |
$ |
43,252 | |||
DCF coverage ratio |
1.2x |
1.6x | |||||
1) |
Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Antero Midstream LTIP equity-based compensation awards to be paid in the fourth quarter of 2016. |
Balance Sheet and Liquidity
As of March 31, 2016, Antero Midstream had $14 million of cash on its balance sheet and $680 million drawn on its $1.5 billion bank credit facility, resulting in $834 million in available liquidity. Antero Midstream expects to fund all 2016 capital expenditures with internally generated operating cash flow and available borrowing capacity.
Capital Spending
Capital expenditures were $86 million in the first quarter of 2016 as compared to $107 million in the first quarter of 2015. Capital invested in gathering and compression assets was $49 million and capital invested in the fresh water delivery business and the Antero Clearwater Facility was $37 million.
Conference Call
Antero Midstream will hold a call on Thursday, April 28, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, May 6, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10083150.
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 on the Partnership's website until Friday, May 6, 2016 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Partnership's website before the April 28, 2016 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
As used in this news release, adjusted EBITDA means net income plus interest expense, depreciation expense, contingent acquisition consideration accretion, income tax expense (if applicable), and non-cash stock compensation expense. As used in this news release, distributable cash flow means adjusted EBITDA less cash interest expense, cash reserved for payment of income tax withholding upon vesting of Antero Midstream LP equity-based compensation awards and maintenance capital expenditures. Distributable cash flow should not be viewed as indicative of the actual amount of cash that the Partnership has available for distributions from operating surplus or that the Partnership plans to distribute. Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of the Partnership's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
The Partnership believes that adjusted EBITDA and distributable cash flow provide useful information to investors in assessing the Partnership's financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because adjusted EBITDA and distributable cash flow may be defined differently by other partnerships in its industry, the partnership's definition of adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility.
The partnership does not provide financial guidance for projected net income or changes in working capital, and, therefore, is unable to provide a reconciliation of its adjusted EBITDA and distributable cash flow guidance to net income, operating income, or net cash flow provided by operating activities, the most comparable financial measures calculated in accordance with GAAP.
Reconciliation of Adjusted EBITDA to Cash Provided by Operating Activities (Dollars in thousands): |
||||||||
Three months ended March 31, | ||||||||
2015 |
2016 | |||||||
Adjusted EBITDA |
$ |
60,394 |
$ |
79,570 | ||||
Add: |
||||||||
Amortization of deferred financing costs Interest expense |
244 |
366 | ||||||
Less: |
||||||||
Interest expense Interest expense |
(1,586) |
(3,461) | ||||||
Changes in operating assets and liabilities |
11,020 |
5,873 | ||||||
Net cash provided by operating activities |
$ |
70,072 |
$ |
82,348 | ||||
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the quarter ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP Condensed Combined Consolidated Balance Sheets December 31, 2015 and March 31, 2016 (Unaudited) (In thousands, except unit counts) | |||||
December 31, |
March 31, | ||||
2015 |
2016 | ||||
Assets | |||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
6,883 |
$ |
14,478 | |
Accounts receivable–Antero |
65,712 |
63,445 | |||
Accounts receivable–third party |
2,707 |
1,292 | |||
Prepaid expenses |
— |
336 | |||
Total current assets |
75,302 |
79,551 | |||
Property and equipment |
|||||
Gathering and compressions systems |
1,485,835 |
1,527,205 | |||
Water handling and treatment systems |
565,616 |
582,331 | |||
Less accumulated depreciation |
(157,625) |
(181,448) | |||
Property and equipment, net |
1,893,826 |
1,928,088 | |||
Other assets, net |
10,904 |
19,807 | |||
Total assets |
$ |
1,980,032 |
$ |
2,027,446 | |
Liabilities and Partners' Capital | |||||
Current liabilities: |
|||||
Accounts payable |
$ |
10,941 |
$ |
11,338 | |
Accounts payable–Antero |
2,138 |
3,736 | |||
Accrued capital expenditures |
50,022 |
22,101 | |||
Accrued ad valorem tax |
7,195 |
8,454 | |||
Accrued liabilities |
28,168 |
27,722 | |||
Other current liabilities |
150 |
156 | |||
Total current liabilities |
98,614 |
73,507 | |||
Long-term liabilities |
|||||
Long-term debt |
620,000 |
680,000 | |||
Contingent acquisition consideration |
178,049 |
181,445 | |||
Other |
624 |
584 | |||
Total liabilities |
897,287 |
935,536 | |||
Partners' capital: |
|||||
Common unitholders - public (59,286,451 units and 67,292,931 units issued and outstanding at December 31, 2015 and March 31, 2016, respectively) |
1,351,317 |
1,360,212 | |||
Common unitholder - Antero (40,929,378 units and 32,929,378 units issued and outstanding at December 31, 2015 and March 31, 2016, respectively) |
30,186 |
26,611 | |||
Subordinated unitholder - Antero (75,940,957 units issued and outstanding at December 31, 2015 and March 31, 2016) |
(299,727) |
(296,763) | |||
General partner |
969 |
1,850 | |||
Total partners' capital |
1,082,745 |
1,091,910 | |||
Total liabilities and partners' capital |
$ |
1,980,032 |
$ |
2,027,446 |
ANTERO MIDSTREAM PARTNERS LP Condensed Combined Consolidated Results of Operations March 31, 2015 and 2016 (Unaudited) ($ in thousands, except average realized fees) | ||||||||||||
Amount of |
||||||||||||
Three months ended March 31, |
Increase |
Percentage | ||||||||||
2015 |
2016 |
(Decrease) |
Change | |||||||||
Revenue: |
||||||||||||
Revenue - Antero |
$ |
85,684 |
$ |
135,555 |
$ |
49,871 |
58 |
% | ||||
Revenue - third-party |
151 |
275 |
124 |
82 |
% | |||||||
Total revenue |
85,835 |
135,830 |
49,995 |
58 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
19,301 |
49,141 |
29,840 |
155 |
% | |||||||
General and administrative (before equity-based compensation) |
6,140 |
7,119 |
979 |
16 |
% | |||||||
Equity-based compensation |
5,779 |
5,972 |
193 |
3 |
% | |||||||
Depreciation |
20,702 |
23,823 |
3,121 |
15 |
% | |||||||
Contingent acquisition consideration accretion |
— |
3,396 |
3,396 |
* |
||||||||
Total operating expenses |
51,922 |
89,451 |
37,529 |
72 |
% | |||||||
Operating income |
33,913 |
46,379 |
12,466 |
37 |
% | |||||||
Interest expense |
1,586 |
3,461 |
1,875 |
118 |
% | |||||||
Net income |
$ |
32,327 |
$ |
42,918 |
$ |
10,591 |
33 |
% | ||||
Adjusted EBITDA |
$ |
60,394 |
$ |
79,570 |
$ |
19,176 |
32 |
% | ||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
84,168 |
118,597 |
34,429 |
41 |
% | |||||||
Gathering—high pressure (MMcf) |
102,080 |
111,162 |
9,082 |
9 |
% | |||||||
Compression (MMcf) |
32,201 |
55,102 |
22,901 |
71 |
% | |||||||
Condensate gathering (MBbl) |
217 |
270 |
53 |
24 |
% | |||||||
Fresh water distribution (MBbl) |
9,430 |
8,857 |
(573) |
(6) |
% | |||||||
Waste water handling and treatment (MBbl) |
— |
2,206 |
2,206 |
* |
||||||||
Wells serviced by fresh water distribution |
40 |
30 |
(10) |
(25) |
% | |||||||
Gathering—low pressure (MMcf/d) |
935 |
1,303 |
368 |
41 |
% | |||||||
Gathering—high pressure (MMcf/d) |
1,134 |
1,222 |
88 |
9 |
% | |||||||
Compression (MMcf/d) |
358 |
606 |
248 |
71 |
% | |||||||
Condensate gathering (MBbl/d) |
2 |
3 |
1 |
24 |
% | |||||||
Fresh water distribution (MBbl/d) |
105 |
97 |
(8) |
(6) |
% | |||||||
Waste water handling and treatment (MBbl/d) |
— |
24 |
24 |
* |
||||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
0.00 |
2 |
% | ||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
0.00 |
2 |
% | ||||
Average compression fee ($/Mcf) |
$ |
0.19 |
$ |
0.19 |
$ |
0.00 |
2 |
% | ||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.16 |
$ |
4.17 |
$ |
0.01 |
2 |
% | ||||
Average fresh water distribution fee - Antero ($/Bbl) |
$ |
3.64 |
$ |
3.67 |
$ |
0.03 |
1 |
% |
* Not meaningful or applicable |
ANTERO MIDSTREAM PARTNERS LP Combined Consolidated Results of Segment Operations March 31, 2015 and 2016 (Unaudited) (In thousands) | |||||||||
Water |
|||||||||
Gathering and |
Handling and |
Consolidated | |||||||
Compression |
Treatment |
Total | |||||||
Three months ended March 31, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
52,243 |
$ |
33,441 |
$ |
85,684 | |||
Revenue - third-party |
— |
151 |
151 | ||||||
Total revenues |
52,243 |
33,592 |
85,835 | ||||||
Operating expenses: |
|||||||||
Direct operating |
11,689 |
7,612 |
19,301 | ||||||
General and administrative (before equity-based compensation) |
4,878 |
1,262 |
6,140 | ||||||
Equity-based compensation |
4,623 |
1,156 |
5,779 | ||||||
Depreciation |
14,582 |
6,120 |
20,702 | ||||||
Total expenses |
35,772 |
16,150 |
51,922 | ||||||
Operating income |
$ |
16,471 |
$ |
17,442 |
$ |
33,913 | |||
Total assets |
$ |
1,394,349 |
$ |
420,481 |
$ |
1,814,830 | |||
Additions to property and equipment |
$ |
85,737 |
$ |
21,315 |
$ |
107,052 | |||
Three months ended March 31, 2016 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
69,116 |
$ |
66,439 |
$ |
135,555 | |||
Revenue - third-party |
275 |
— |
275 | ||||||
Total revenues |
69,391 |
66,439 |
135,830 | ||||||
Operating expenses: |
|||||||||
Direct operating |
7,619 |
41,522 |
49,141 | ||||||
General and administrative (before equity-based compensation) |
4,949 |
2,170 |
7,119 | ||||||
Equity-based compensation |
4,386 |
1,586 |
5,972 | ||||||
Depreciation |
16,861 |
6,962 |
23,823 | ||||||
Contingent acquisition consideration accretion |
- |
3,396 |
3,396 | ||||||
Total expenses |
33,815 |
55,636 |
89,451 | ||||||
Operating income |
$ |
35,576 |
$ |
10,803 |
$ |
46,379 | |||
Total assets |
$ |
1,503,098 |
$ |
524,348 |
$ |
2,027,446 | |||
Additions to property and equipment |
$ |
48,686 |
$ |
37,036 |
$ |
85,722 |
ANTERO MIDSTREAM PARTNERS LP Condensed Combined Consolidated Statements of Cash Flows Three Months Ended March 31, 2015, and 2016 (Unaudited) (In thousands) | ||||||
Three months ended March 31, |
||||||
2015 |
2016 |
|||||
Cash flows provided by operating activities: |
||||||
Net income |
$ |
32,327 |
$ |
42,918 |
||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||
Depreciation |
20,702 |
23,823 |
||||
Accretion of contingent acquisition consideration |
— |
3,396 |
||||
Equity-based compensation |
5,779 |
5,972 |
||||
Amortization of deferred financing costs |
244 |
366 |
||||
Changes in assets and liabilities: |
||||||
Accounts receivable–Antero |
1,880 |
2,267 |
||||
Accounts receivable–third party |
4,458 |
1,415 |
||||
Prepaid expenses |
162 |
(336) |
||||
Accounts payable |
577 |
116 |
||||
Accounts payable–Antero |
641 |
1,598 |
||||
Accrued ad valorem tax |
— |
1,259 |
||||
Accrued liabilities |
3,302 |
(446) |
||||
Net cash provided by operating activities |
70,072 |
82,348 |
||||
Cash flows used in investing activities: |
||||||
Additions to gathering and compression systems |
(85,737) |
(48,686) |
||||
Additions to water handling and treatment systems |
(21,315) |
(37,036) |
||||
Change in other assets |
(7,515) |
(9,270) |
||||
Net cash used in investing activities |
(114,567) |
(94,992) |
||||
Cash flows provided by (used in) financing activities: |
||||||
Deemed distribution to Antero, net |
(28,937) |
— |
||||
Distributions to unitholders |
(14,322) |
(39,725) |
||||
Borrowings on bank credit facilities, net |
20,000 |
60,000 |
||||
Payments of deferred financing costs |
(14) |
— |
||||
Other |
(85) |
(36) |
||||
Net cash provided by (used in) financing activities |
(23,358) |
20,239 |
||||
Net increase (decrease) in cash and cash equivalents |
(67,853) |
7,595 |
||||
Cash and cash equivalents, beginning of period |
230,192 |
6,883 |
||||
Cash and cash equivalents, end of period |
$ |
162,339 |
$ |
14,478 |
||
Supplemental disclosure of cash flow information: |
||||||
Cash paid during the period for interest |
$ |
1,393 |
$ |
3,686 |
||
Supplemental disclosure of noncash investing activities: |
||||||
Decrease in accrued capital expenditures and accounts payable for property and equipment |
$ |
(21,062) |
$ |
(27,640) |
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SOURCE Antero Midstream Partners LP
DENVER, April 14, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased first quarter 2016 distribution and provided its first quarter 2016 operations update.
Highlights include:
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.235 per unit ($0.94 per unit annualized) for the first quarter of 2016. The distribution represents a 31% increase compared to the prior year quarter and a 7% increase sequentially. The distribution represents the Partnership's fifth consecutive quarterly distribution increase since its initial public offering in November 2014. The distribution will be payable on May 25, 2016 to unitholders of record as of May 11, 2016.
Operations Update
All operational figures are as of the date of this release unless otherwise noted.
Low pressure gathering volumes for the first quarter of 2016 averaged 1,303 MMcf/d, a 39% increase from the first quarter of 2015 and a 16% increase from the fourth quarter of 2015. High pressure gathering volumes for the first quarter of 2016 averaged 1,222 MMcf/d, an 8% increase from the first quarter of 2015 and a 2% increase compared to the fourth quarter of 2015. The increase in gathering volumes was due to production growth from Antero Resources Corporation ("Antero Resources") on Antero Midstream dedicated acreage. Compression volumes for the first quarter of 2016 averaged 606 MMcf/d, a 69% increase from the first quarter of 2015 and a 27% increase from the fourth quarter of 2015. Antero Midstream's first Ohio Utica Shale compressor station, which was placed into service in December 2015, has already reached over 90% utilization and volume growth across Antero Midstream's footprint drove the increase in compression volumes. Condensate gathering volumes averaged 2,965 Bbl/d during the quarter, a 23% increase compared to the prior year quarter and a 25% decrease sequentially. The sequential decrease was driven by Antero Resources shifting Ohio Utica Shale development from its Highly-Rich Gas / Condensate area to higher rate of return locations in the Highly-Rich Gas area.
Fresh water delivery volumes averaged 97,331 Bbl/d during the quarter, a 7% decrease compared to the prior year quarter and a 19% decrease sequentially. The decrease in volumes was driven by the reduction in overall completion activities by Antero Resources, partially offset by increased water usage on a per completion stage basis. Antero Resources currently plans to use approximately 25% more water per stage in its Marcellus completions in 2016 as compared to 2015.
Three Months Ended March 31, |
|||||||
Average Daily Throughput: |
2016 |
2015 |
% Change |
||||
Low Pressure Gathering (MMcf/d) |
1,303 |
935 |
39% |
||||
High Pressure Gathering (MMcf/d) |
1,222 |
1,134 |
8% |
||||
Compression (MMcf/d) |
606 |
358 |
69% |
||||
Condensate Gathering (Bbl/d) |
2,965 |
2,407 |
23% | ||||
Average Daily Volumes: |
|||||||
Fresh Water Delivery (Bbl/d) |
97,331 |
104,781 |
(7)% |
In conjunction with Antero Midstream's operations update, Antero Resources released a first quarter 2016 operations update, which can be found at www.anteroresources.com.
Antero Midstream First Quarter Earnings Release and Call
Antero Midstream plans to issue its first quarter 2016 earnings release on Wednesday, April 27, 2016 after the close of trading on the New York Stock Exchange.
Antero Midstream will hold a call on Thursday, April 28, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, May 6, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10083150.
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 on the Partnership's website until Friday, May 6, 2016 at 10:00 am MT.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream
DENVER, April 1, 2016 /PRNewswire/ -- Antero Resources (NYSE: AR) and Antero Midstream (NYSE:AM) (collectively, "Antero") today announced that Christopher R. Manning has resigned from the board of directors of Antero Resources and the board of directors of the general partner of Antero Midstream. Neither Antero Resources nor Antero Midstream has plans to fill the vacated board seats in the near term.
Paul M. Rady, Chairman and CEO of Antero Resources and Antero Midstream commented, "I would like to thank Chris for his contribution to Antero's success over the last 11 years. When Chris first joined Antero's board in 2005, we were a small, privately held producer that had just completed the sale of our Barnett Shale assets to XTO Energy. As we transformed Antero into a leading Appalachian upstream company and one of the top natural gas producers in the U.S., as well as one of the highest growth midstream MLPs, Chris has provided valuable insight and expertise every step of the way. We are grateful for his contributions to Antero over the years and wish him the very best in the future."
Mr. Manning commented, "It has been an honor and a privilege to have been involved with Antero since its inception. Working with my fellow directors at both companies and the Antero management team led by Paul Rady and Glen Warren has been extremely rewarding and I wish them the best in their continued management of two great companies with world class assets."
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. Antero Resources' website is located at www.anteroresources.com. Antero Midstream is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
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SOURCE Antero Resources; Antero Midstream
DENVER, March 24, 2016 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company") announced today the pricing of an underwritten public offering of 8,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream Partners LP (NYSE: AM) (the "Partnership") held by Antero Resources at a price of $22.40 per common unit for aggregate gross proceeds of approximately $179 million before estimated offering expenses. In connection with the Offering, Antero Resources granted the underwriter a 30-day option to purchase up to an additional 1,200,000 common units. After giving effect to the Offering, and assuming no exercise of the underwriter's option to purchase additional common units, Antero Resources will own approximately 62% of the Partnership's outstanding common and subordinated units.
The common units are being sold in the Offering pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission (the "SEC"). The Offering is expected to close on March 30, 2016, subject to customary closing conditions. Antero Resources intends to use the proceeds from the Offering to repay borrowings under its credit facility and to fund a portion of its 2016 development program.
Citigroup is acting as the sole book-running manager for the Offering. The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Citigroup Global Markets Inc.
c/o Broadridge Financial Solutions
1155 Long Island Avenue
Edgewood, NY, 11717
1-800-831-9146
email: prospectus@citi.com
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.
Cautionary Statements
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero Resources' control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero Resources 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. Nothing in this press release is intended to constitute guidance with respect to Antero Midstream.
Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility and continued low commodity prices, Antero Resources' ability to meet development and drilling plans, the Company's ability to implement its hedge strategy and results, risk regarding the timing and amount of future production of natural gas, NGLs and oil, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, marketing and transportation risks, the ability to satisfy applicable minimum volume requirements, regulatory changes, the uncertainty inherent in estimating natural gas, NGL and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2015.
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SOURCE Antero Resources Corporation
DENVER, March 24, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced the pricing of an underwritten public offering of 8,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream held by Antero Resources Corporation (NYSE: AR) at a price of $22.40 per unit for aggregate gross proceeds to Antero Resources Corporation of approximately $179 million before estimated offering expenses. Antero Midstream will not receive any proceeds from the sale of common units in the Offering. In connection with the Offering, Antero Resources granted the underwriter a 30-day option to purchase up to an additional 1,200,000 common units. After giving effect to the Offering, and assuming no exercise of the underwriter's option to purchase additional common units, Antero Resources will own approximately 62% of the Partnership's outstanding common and subordinated units.
The common units are being sold in the Offering pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission (the "SEC"). The Offering is expected to close on March 30, 2016, subject to customary closing conditions.
Citigroup is acting as the sole book-running manager for the Offering. The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Citigroup Global Markets Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY, 11717 1-800-831-9146 email: prospectus@citi.com |
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio. The Partnership's website is located at www.anteromidstream.com.
Cautionary Statements
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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.
The Partnership cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, March 23, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced that Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Selling Unitholder") commenced an underwritten public offering of 8,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream held by Antero Resources. The common units are being sold in the Offering pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission (the "SEC"). In addition, the Selling Unitholder anticipates granting the underwriter a 30-day option to purchase up to an additional 1,200,000 common units. The underwriter intends to offer the units from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Antero Midstream will not receive any proceeds from the sale of common units in the Offering.
Antero Resources currently owns 75,940,957 subordinated units and 40,929,378 common units, including 10,988,421 common units received as partial consideration in the water business drop down transaction in September 2015.
Citigroup is acting as the sole book-running manager for the Offering. The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Citigroup Global Markets Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY, 11717 1-800-831-9146 email: prospectus@citi.com |
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio. The Partnership's website is located at www.anteromidstream.com.
Cautionary Statements
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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.
The Partnership cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, March 23, 2016 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources," the "Company" or the "Selling Unitholder") announced today the commencement of an underwritten public offering of 8,000,000 common units (the "Offering") representing limited partner interests in Antero Midstream Partners LP (NYSE: AM) held by Antero Resources. The common units are being sold in the Offering pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission (the "SEC"). In addition, the Selling Unitholder anticipates granting the underwriter a 30-day option to purchase up to an additional 1,200,000 common units. The underwriter intends to offer the units from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Antero Resources intends to use the proceeds from the Offering to repay borrowings under its credit facility and to fund a portion of its 2016 development program.
Antero Resources currently owns 75,940,957 subordinated units and 40,929,378 common units, including 10,988,421 common units received as partial consideration in the water business drop down transaction in September 2015.
Citigroup is acting as the sole book-running manager for the Offering. The Offering is being made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, copies of which, when available, may be obtained from:
Citigroup Global Markets Inc.
c/o Broadridge Financial Solutions
1155 Long Island Avenue
Edgewood, NY, 11717
1-800-831-9146
email: prospectus@citi.com
You may also get these documents for free by visiting the SEC's website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.
Cautionary Statements
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero 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. Nothing in this press release is intended to constitute guidance with respect to Antero Midstream.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility and continued low commodity prices, Antero's ability to meet development and drilling plans, the Company's ability to implement its hedge strategy and results, risk regarding the timing and amount of future production of natural gas, NGLs and oil, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, marketing and transportation risks, the ability to satisfy applicable minimum volume requirements, regulatory changes, the uncertainty inherent in estimating natural gas, NGL and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2015.
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SOURCE Antero Resources Corporation
DENVER, Feb. 24, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today released its fourth quarter and full-year 2015 financial and operating results. The relevant combined consolidated financial statements are included in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015, which has been filed with the Securities and Exchange Commission ("SEC").
Highlights for the fourth quarter of 2015:
Recent Developments
Distribution for the Fourth Quarter of 2015
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.22 per unit ($0.88 per unit annualized) for the fourth quarter of 2015. The distribution represents a 29% increase over the minimum quarterly distribution and a 7% increase quarter-over-quarter. The distribution represents the Partnership's fourth consecutive quarterly distribution increase since its initial public offering in November 2014. The distribution will be payable on February 29, 2016 to unitholders of record as of February 15, 2016.
2016 Capital Budget and Guidance
On February 17, 2016, Antero Midstream announced a 2016 capital budget of $435 million, which includes $410 million of expansion capital and $25 million of maintenance capital. The capital budget includes $240 million of expansion capital on gathering and compression infrastructure, approximately 90% of which will be invested in the Marcellus Shale and the remaining 10% will be invested in the Utica Shale. The gathering and compression budget will result in 9 miles and 22 miles of additional low pressure and high pressure gathering pipelines, respectively, and 240 MMcf/d of incremental compression capacity in 2016. Antero Midstream also expects to invest $40 million of expansion capital in fresh water delivery infrastructure, approximately 75% of which will be invested in the Marcellus Shale and the remaining 25% will be invested in the Utica Shale. The Partnership expects to construct one fresh water storage impoundment as well as 11 miles and 19 miles of fresh water trunklines and surface pipelines, respectively. Antero Midstream's 2016 budget also includes $130 million of construction capital for the advanced wastewater treatment facility (the "Antero Clearwater Facility"), which is expected to be placed into service in late 2017.
Antero Midstream is forecasting adjusted EBITDA of $300 million to $325 million and Distributable Cash Flow ("DCF") of $250 million to $275 million for 2016. Additionally, the Partnership is forecasting aggregate distributions attributable to calendar year 2016 that are 28% to 30% higher than the aggregate 2015 distributions of $0.795 per unit, while maintaining an average DCF coverage ratio in excess of Antero Midstream's targeted ratio of 1.1x to 1.2x on an annual basis.
Fourth Quarter 2015 Financial Results
Antero Midstream's acquisition of Antero Resources' integrated water business was accounted for as a transfer of entities under common control. As a result, the Partnership recast its combined consolidated financial statements to retrospectively reflect the integrated water business as if the assets and liabilities were owned for all past periods presented. Beginning in the third quarter of 2015, and as a result of the acquisition, Antero Midstream began reporting its results through two business segments, Gathering and Compression and Water Handling and Treatment. To facilitate year over year comparison and discussion, the fourth quarter 2015 and full year 2015 results discussed below include both the Gathering and Compression and Water Handling and Treatment segment operations.
The term "Adjusted EBITDA" discussed below reflects the Gathering and Compression and Water Handling and Treatment segments on a recast combined basis, while the term "Adjusted EBITDA attributable to the Partnership" reflects contribution from the Water Handling and Treatment segments only during the fourth quarter of 2015 in order to facilitate a comparison to Antero Midstream's previously provided financial guidance. For a reconciliation of net income to Adjusted EBITDA and distributable cash flow, please read "Non-GAAP Financial Measures."
Low pressure gathering volumes for the fourth quarter of 2015 averaged 1,124 MMcf/d, a 52% increase from the fourth quarter of 2014 and an 8% increase sequentially. High pressure gathering volumes for the fourth quarter of 2015 averaged 1,195 MMcf/d, a 32% increase from the fourth quarter of 2014 and a 2% decrease sequentially. Compression volumes for the fourth quarter of 2015 averaged 478 MMcf/d, a 115% increase from the fourth quarter of 2014 and a 10% increase sequentially. Condensate gathering volumes averaged 3,977 Bbl/d during the quarter, a 48% increase from the fourth quarter of 2014 and 39% increase sequentially. Volumetric throughput growth was driven by production growth from Antero Resources. Fresh water delivery volumes averaged 119,671 Bbl/d during the fourth quarter of 2015, a 36% decrease from the fourth quarter of 2014 and 78% increase sequentially, as Antero began completing 12 Marcellus wells that had been deferred from earlier in the year.
Three months ended December 31, |
Year ended December 31, |
|||||||||||
Average Daily Throughput: |
2014 |
2015 |
% Change |
2014 |
2015 |
% Change | ||||||
Low pressure gathering (MMcf/d) |
738 |
1,124 |
52% |
498 |
1,016 |
104% | ||||||
High pressure gathering (MMcf/d) |
908 |
1,195 |
32% |
460 |
1,186 |
158% | ||||||
Compression (MMcf/d) |
222 |
478 |
115% |
104 |
432 |
313% | ||||||
Condensate gathering (Bbl/d) |
2,676 |
3,977 |
48% |
1,701 |
3,061 |
80% | ||||||
Average Daily Volumes: |
||||||||||||
Fresh water delivery (Bbl/d) |
186,221 |
119,671 |
(36)% |
132,421 |
96,010 |
(27)% |
For the three months ended December 31, 2015, the Partnership reported revenues of $132 million, comprised of $63 million in revenues from the Gathering and Compression segment and $69 million in revenues from the Water Handling and Treatment segment. Revenues increased 31% compared to the prior year quarter, driven by increased gathering and compression volumes. Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $6 million and $34 million, respectively, for a total of $40 million in direct operating expenses. Direct operating expenses increased 146% year over year, driven by the continued expansion of the Partnership's gathering and compression and fresh water delivery assets to support the production growth of Antero Resources. General and administrative expenses totaled $13 million during the fourth quarter of 2015, including $5 million of non-cash equity-based compensation expense. General and administrative expenses increased $4 million, or 45%, as compared to the fourth quarter of 2014. Total cash and non-cash operating expenses increased by 87% year over year totaling $80 million, including $23 million of depreciation.
Adjusted EBITDA for the fourth quarter of 2015, which includes contribution from the Water Handling and Treatment segment, was $83 million, a 5% increase compared to the prior year quarter due to increased gathering and compression volumes and associated revenue. Cash interest expense and income tax withholding from the vesting of equity based compensation awards were $3 million and $5 million, respectively. Maintenance capital expenditures during the quarter totaled $3 million and distributable cash flow was $72 million, resulting in a DCF coverage ratio of 1.8x.
2015 Financial Results
Low pressure gathering volumes for 2015 averaged 1,016 MMcf/d, a 104% increase over the prior year, while high pressure gathering volumes averaged 1,186 MMcf/d, a 158% increase over the prior year. Compression volumes for 2015 averaged 432 MMcf/d, a 313% increase over the prior year. Condensate gathering volumes averaged 3,061 Bbl/d, an 80% increase over the prior year. Fresh water delivery volumes averaged 96,010 Bbl/d during 2015, a 27% decrease compared to the prior year.
Total revenues for 2015 were $388 million, a 45% increase over the prior year, and were comprised of $231 million in revenues from the Gathering and Compression segment and $157 million in revenues from the Water Handling and Treatment segment. Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $26 million and $53 million, respectively, for a total of $79 million in direct operating expenses. Direct operating expenses increased 62% year over year due to the expansion of the Partnership's assets and operations. General and administrative expenses totaled $51 million, including $22 million of non-cash equity-based compensation expense, a 69% increase compared to 2014. Total cash and non-cash operating expenses totaled $220 million, including $87 million of depreciation.
Adjusted EBITDA of $280 million for 2015 was 41% higher than the prior year, due to increased throughput and associated revenue. Adjusted EBITDA attributable to the Partnership, which included the contribution from the Water Handling and Treatment segment only during the fourth quarter of 2015 and corresponds to the Partner ship's previously provided 2015 guidance, was $215 million. Cash interest paid attributable to the Partnership was $5 million and maintenance capital expenditures totaled $13 million, resulting in distributable cash flow of $192 million. DCF coverage for 2015 of 1.4x was in excess of the Partnership's targeted ratio of 1.1x to 1.2x.
Reconciliation of Net Income to Adjusted EBITDA and DCF (Dollars in thousands): |
Three months ended |
Year ended | |||||||||||||
December 31, |
December 31, | ||||||||||||||
2014 |
2015 |
2014 |
2015 | ||||||||||||
Net income |
$ |
55,898 |
$ |
49,008 |
$ |
127,875 |
$ |
159,105 | |||||||
Add: |
|||||||||||||||
Interest expense |
2,062 |
2,892 |
6,183 |
8,158 | |||||||||||
Depreciation expense |
17,290 |
23,152 |
53,029 |
86,670 | |||||||||||
Contingent acquisition consideration accretion |
— |
3,333 |
— |
3,333 | |||||||||||
Equity-based compensation |
4,226 |
4,810 |
11,618 |
22,470 | |||||||||||
Adjusted EBITDA |
$ |
79,476 |
$ |
83,195 |
$ |
198,705 |
$ |
279,736 | |||||||
Less: |
|||||||||||||||
Pre-water acquisition net income attributed to parent |
(22,234) |
— |
(22,234) |
(40,193) | |||||||||||
Pre-water acquisition depreciation expense attributed to parent |
(3,086) |
— |
(3,086) |
(18,767) | |||||||||||
Pre-water acquisition equity-based compensation expense attributed to parent |
(654) |
— |
(654) |
(3,445) | |||||||||||
Pre-water acquisition interest expense attributed to parent |
(359) |
— |
(359) |
(2,326) | |||||||||||
Pre-IPO EBITDA(1) |
(36,464) |
— |
(155,693) |
— | |||||||||||
Adjusted EBITDA attributable to the Partnership |
$ |
16,679 |
$ |
83,195 |
$ |
16,679 |
$ |
215,005 | |||||||
Less: |
|||||||||||||||
Cash interest paid - attributable to Partnership |
(331) |
(2,934) |
(331) |
(5,149) | |||||||||||
Income tax withholding upon vesting of Antero Midstream LP equity-based compensation awards |
— |
(4,806) |
— |
(4,806) | |||||||||||
Maintenance capital expenditures |
(1,157) |
(3,096) |
(1,157) |
(13,097) | |||||||||||
Distributable cash flow |
$ |
15,191 |
$ |
72,359 |
$ |
15,191 |
$ |
191,953 | |||||||
Total distributions declared |
$ |
14,322 |
$ |
39,725 |
$ |
14,322 |
$ |
132,651 | |||||||
DCF coverage ratio |
1.06x |
1.82x |
1.06x |
1.45x | |||||||||||
1) |
Represents EBITDA generated during 2014 prior to the initial public offering on November 10, 2014. |
Balance Sheet and Liquidity
As of December 31, 2015, Antero Midstream had $7 million of cash on its balance sheet and $620 million drawn on its credit facility, resulting in $887 billion in available liquidity. Antero Midstream expects to fund all 2016 capital expenditures with internally generated operating cash flow and available borrowing capacity under Antero Midstream's $1.5 billion bank credit facility.
2015 Capital Spending
Capital expenditures were $445 million in 2015 as compared to $798 million in 2014. Including $40 million paid by Antero Resources in connection with payables related to capital expenditures associated with assets contributed to Antero Midstream prior to the Partnership IPO, gathering and compression infrastructure capital expenditures were $360 million. Additionally, $60 million was invested in fresh water delivery infrastructure, including $53 million invested during the nine months ended September 30, 2015 from the impact of the recast combined consolidated financial statements. The $445 million of capital invested also includes $69 million related to the ongoing construction of Antero Clearwater Facility.
During 2015, Antero Midstream added 325 MMcf/d of compression capacity in the Marcellus Shale and 120 MMcf/d in the Utica Shale. Additionally, the Partnership placed into service 25 miles of low pressure pipeline, 15 miles of high pressure pipeline and three miles of condensate pipeline. The below table summarizes the Partnership's cumulative miles of pipeline and compression capacity at year-end 2014 and 2015:
Gathering and Compression System | |||||||||||||||||||||||||||||||
Low |
High |
Condensate |
Compression |
||||||||||||||||||||||||||||
As of December 31, |
|||||||||||||||||||||||||||||||
Marcellus |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
|||||||||||||||||||||||
91 |
106 |
62 |
76 |
— |
— |
375 |
700 |
||||||||||||||||||||||||
Utica |
45 |
55 |
35 |
36 |
16 |
19 |
— |
120 |
|||||||||||||||||||||||
Total |
136 |
161 |
97 |
112 |
16 |
19 |
375 |
820 |
|||||||||||||||||||||||
During 2015, Antero Midstream added 48 miles of buried and surface fresh water pipelines in the Marcellus and Utica Shale combined. Additionally, the Partnership built 5 fresh water storage impoundments. The below table summarizes the Partnership's cumulative miles of pipeline, wells serviced by water distribution and fresh water storage impoundments at year-end 2014 and 2015.
Water Handling System | ||||||||||||||||
Buried Fresh Water Pipeline |
Surface Fresh Water Pipeline |
Wells Serviced by Water Distribution |
Fresh Water Impoundments | |||||||||||||
As of December 31, | ||||||||||||||||
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 | |||||||||
Marcellus |
103 |
104 |
53 |
80 |
151 |
62 |
22 |
22 | ||||||||
Utica |
49 |
49 |
6 |
26 |
41 |
62 |
8 |
13 | ||||||||
Total |
152 |
153 |
59 |
106 |
192 |
124 |
30 |
35 |
Conference Call
Antero Midstream will hold a call on Thursday, February 25, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, March 4, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10078389.
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 on the Partnership's website until Friday, March 4, 2016 at 10:00 am MT.
Presentation
An updated presentation will be posted to the partnership's website before the February 25, 2016 conference call. The presentation can be found at www.anteromidstream.com on the homepage. Information on the Partnership's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
As used in this news release, adjusted EBITDA means net income plus interest expense, depreciation and amortization expense, income tax expense (if applicable), and non-cash stock compensation expense. As used in this news release, distributable cash flow means adjusted EBITDA less cash interest expense, income tax withholding payments upon vesting of equity-based compensation awards and maintenance capital expenditures. Distributable cash flow should not be viewed as indicative of the actual amount of cash that the Partnership has available for distributions from operating surplus or that the Partnership plans to distribute. Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of the Partnership's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
The Partnership believes that adjusted EBITDA and distributable cash flow provide useful information to investors in assessing the Partnership's financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because adjusted EBITDA and distributable cash flow may be defined differently by other partnerships in its industry, the partnership's definition of adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility.
The partnership does not provide financial guidance for projected net income or changes in working capital, and, therefore, is unable to provide a reconciliation of its adjusted EBITDA and distributable cash flow guidance to net income, operating income, or net cash flow provided by operating activities, the most comparable financial measures calculated in accordance with GAAP.
Reconciliation of Adjusted EBITDA to Cash Provided by Operating Activities (Dollars in thousands): |
|||||||||||||||
Three months ended December 31, |
Year ended December 31, | ||||||||||||||
2014 |
2015 |
2014 |
2015 | ||||||||||||
Adjusted EBITDA |
$ |
79,476 |
$ |
83,195 |
$ |
198,705 |
$ |
279,736 | |||||||
Add: |
|||||||||||||||
Amortization of deferred financing costs |
135 |
370 |
135 |
1,144 | |||||||||||
Less: |
|||||||||||||||
Interest expense |
(2,062) |
(2,892) |
(6,183) |
(8,158) | |||||||||||
Changes in operating assets and liabilities |
(10,612) |
(20,554) |
(23,224) |
(13,044) | |||||||||||
Net cash provided by operating activities |
$ |
66,937 |
$ |
60,119 |
$ |
169,433 |
$ |
259,678 | |||||||
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
The Partnership cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the gathering and compression and water handling and treatment business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Combined Consolidated Balance Sheets | |||||||||||||
December 31, 2014 and 2015 | |||||||||||||
(In thousands, except unit counts) | |||||||||||||
2014 |
2015 |
||||||||||||
Assets |
|||||||||||||
Current assets: |
|||||||||||||
Cash and cash equivalents |
$ |
230,192 |
$ |
6,883 |
|||||||||
Accounts receivable–Antero |
31,563 |
65,712 |
|||||||||||
Accounts receivable–third party |
5,574 |
2,707 |
|||||||||||
Prepaid expenses |
518 |
— |
|||||||||||
Total current assets |
267,847 |
75,302 |
|||||||||||
Property and equipment: |
|||||||||||||
Gathering and compressions systems |
1,180,707 |
1,485,835 |
|||||||||||
Water handling and treatment systems |
421,012 |
565,616 |
|||||||||||
Less accumulated depreciation |
(70,124) |
(157,625) |
|||||||||||
Property and equipment, net |
1,531,595 |
1,893,826 |
|||||||||||
Other assets, net |
17,168 |
10,904 |
|||||||||||
Total assets |
$ |
1,816,610 |
$ |
1,980,032 |
|||||||||
Liabilities and Partners' capital |
|||||||||||||
Current liabilities: |
|||||||||||||
Accounts payable |
$ |
13,021 |
$ |
10,941 |
|||||||||
Accounts payable–Antero |
1,380 |
2,138 |
|||||||||||
Accrued capital expenditures |
49,974 |
50,022 |
|||||||||||
Accrued ad valorem tax |
5,862 |
7,195 |
|||||||||||
Accrued liabilities |
9,254 |
28,168 |
|||||||||||
Other current liabilities |
357 |
150 |
|||||||||||
Total current liabilities |
79,848 |
98,614 |
|||||||||||
Long-term liabilities |
|||||||||||||
Long-term debt |
115,000 |
620,000 |
|||||||||||
Contingent acquisition consideration |
— |
178,049 |
|||||||||||
Other |
859 |
624 |
|||||||||||
Total liabilities |
195,707 |
897,287 |
|||||||||||
Partners' capital: |
|||||||||||||
Common unitholders - public (59,286,451 units issued and outstanding) |
1,090,037 |
1,351,317 |
|||||||||||
Common unitholder - Antero (40,929,378 units issued and outstanding) |
71,665 |
30,186 |
|||||||||||
Subordinated unitholder - Antero (75,940,957 units issued and outstanding) |
180,757 |
(299,727) |
|||||||||||
General partner |
— |
969 |
|||||||||||
Total partners' capital |
1,342,459 |
1,082,745 |
|||||||||||
Parent net investment |
278,444 |
— |
|||||||||||
Total capital |
1,620,903 |
1,082,745 |
|||||||||||
Total liabilities and partners' capital |
$ |
1,816,610 |
$ |
1,980,032 |
|||||||||
ANTERO MIDSTREAM PARTNERS LP | ||||||||||||
Combined Consolidated Results of Operations | ||||||||||||
December 31, 2014 and 2015 | ||||||||||||
($ in thousands, except average realized fees) | ||||||||||||
Year ended December 31, |
Amount of |
Percentage | ||||||||||
2014 |
2015 |
Increase |
Change | |||||||||
Revenue: |
||||||||||||
Revenue - Antero |
$ |
258,029 |
$ |
386,164 |
$ |
128,135 |
50 |
% | ||||
Revenue - third-party |
8,245 |
1,160 |
(7,085) |
(86) |
% | |||||||
Total revenue |
266,274 |
387,324 |
121,050 |
45 |
% | |||||||
Operating expenses: |
||||||||||||
Direct operating |
48,821 |
78,852 |
30,031 |
62 |
% | |||||||
General and administrative (before equity-based compensation) |
18,748 |
28,736 |
9,988 |
53 |
% | |||||||
Equity-based compensation |
11,618 |
22,470 |
10,852 |
93 |
% | |||||||
Depreciation |
53,029 |
86,670 |
33,641 |
63 |
% | |||||||
Contingent acquisition consideration accretion |
— |
3,333 |
3,333 |
* |
||||||||
Total operating expenses |
132,216 |
220,061 |
87,845 |
66 |
% | |||||||
Operating income |
134,058 |
167,263 |
33,205 |
25 |
% | |||||||
Interest expense |
6,183 |
8,158 |
1,975 |
32 |
% | |||||||
Net income |
$ |
127,875 |
$ |
159,105 |
$ |
31,230 |
24 |
% | ||||
Adjusted EBITDA |
$ |
198,705 |
$ |
279,736 |
$ |
81,031 |
41 |
% | ||||
Operating Data: |
||||||||||||
Gathering—low pressure (MMcf) |
181,727 |
370,830 |
189,103 |
104 |
% | |||||||
Gathering—high pressure (MMcf) |
167,935 |
432,861 |
264,926 |
158 |
% | |||||||
Compression (MMcf) |
38,104 |
157,515 |
119,411 |
313 |
% | |||||||
Condensate gathering (MBbl) |
621 |
1,117 |
496 |
80 |
% | |||||||
Fresh water distribution (MBbl) |
48,333 |
35,044 |
(13,289) |
(27) |
% | |||||||
Wells serviced by water distribution |
192 |
124 |
(68) |
(35) |
% | |||||||
Gathering—low pressure (MMcf/d) |
498 |
1,016 |
518 |
104 |
% | |||||||
Gathering—high pressure (MMcf/d) |
460 |
1,186 |
726 |
158 |
% | |||||||
Compression (MMcf/d) |
104 |
432 |
328 |
313 |
% | |||||||
Condensate gathering (MBbl/d) |
2 |
3 |
1 |
80 |
% | |||||||
Fresh water distribution (MBbl/d) |
132 |
96 |
(36) |
(27) |
% | |||||||
Average realized fees: |
||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
0.00 |
2 |
% | ||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.18 |
$ |
0.19 |
$ |
0.01 |
2 |
% | ||||
Average compression fee ($/Mcf) |
$ |
0.18 |
$ |
0.19 |
$ |
0.01 |
2 |
% | ||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.08 |
$ |
4.16 |
$ |
0.08 |
2 |
% | ||||
Average fresh water distribution fee—Antero ($/Bbl) |
$ |
3.56 |
$ |
3.64 |
$ |
0.08 |
2 |
% | ||||
Average fresh water distribution fee—third party ($/Bbl) |
$ |
3.00 |
$ |
4.75 |
$ |
1.75 |
58 |
% |
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||||||||
Combined Consolidated Results of Operations | |||||||||||||
December 31, 2014 and 2015 | |||||||||||||
($ in thousands, except average realized fees) | |||||||||||||
Three Months Ended |
|||||||||||||
December 31, |
Amount of |
||||||||||||
2014 |
2015 |
Increase (Decrease) |
Percentage Change | ||||||||||
Revenue: |
|||||||||||||
Revenue - Antero |
$ |
95,144 |
$ |
131,348 |
$ |
36,204 |
38 |
% | |||||
Revenue - third-party |
5,574 |
345 |
(5,229) |
(94) |
% | ||||||||
Total revenue |
100,718 |
131,693 |
30,975 |
31 |
% | ||||||||
Operating expenses: |
|||||||||||||
Direct operating |
16,289 |
40,021 |
23,732 |
146 |
% | ||||||||
General and administrative (before equity-based compensation) |
4,953 |
8,476 |
3,523 |
71 |
% | ||||||||
Equity-based compensation |
4,226 |
4,810 |
584 |
14 |
% | ||||||||
Depreciation |
17,290 |
23,152 |
5,863 |
34 |
% | ||||||||
Contingent acquisition consideration accretion |
— |
3,333 |
3,333 |
* |
|||||||||
Total operating expenses |
42,758 |
79,793 |
37,035 |
87 |
% | ||||||||
Operating income |
57,960 |
51,900 |
(6,060) |
(10) |
% | ||||||||
Interest expense |
2,062 |
2,892 |
830 |
40 |
% | ||||||||
Net income |
$ |
55,898 |
$ |
49,008 |
$ |
(6,890) |
(12) |
% | |||||
Adjusted EBITDA |
$ |
79,476 |
$ |
83,195 |
$ |
3,719 |
5 |
% | |||||
Operating Data: |
|||||||||||||
Gathering—low pressure (MMcf) |
67,899 |
103,388 |
35,489 |
52 |
% | ||||||||
Gathering—high pressure (MMcf) |
83,534 |
109,931 |
26,397 |
32 |
% | ||||||||
Compression (MMcf) |
20,394 |
43,932 |
23,538 |
115 |
% | ||||||||
Condensate gathering (MBbl) |
246 |
366 |
119 |
48 |
% | ||||||||
Fresh water distribution (MBbl) |
17,132 |
11,011 |
(6,121) |
(36) |
% | ||||||||
Wells serviced by water distribution |
55 |
39 |
(16) |
(29) |
% | ||||||||
Gathering—low pressure (MMcf/d) |
738 |
1,124 |
386 |
52 |
% | ||||||||
Gathering—high pressure (MMcf/d) |
908 |
1,195 |
287 |
32 |
% | ||||||||
Compression (MMcf/d) |
222 |
478 |
256 |
115 |
% | ||||||||
Condensate gathering (MBbl/d) |
3 |
4 |
1 |
48 |
% | ||||||||
Fresh water distribution (MBbl/d) |
186 |
120 |
(66) |
(36) |
% | ||||||||
Average realized fees: |
|||||||||||||
Average gathering—low pressure fee ($/Mcf) |
$ |
0.31 |
$ |
0.31 |
$ |
0.00 |
2 |
% | |||||
Average gathering—high pressure fee ($/Mcf) |
$ |
0.18 |
$ |
0.19 |
$ |
0.01 |
2 |
% | |||||
Average compression fee ($/Mcf) |
$ |
0.18 |
$ |
0.19 |
$ |
0.01 |
2 |
% | |||||
Average gathering—condensate fee ($/Bbl) |
$ |
4.08 |
$ |
4.16 |
$ |
0.08 |
2 |
% | |||||
Average fresh water distribution fee—Antero ($/Bbl) |
$ |
3.56 |
$ |
3.66 |
$ |
0.10 |
3 |
% | |||||
Average fresh water distribution fee—third party ($/Bbl) |
$ |
3.00 |
$ |
— |
$ |
(3.00) |
(100) |
% | |||||
* Not meaningful or applicable. |
ANTERO MIDSTREAM PARTNERS LP | |||||||||
Combined Consolidated Results of Operations | |||||||||
December 31, 2014 and 2015 | |||||||||
(In thousands) | |||||||||
Gathering and |
Water |
Consolidated | |||||||
Compression |
Handling |
Total | |||||||
Year Ended December 31, 2014 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
95,746 |
$ |
162,283 |
$ |
258,029 | |||
Revenue - third-party |
- |
8,245 |
8,245 | ||||||
Total revenues |
95,746 |
170,528 |
266,274 | ||||||
Operating expenses: |
|||||||||
Direct operating |
15,470 |
33,351 |
48,821 | ||||||
General and administrative (before equity-based compensation) |
13,416 |
5,332 |
18,748 | ||||||
Equity-based compensation |
8,619 |
2,999 |
11,618 | ||||||
Depreciation |
36,789 |
16,240 |
53,029 | ||||||
Total expenses |
74,294 |
57,922 |
132,216 | ||||||
Operating income |
$ |
21,452 |
$ |
112,606 |
$ |
134,058 | |||
Capital expenditures |
$ |
553,582 |
$ |
200,116 |
$ |
753,698 | |||
Year Ended December 31, 2015 |
|||||||||
Revenues: |
|||||||||
Revenue - Antero |
$ |
230,210 |
$ |
155,954 |
$ |
386,164 | |||
Revenue - third-party |
382 |
778 |
1,160 | ||||||
Total revenues |
230,592 |
156,732 |
387,324 | ||||||
Operating expenses: |
|||||||||
Direct operating |
25,783 |
53,069 |
78,852 | ||||||
General and administrative (before equity-based compensation) |
22,608 |
6,128 |
28,736 | ||||||
Equity-based compensation |
17,840 |
4,630 |
22,470 | ||||||
Depreciation |
60,838 |
25,832 |
86,670 | ||||||
Contingent acquisition consideration accretion |
- |
3,333 |
3,333 | ||||||
Total expenses |
127,069 |
92,992 |
220,061 | ||||||
Operating income |
$ |
103,523 |
$ |
63,740 |
$ |
167,263 | |||
Capital expenditures |
$ |
320,002 |
$ |
132,633 |
$ |
452,635 |
ANTERO MIDSTREAM PARTNERS LP | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
Years Ended December 31, 2013, 2014 and 2015 | ||||||||||
(In thousands) | ||||||||||
2013 |
2014 |
2015 |
||||||||
Cash flows provided by operating activities: |
||||||||||
Net income |
$ |
2,015 |
$ |
127,875 |
$ |
159,105 |
||||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||||
Depreciation |
14,119 |
53,029 |
86,670 |
|||||||
Accretion of contingent acquisition consideration |
— |
— |
3,333 |
|||||||
Equity-based compensation |
24,349 |
11,618 |
22,470 |
|||||||
Amortization of deferred financing costs |
— |
135 |
1,144 |
|||||||
Changes in assets and liabilities: |
||||||||||
Accounts receivable–Antero |
(6,267) |
(29,988) |
(35,148) |
|||||||
Accounts receivable–third party |
— |
(5,574) |
2,867 |
|||||||
Prepaid expenses |
— |
(518) |
518 |
|||||||
Accounts payable |
— |
863 |
2,803 |
|||||||
Accounts payable–Antero |
— |
1,059 |
475 |
|||||||
Accrued ad valorem tax |
1,948 |
3,868 |
1,333 |
|||||||
Accrued liabilities |
2,081 |
7,066 |
14,108 |
|||||||
Net cash provided by operating activities |
38,245 |
169,433 |
259,678 |
|||||||
Cash flows used in investing activities: |
||||||||||
Additions to gathering and compression systems |
(389,340) |
(553,582) |
(320,002) |
|||||||
Additions to Water handling and treatment systems |
(200,256) |
(200,116) |
(132,633) |
|||||||
Amounts paid to Antero for property and equipment |
— |
(40,277) |
— |
|||||||
Change in other assets |
(8,581) |
(3,530) |
7,180 |
|||||||
Net cash used in investing activities |
(598,177) |
(797,505) |
(445,455) |
|||||||
Cash flows provided by (used in) financing activities: |
||||||||||
Deemed contribution from (distribution to) Antero, net |
560,800 |
(5,375) |
(52,669) |
|||||||
Distributions to unitholders |
— |
— |
(107,248) |
|||||||
Net proceeds from initial public offering |
— |
1,087,224 |
— |
|||||||
Borrowings on bank credit facilities, net |
— |
115,000 |
505,000 |
|||||||
Distribution to Antero |
— |
(332,500) |
(620,997) |
|||||||
Proceeds from private placement of common units, net |
— |
— |
240,703 |
|||||||
Payments of deferred financing costs |
— |
(4,871) |
(2,059) |
|||||||
Other |
(868) |
(1,214) |
(262) |
|||||||
Net cash provided by (used in) financing activities |
559,932 |
858,264 |
(37,532) |
|||||||
Net increase (decrease) in cash and cash equivalents |
— |
230,192 |
(223,309) |
|||||||
Cash and cash equivalents, beginning of period |
— |
— |
230,192 |
|||||||
Cash and cash equivalents, end of period |
$ |
— |
$ |
230,192 |
$ |
6,883 |
||||
Supplemental disclosure of cash flow information: |
||||||||||
Cash paid during the period for interest |
$ |
164 |
$ |
5,864 |
$ |
7,765 |
||||
Supplemental disclosure of noncash investing activities: |
||||||||||
Increase in accrued capital expenditures and accounts payable for property and equipment |
$ |
29,852 |
$ |
37,596 |
$ |
4,552 |
Logo - http://photos.prnewswire.com/prnh/20141209/163435LOGO
SOURCE Antero Midstream Partners LP
DENVER, Feb. 24, 2016 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today released its fourth quarter and full-year 2015 financial and operating results. The relevant financial statements are included in Antero's Annual Report on Form 10-K for the year ended December 31, 2015, which has been filed with the Securities and Exchange Commission ("SEC").
Highlights for the Fourth Quarter of 2015:
Recent Developments
Year-End 2015 Proved and 3P Reserves
On January 27, 2016, Antero announced that proved reserves at December 31, 2015 were 13.2 Tcfe, a 4% increase compared to proved reserves at December 31, 2014. Finding and development cost for proved reserve additions was $0.80 per Mcfe. This finding and development cost includes drilling and completion capital as well as costs incurred for well pads, roads, certain wellhead facilities, acquisitions, land additions and gives effect to performance and price revisions. Proved developed reserves increased by 54% from year-end 2014 to 5.8 Tcfe at December 31, 2015. Additionally, the percentage of proved reserves classified as proved developed increased to 44% at December 31, 2015 as compared to 30% at year-end 2014.
The Company's proved, probable and possible ("3P") reserves at year-end 2015 totaled 37.1 Tcfe, which represents a 9% decrease compared to the previous year. Both proved and 3P reserves as of December 31, 2015 excluded 366 million barrels and 1,237 million barrels of ethane, respectively, that is expected to remain in the natural gas stream until such time that pricing supports full ethane recovery. Antero's Marcellus and Utica 3P drilling inventory totaled 3,719 locations at year-end 2015, of which approximately 78% were in the Marcellus.
2016 Capital Budget and Guidance
On February 17, 2016, Antero announced that it expects to invest $1.3 billion in 2016 for drilling and completion and $100 million for core leasehold acreage acquisitions. The $1.3 billion drilling and completion budget represents a 21% reduction from 2015 drilling and completion capital expenditures of $1.65 billion. Net daily production for 2016 is projected to average 1.715 Bcfe/d, a 15% increase over 2015 actual net daily production of 1.493 Bcfe/d. Antero's 2016 capital budget excludes Antero Midstream Partners LP's ("Antero Midstream") (NYSE: AM) $435 million capital budget relating to low and high pressure gathering pipelines, compressor stations and fresh water delivery and advanced wastewater treatment infrastructure.
Antero Resources Financial Results
As of December 31, 2015, Antero owned a 66% limited partner interest in Antero Midstream. Antero Midstream financial results are consolidated with Antero's results.
Fourth Quarter 2015 Financial Results
For the three months ended December 31, 2015, the Company reported net income from continuing operations attributable to common stockholders of $158 million, or $0.57 per basic and diluted share, compared to net income from continuing operations of $607 million or $2.32 per basic and diluted share in the fourth quarter for 2014. GAAP net income for the fourth quarter of 2015 included the following items:
Without the effect of these items, the Company's results for the fourth quarter of 2015 were as follows:
Net production for the fourth quarter of 2015 averaged 1,497 MMcfe/d, an 18% increase as compared to the fourth quarter of 2014 and a 1% decrease compared to the third quarter of 2015. The sequential decrease in production is primarily due to the periodic shut-in of production, averaging 45 MMcfe/d in the fourth quarter, as a result of Antero's decision not to sell gas at depressed pricing at the Dominion South and TETCO M2 indices. Net production was comprised of 1,168 MMcf/d of natural gas (78%), 49,005 Bbl/d of natural gas liquids ("NGL"s) (20%) and 5,751 Bbl/d of crude oil (2%). Fourth quarter 2015 net liquids production (NGLs and oil) of 54,757 Bbl/d increased 80% as compared to the fourth quarter of 2014 and 5% from the third quarter of 2015.
Average natural gas price before hedging decreased 42% from the prior year quarter to $2.13 per Mcf, a $0.14 per Mcf negative differential to Nymex, due to a 43% decline in Nymex. Approximately 83% of Antero's fourth quarter 2015 natural gas production was priced at favorable indices, including Columbia Gas Transmission (TCO), Nymex, Chicago and Gulf Coast. The remaining 17% of natural gas production was priced at various less favorable index pricing points including Dominion South and Tetco M2.
Average realized y-grade C3+ NGL price for the fourth quarter of 2015 was $17.37 per barrel, or 41% of Nymex WTI oil price, a 48% decrease as compared to the prior year quarter, and average realized oil price before hedging was $28.59 per barrel, a 52% decrease as compared to the fourth quarter of 2014. Antero's average realized ethane price (C2) for the fourth quarter of 2015 was $6.17 per barrel, or $0.15 per gallon. The fourth quarter of 2015 represented the first period in which Antero recovered ethane at the Sherwood processing plant in West Virginia. Average natural gas-equivalent price including C2+ NGLs and oil, but excluding hedge settlements, decreased from the prior year quarter by 42% to $2.32 per Mcfe due to a 43% decline in both Nymex WTI and Henry Hub natural gas prices.
Average realized natural gas price including hedges was $4.40 per Mcf for the fourth quarter of 2015, in line when compared to the fourth quarter of 2014. Average realized NGL price including hedges was $21.51 per barrel, a 37% decrease as compared to the fourth quarter of 2014. Average realized oil price including hedges was $40.85 per barrel, a 48% decrease as compared to the fourth quarter of 2014. Average natural gas-equivalent price including NGLs, oil and hedge settlements decreased by 9% to $4.28 per Mcfe for the fourth quarter of 2015 as compared to the fourth quarter of 2014. For the fourth quarter of 2015, Antero realized hedging gains of $270 million, or $1.96 per Mcfe.
Total operating revenues for the fourth quarter of 2015 were $905 million as compared to $1.5 billion for the fourth quarter of 2014. Operating revenue for the fourth quarter of 2015 included a $275 million non-cash gain on unsettled hedges while the fourth quarter of 2014 included a $853 million non-cash gain on unsettled hedges. Liquids production contributed 28% of combined natural gas, NGLs and oil revenue before hedges in the fourth quarter of 2015, as compared to a 22% contribution for the prior year quarter. Adjusted net revenue increased 8% to $630 million compared to the fourth quarter of 2014 (including cash-settled hedge gains and losses but excluding unsettled hedge gains and losses). For a reconciliation of adjusted net revenue to operating revenue, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Marketing revenue for the fourth quarter of 2015 was $33 million. Antero's marketing revenue was primarily associated with the sale of third-party gas purchased to utilize the Company's excess firm transportation capacity on the Tennessee Gas Pipeline.
Marketing expense for the fourth quarter of 2015 was $85 million. The largest components of marketing expense were the costs related to excess capacity, the cost of purchasing third-party gas and the firm transport demand costs associated with the Company's unused ATEX ethane pipeline capacity. During the fourth quarter, Antero gained access to over 1 Bcf/d of incremental Marcellus firm transportation takeaway capacity to more favorably priced markets through the Stonewall Pipeline and Tennessee Gas Pipeline. This takeaway capacity was only approximately 55% utilized in December as there was limited access to the Tennessee pipeline and the firm sales agreements utilizing the Stonewall capacity were not effective until January 1, 2016. The percentage utilization increased to approximately 80% in January 2016 with the commencement of the firm sales agreements utilizing the Stonewall pipeline and additional access to the Tennessee pipeline. Per unit net marketing expenses for the fourth quarter of 2015 were $0.38 per Mcfe.
Additionally, as previously disclosed, there was a one-time non-cash expense of $28 million during the quarter related to the buy-back and termination of a 130 BBtu/d firm sales contract with Dominion South related pricing. The termination of this contract has been classified as contract termination and rig stacking expense in the Company's statement of operations. Based on year-end 2015 strip pricing, the expected incremental revenue over the next two years from terminating this contract and instead selling the volumes at the TCO index is projected to be approximately $60 million, substantially exceeding the termination charge associated with this transaction.
Per unit cash production expense (lease operating, gathering, compression, processing and transportation, and production tax) for the fourth quarter of 2015 was $1.46 per Mcfe which is a 5% decrease compared to $1.54 per Mcfe in the prior year quarter. The per unit cash production expense for the quarter included $0.08 per Mcfe for lease operating costs, $1.23 per Mcfe for gathering, compression and transportation costs and $0.15 per Mcfe for production and ad valorem taxes. Per unit general and administrative expense for the fourth quarter of 2015, excluding non-cash equity-based compensation expense, was $0.27 per Mcfe, a 13% increase from the fourth quarter of 2014. The increase was primarily driven by increased staffing levels, as well as increases in legal and other general corporate expenses, partly due to Antero's increased development activities and production levels. Per unit depreciation, depletion and amortization expense decreased 13% from the prior year quarter to $1.18 per Mcfe, primarily driven by proved developed reserves increasing at a faster rate than the corresponding cost additions from wells completed during the quarter, partially offset by increased depreciation on midstream and water assets.
Adjusted EBITDAX of $308 million for the fourth quarter of 2015 was 7% lower than the prior year quarter primarily due to decreased product revenue. EBITDAX margin for the quarter was $2.23 per Mcfe, representing a 22% decrease from the prior year quarter primarily due to lower commodity prices. For the fourth quarter of 2015, cash flow from operations before changes in working capital decreased 14% from the prior year to $239 million.
For a description of Adjusted EBITDAX and EBITDAX margin, cash flow from operations before changes in working capital and adjusted net income from continuing operations attributable to common stockholders and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."
Antero Midstream Financial Results
Antero Midstream results were released today and are available at www.anteromidstream.com
Low pressure gathering volumes for the fourth quarter of 2015 averaged 1,124 MMcf/d, a 52% increase from the fourth quarter of 2014 and an 8% increase sequentially. High pressure gathering volumes for the fourth quarter of 2015 averaged 1,195 MMcf/d, a 32% increase from the fourth quarter of 2014 and a 2% decrease from the third quarter of 2015. Compression volumes for the fourth quarter of 2015 averaged 478 MMcf/d, a 115% increase from the fourth quarter of 2014 and a 10% increase sequentially. Condensate gathering volumes averaged 3,967 Bbl/d during the quarter, a 48% increase from the fourth quarter of 2015 and 39% increase from the third quarter of 2015. Volumetric throughput growth was driven primarily by production growth from Antero. Fresh water delivery volumes averaged 119,671 Bbl/d during the fourth quarter of 2015, a 36% decrease compared to the prior year quarter and a 78% increase sequentially.
For the three months ended December 31, 2015, Antero Midstream reported revenues of $132 million, comprised of $63 million in revenues from the Gathering and Compression segment and $69 million in revenues from the Water Handling segment. Direct operating expenses for the Gathering and Compression and Water Handling segments were $6 million and $34 million, respectively, for a total of $40 million in direct operating expenses. General and administrative expenses totaled $13 million during the fourth quarter of 2015, including $5 million of non-cash equity-based compensation expense. Total cash and non-cash operating expenses were $80 million, including $23 million of depreciation.
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of Antero Midstream, declared a cash distribution of $0.22 per unit ($0.88 per unit annualized) for the fourth quarter of 2015. The distribution represents a 29% increase over the minimum quarterly distribution and a 7% increase quarter-over-quarter. The distribution represents Antero Midstream's fourth consecutive quarterly distribution increase since its initial public offering in November 2014. The distribution will be payable on February 29, 2016 to unitholders of record as of February 15, 2016.
2015 Financial Results
Net production for 2015 averaged 1,493 MMcfe/d, an increase of 48% from the prior year. Net production was comprised of 1,203 MMcf/d of natural gas (81%), 42,604 Bbl/d of NGLs (17%) and 5,694 Bbl/d of crude oil (2%). Net liquids production in 2015 averaged 48,298 Bbl/d, an increase of 110% over 2014 liquids production. The net production increase was primarily driven by liquids-rich production from 69 new Marcellus wells and 62 new Utica wells brought on line in 2015, all operated by Antero.
Average natural gas price before hedges decreased 42% from the prior year to $2.37 per Mcf, a $0.29 per Mcf negative differential to Nymex, in line with 2015 guidance of $0.20 per Mcf to $0.30 per Mcf. Approximately 69% of Antero's 2015 natural gas production was priced at favorable indices, including Columbia Gas Transmission (TCO), Nymex and Chicago. The remaining 31% of natural gas production was priced at various other less favorable index pricing points, including Dominion South and Tetco M2.
Average realized Y-grade C3+ NGL price for 2015 was $17.15 per barrel, or 35% of the Nymex WTI oil price, a 63% decrease as compared to the prior year and in line with 2015 guidance of 33% to 37% of WTI. Average realized oil price before hedging was $34.05 per barrel, a 58% decrease as compared to the prior year. Average natural gas-equivalent price including C2+ NGLs and oil, but excluding hedge settlements, decreased 47% to $2.52 per Mcfe from the prior year due to a 48% decline in Nymex WTI oil prices and 40% decline in Nymex Henry Hub natural gas prices, respectively.
Average realized natural gas price including hedges was $4.15 per Mcf for 2015, an 8% decrease as compared to 2014. Average realized NGL price including hedges was $20.57 per barrel, a 56% decrease compared to 2014. Average realized oil price including hedges was $42.38 per barrel, a 50% decrease as compared to 2014. Average natural gas-equivalent price including NGLs, oil and hedge settlements, decreased by 20% to $4.10 per Mcfe for 2015 as compared to 2014. For 2015, Antero realized hedging gains of $857 million, or $1.57 per Mcfe.
Total operating revenues for 2015 were $4.0 billion as compared to $2.7 billion for the prior year. Operating revenue for 2015 included a $1.5 billion non-cash gain on unsettled hedges while 2014 included a $732 million non-cash gain on unsettled hedges. Liquids production contributed 24% of combined natural gas, NGLs and oil revenue before hedges in 2015 compared to 25% during 2014. Non-GAAP adjusted net revenue increased 25% to $2.4 billion compared to 2014 (including cash-settled hedge gains and losses but excluding unsettled hedge gains and losses). For a reconciliation of adjusted net revenue to operating revenue, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
Marketing revenue for 2015 was $176 million. Antero's marketing revenue was primarily associated with the sale of third-party gas purchased to utilize the Company's excess firm transportation capacity on the Rockies Express Pipeline and Tennessee Gas Pipeline.
Marketing expense for 2015 was $299 million. The largest components of marketing expense include firm transportation costs related to current excess capacity as well as the cost of third-party purchased gas and NGLs.
Net marketing expense for 2015 was $123 million, or $0.23 per Mcfe, in line with 2015 guidance of $0.20 to $0.30 per Mcfe.
Per unit cash production expense (lease operating, gathering, compression, processing and transportation, and production tax) for 2015 was $1.42 per Mcfe which is a 10% decrease compared to $1.58 per Mcfe in the prior year and ahead of 2015 guidance of $1.50 to $1.60 per Mcfe. The per unit cash production expense for 2015 included $0.07 per Mcfe for lease operating costs, $1.21 per Mcfe for gathering, compression and transportation costs and $0.14 per Mcfe for production and ad valorem taxes. The decrease was primarily due to decreases in fuel costs as compared to the prior year due to lower natural gas prices.
Per unit general and administrative expense for 2015, excluding non-cash equity based compensation expense, was $0.25 per Mcfe, an 11% decrease from 2014 and in line with 2015 guidance of $0.23 per Mcfe to $0.27 per Mcfe. The decrease was primarily driven by the significant increase in net production. Per unit depreciation, depletion and amortization expense was consistent with the prior year at $1.31 per Mcfe.
The Company reported net income from continuing operations attributable to common stockholders of $941 million ($3.43 per basic and diluted share) on a GAAP basis for 2015, including $1.5 billion of non-cash gains on unsettled hedges ($954 million net of tax), $98 million of non-cash equity-based compensation expense ($61 million net of tax), $104 million of impairments of unproved properties ($65 million net of tax), and $39 million of contract termination and rig stacking expense ($24 million net of tax). Excluding these items, adjusted net income from continuing operations attributable to common stockholders was $152 million ($0.56 per basic and diluted share) for 2015, representing a 52% decrease over the prior year.
Adjusted EBITDAX of $1.2 billion for 2015 was 5% higher than the prior year primarily due to a 48% increase in production, which was partially offset by a 20% decrease in the average per Mcfe price received after the impact of cash settled derivatives, net of the related increases in cash operating and general and administrative expenses. EBITDAX margin for 2015 was $2.24 per Mcfe, representing a 29% decrease from the prior year due to lower commodity prices. For 2015, cash flow from operations before changes in working capital was in line with the prior year at $976 million.
For a description of Adjusted EBITDAX and EBITDAX margin, cash flow from operations before changes in working capital and adjusted net income from continuing operations attributable to common stockholders and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."
Balance Sheet and Liquidity
As of December 31, 2015, Antero's consolidated net debt was $4.7 billion of which $1.3 billion were borrowings outstanding under the Company's $5.5 billion of lender commitments on its senior secured revolving credit facilities. Including $702 million in letters of credit outstanding, the company had $3.5 billion in available consolidated liquidity as of December 31, 2015. For a reconciliation of consolidated net debt to total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."
2015 Capital Spending
Antero's drilling and completion costs for the year ended December 31, 2015, were approximately $1.65 billion. In addition, the Company invested $199 million for additional leasehold interests, including $39 million for acquisitions and $160 million for land, and $80 million in Antero's fresh water distribution and wastewater treatment projects in the Marcellus and Utica Shale plays. Antero's drilling and completion costs for the three months ended December 31, 2015, were $301 million. In addition, the Company invested $28 million for additional leasehold interests during the fourth quarter of 2015.
Conference Call
A conference call is scheduled on Thursday, February 25, 2016, at 9:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Resources." A telephone replay of the call will be available until Friday, March 4, 2016, at 9:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10078393.
To access the live webcast and view the related earnings conference call presentation, visit Antero's website at www.anteroresources.com. The webcast will be archived for replay on the Company's website until March 4, 2016, at 9:00 am MT.
Presentation
An updated presentation will be posted to the Company's website before the February 25, 2016 conference call. The presentation can be found at www.anteroresources.com on the homepage. Information on the Company's website does not constitute a portion of this press release.
Non-GAAP Financial Measures
Adjusted net revenue as set forth in this release represents total operating revenue adjusted for certain non-cash items, including unsettled hedge gains and losses and gains and losses on asset sales. Antero believes that adjusted net revenue is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted net revenue is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenue as an indicator of financial performance. The following table reconciles total operating revenue to adjusted net revenue:
Three months ended |
Year ended | ||||||||||
December 31, |
December 31, | ||||||||||
2014 |
2015 |
2014 |
2015 | ||||||||
Total operating revenues |
$ |
1,478,597 |
$ |
905,122 |
$ |
2,720,632 |
$ |
3,954,858 | |||
Commodity derivative fair value gains |
(931,921) |
(545,103) |
(868,201) |
(2,381,501) | |||||||
Gains on settled derivatives |
78,451 |
269,933 |
135,784 |
856,572 | |||||||
Gain on sale of assets |
(40,000) |
0 |
(40,000) |
0 | |||||||
Adjusted net revenues |
$ |
585,127 |
$ |
629,952 |
$ |
1,948,215 |
$ |
2,429,929 | |||
Adjusted net income from continuing operations attributable to common stockholders as set forth in this release represents net income (loss) from continuing operations attributable to common stockholders, adjusted for certain items. Antero believes that adjusted net income from continuing operations attributable to common stockholders is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted net income from continuing operations attributable to common stockholders is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) from continuing operations attributable to common stockholders as an indicator of financial performance. The following table reconciles net income (loss) from continuing operations attributable to common stockholders to adjusted net income from continuing operations attributable to common stockholders:
Three months ended |
Years ended | |||||||||||
December 31, |
December 31, | |||||||||||
2014 |
2015 |
2014 |
2015 | |||||||||
Net income from continuing operations attributable to common stockholders |
$ |
606,722 |
$ |
158,464 |
$ |
671,377 |
$ |
941,364 | ||||
Non-cash commodity derivative gains on unsettled derivatives |
(853,470) |
(275,170) |
(732,417) |
(1,524,929) | ||||||||
Impairment of unproved properties |
7,303 |
60,651 |
15,198 |
104,321 | ||||||||
Equity-based compensation expense |
26,356 |
18,597 |
112,252 |
97,877 | ||||||||
Loss on early extinguishment of debt |
— |
— |
20,386 |
— | ||||||||
Gain on sale of assets |
(40,000) |
— |
(40,000) |
— | ||||||||
Contract termination and rig stacking |
— |
27,629 |
— |
38,531 | ||||||||
Income tax effect of reconciling items |
330,670 |
63,938 |
267,642 |
495,215 | ||||||||
Adjusted net income from continuing operations attributable to common stockholders |
$ |
77,581 |
$ |
54,109 |
$ |
314,438 |
$ |
152,379 |
Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operating activities before changes in working capital. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity.
The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release:
Three months ended |
Years ended | |||||||||||
2014 |
2015 |
2014 |
2015 | |||||||||
Net cash provided by operating activities |
$ |
199,375 |
$ |
169,781 |
$ |
998,121 |
$ |
1,006,381 | ||||
Net change in working capital |
78,348 |
68,842 |
(17,805) |
(30,067) | ||||||||
Cash flow from operations before changes in working capital |
$ |
277,723 |
$ |
238,623 |
$ |
980,316 |
$ |
976,314 |
The following table reconciles consolidated net debt to total debt as used in this release:
Years ended | ||||||
2014 |
2015 | |||||
Bank credit facilities |
$ |
1,730,000 |
$ |
1,327,000 | ||
6.00% senior notes due 2020 |
525,000 |
525,000 | ||||
5.375% senior notes due 2021 |
1,000,000 |
1,000,000 | ||||
5.125% senior notes due 2022 |
1,100,000 |
1,100,000 | ||||
5.625% senior notes due 2023 |
— |
750,000 | ||||
Net unamortized premium |
7,550 |
6,513 | ||||
Total debt |
$ |
4,362,550 |
$ |
4,708,513 | ||
Cash and cash equivalents |
245,979 |
23,473 | ||||
Consolidated net debt |
$ |
4,116,571 |
$ |
4,685,040 |
Adjusted EBITDAX is a non-GAAP financial measure that Antero defines as net income from continuing operations after adjusting for those items shown in the table below. Adjusted EBITDAX, as used and defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, Antero's management team believes Adjusted EBITDAX is useful to an investor in evaluating the Company's financial performance because this measure:
There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDAX reported by different companies. The following table represents a reconciliation of the Company's net income from continuing operations to total Adjusted EBITDAX, a reconciliation of total Adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before cash receipts for settled hedges to Adjusted EBITDAX margin:
Three months ended December 31, |
Years ended December 31, | |||||||||||
(in thousands) |
2014 |
2015 |
2014 |
2015 | ||||||||
Net income from continuing operations including noncontrolling interest |
$ |
608,970 |
$ |
175,574 |
$ |
673,625 |
$ |
979,996 | ||||
Commodity derivative fair value gains |
(931,921) |
(545,103) |
(868,201) |
(2,381,501) | ||||||||
Gains on settled derivatives |
78,451 |
269,933 |
135,784 |
856,572 | ||||||||
Gain on sale of assets |
(40,000) |
— |
(40,000) |
— | ||||||||
Interest expense |
48,994 |
60,471 |
160,051 |
234,400 | ||||||||
Loss on early extinguishment of debt |
— |
— |
20,386 |
— | ||||||||
Income tax expense |
369,753 |
77,181 |
445,672 |
575,890 | ||||||||
Depletion, depreciation, amortization, and accretion |
157,252 |
162,178 |
479,167 |
711,418 | ||||||||
Impairment of unproved properties |
7,303 |
60,651 |
15,198 |
104,321 | ||||||||
Exploration expense |
6,717 |
760 |
27,893 |
3,846 | ||||||||
Equity-based compensation expense |
26,356 |
18,597 |
112,252 |
97,877 | ||||||||
State franchise taxes |
450 |
(59) |
2,188 |
72 | ||||||||
Contract termination and rig stacking |
— |
27,629 |
— |
38,531 | ||||||||
Consolidated Adjusted EBITDAX |
332,325 |
307,812 |
1,164,015 |
1,221,422 | ||||||||
Net income from discontinued operations |
2,210 |
— |
2,210 |
— | ||||||||
Gain on sale of assets |
(3,564) |
— |
(3,564) |
— | ||||||||
Income tax expense |
1,354 |
— |
1,354 |
— | ||||||||
Adjusted EBITDAX from discontinued operations |
— |
— |
— |
— | ||||||||
Total Adjusted EBITDAX |
332,325 |
307,812 |
1,164,015 |
1,221,422 | ||||||||
Interest expense |
(48,994) |
(60,471) |
(160,051) |
(234,400) | ||||||||
Exploration expense |
(6,717) |
(760) |
(27,893) |
(3,846) | ||||||||
Changes in current assets and liabilities |
(78,348) |
(68,842) |
17,805 |
30,067 | ||||||||
State franchise taxes |
(450) |
59 |
(2,188) |
(72) | ||||||||
Other noncash items |
1,559 |
(8,017) |
6,433 |
(6,790) | ||||||||
Net cash provided by operating activities |
$ |
199,375 |
$ |
169,781 |
$ |
998,121 |
$ |
1,006,381 |
Three months ended |
Years ended | |||||||||||
December 31, |
December 31, | |||||||||||
Adjusted EBITDAX margin ($ per Mcfe): |
2014 |
2015 |
2014 |
2015 | ||||||||
Realized price before gains on settled derivatives |
$ |
4.00 |
$ |
2.32 |
$ |
4.73 |
$ |
2.52 | ||||
Gathering, compression, and water handling and treatment revenues |
0.09 |
0.05 |
0.06 |
0.04 | ||||||||
Lease operating expense |
(0.09) |
(0.08) |
(0.08) |
(0.07) | ||||||||
Gathering, compression, processing and transportation costs |
(1.25) |
(1.23) |
(1.26) |
(1.21) | ||||||||
Marketing, net |
(0.13) |
(0.38) |
(0.14) |
(0.23) | ||||||||
Production and ad valorem taxes |
(0.20) |
(0.15) |
(0.24) |
(0.14) | ||||||||
General and administrative(1) |
(0.24) |
(0.26) |
(0.28) |
(0.24) | ||||||||
Gains on settled derivatives |
0.68 |
1.96 |
0.37 |
1.57 | ||||||||
Adjusted EBITDAX margin ($ per Mcfe): |
$ |
2.86 |
$ |
2.23 |
$ |
3.16 |
$ |
2.24 | ||||
(1) – excludes equity-based stock compensation that is included in G&A |
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.
Cautionary Statements
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero 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. Nothing in this press release is intended to constitute guidance with respect to Antero Midstream.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility and continued low commodity prices, Antero's ability to meet development and drilling plans, the Company's ability to implement its hedge strategy and results, risk regarding the timing and amount of future production of natural gas, NGLs and oil, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, marketing and transportation risks, the ability to satisfy applicable minimum volume requirements, regulatory changes, the uncertainty inherent in estimating natural gas, NGL and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2015.
For more information, contact Michael Kennedy – SVP – Finance at (303) 357-6782 or mkennedy@anteroresources.com.
ANTERO RESOURCES CORPORATION | |||||||
Consolidated Balance Sheets | |||||||
December 31, 2014 and 2015 | |||||||
(In thousands, except share amounts) | |||||||
2014 |
2015 |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
245,979 |
23,473 |
||||
Accounts receivable, net of allowance for doubtful accounts of $1,251 in 2014 and $1,195 in 2015 |
116,203 |
79,404 |
|||||
Accrued revenue |
191,558 |
128,242 |
|||||
Derivative instruments |
692,554 |
1,009,030 |
|||||
Other current assets |
5,866 |
8,087 |
|||||
Total current assets |
1,252,160 |
1,248,236 |
|||||
Property and equipment: |
|||||||
Natural gas properties, at cost (successful efforts method): |
|||||||
Unproved properties |
2,060,936 |
1,996,081 |
|||||
Proved properties |
6,515,221 |
8,211,106 |
|||||
Water handling and treatment systems |
421,012 |
565,616 |
|||||
Gathering systems and facilities |
1,197,239 |
1,502,396 |
|||||
Other property and equipment |
37,687 |
46,415 |
|||||
10,232,095 |
12,321,614 |
||||||
Less accumulated depletion, depreciation, and amortization |
(879,643) |
(1,589,372) |
|||||
Property and equipment, net |
9,352,452 |
10,732,242 |
|||||
Derivative instruments |
899,997 |
2,108,450 |
|||||
Other assets |
68,886 |
66,296 |
|||||
Total assets |
$ |
11,573,495 |
14,155,224 |
||||
Liabilities and Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
531,564 |
364,160 |
||||
Accrued liabilities |
168,614 |
194,076 |
|||||
Revenue distributions payable |
182,352 |
129,949 |
|||||
Other current liabilities |
12,202 |
19,085 |
|||||
Total current liabilities |
894,732 |
707,270 |
|||||
Long-term liabilities: |
|||||||
Long-term debt |
4,362,550 |
4,708,513 |
|||||
Deferred income tax liability |
794,796 |
1,370,686 |
|||||
Other liabilities |
47,587 |
82,077 |
|||||
Total liabilities |
6,099,665 |
6,868,546 |
|||||
Commitments and contingencies |
|||||||
Equity: |
|||||||
Stockholders' equity: |
|||||||
Preferred stock, $0.01 par value; authorized - 50,000,000 shares; none issued |
— |
— |
|||||
Common stock, $0.01 par value; authorized - 1,000,000,000 shares; issued and outstanding 262,071,642 shares and 277,035,558 shares, respectively |
2,621 |
2,770 |
|||||
Additional paid-in capital |
3,513,725 |
4,122,811 |
|||||
Accumulated earnings |
867,447 |
1,808,811 |
|||||
Total stockholders' equity |
4,383,793 |
5,934,392 |
|||||
Noncontrolling interest in consolidated subsidiary |
1,090,037 |
1,352,286 |
|||||
Total equity |
5,473,830 |
7,286,678 |
|||||
Total liabilities and equity |
$ |
11,573,495 |
14,155,224 |
ANTERO RESOURCES CORPORATION | ||||||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||
Years Ended December 31, 2013, 2014 and 2015 | ||||||||||
(In thousands, except share and per share amounts) | ||||||||||
2013 |
2014 |
2015 |
||||||||
Revenue: |
||||||||||
Natural gas sales |
$ |
689,198 |
1,301,349 |
1,039,892 |
||||||
Natural gas liquids sales |
111,663 |
328,323 |
264,483 |
|||||||
Oil sales |
20,584 |
107,080 |
70,753 |
|||||||
Gathering, compression, and water handling and treatment |
— |
22,075 |
22,000 |
|||||||
Marketing |
— |
53,604 |
176,229 |
|||||||
Commodity derivative fair value gains |
491,689 |
868,201 |
2,381,501 |
|||||||
Gain on sale of gathering system |
— |
40,000 |
— |
|||||||
Total revenue |
1,313,134 |
2,720,632 |
3,954,858 |
|||||||
Operating expenses: |
||||||||||
Lease operating |
9,439 |
29,341 |
36,011 |
|||||||
Gathering, compression, processing, and transportation |
218,428 |
461,413 |
659,361 |
|||||||
Production and ad valorem taxes |
50,481 |
87,918 |
78,325 |
|||||||
Marketing |
— |
103,435 |
299,062 |
|||||||
Exploration |
22,272 |
27,893 |
3,846 |
|||||||
Impairment of unproved properties |
10,928 |
15,198 |
104,321 |
|||||||
Depletion, depreciation, and amortization |
233,876 |
477,896 |
709,763 |
|||||||
Accretion of asset retirement obligations |
1,065 |
1,271 |
1,655 |
|||||||
General and administrative (including equity-based compensation expense of $365,280, $112,252, and $97,877 in 2013, 2014, and 2015, respectively) |
425,438 |
216,533 |
233,697 |
|||||||
Contract termination and rig stacking |
— |
— |
38,531 |
|||||||
Total operating expenses |
971,927 |
1,420,898 |
2,164,572 |
|||||||
Operating income |
341,207 |
1,299,734 |
1,790,286 |
|||||||
Other expenses: |
||||||||||
Interest |
(136,617) |
(160,051) |
(234,400) |
|||||||
Loss on early extinguishment of debt |
(42,567) |
(20,386) |
— |
|||||||
Total other expenses |
(179,184) |
(180,437) |
(234,400) |
|||||||
Income from continuing operations before income taxes and discontinued operations |
162,023 |
1,119,297 |
1,555,886 |
|||||||
Provision for income tax expense |
(186,210) |
(445,672) |
(575,890) |
|||||||
Income (loss) from continuing operations |
(24,187) |
673,625 |
979,996 |
|||||||
Discontinued operations: |
||||||||||
Income from sale of discontinued operations, net of income tax expense of $3,249 and $1,354 in 2013 and 2014, respectively |
5,257 |
2,210 |
— |
|||||||
Net income (loss) and comprehensive income (loss) including noncontrolling interest |
(18,930) |
675,835 |
979,996 |
|||||||
Net income and comprehensive income attributable to noncontrolling interest |
— |
2,248 |
38,632 |
|||||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation |
$ |
(18,930) |
673,587 |
941,364 |
||||||
Earnings (loss) per common share: |
||||||||||
Continuing operations |
$ |
(0.09) |
2.56 |
3.43 |
||||||
Discontinued operations |
0.02 |
0.01 |
— |
|||||||
Total |
$ |
(0.07) |
2.57 |
3.43 |
||||||
Earnings (loss) per common share—assuming dilution: |
||||||||||
Continuing operations |
$ |
(0.09) |
2.56 |
3.43 |
||||||
Discontinued operations |
0.02 |
0.01 |
— |
|||||||
Total |
$ |
(0.07) |
2.57 |
3.43 |
||||||
Weighted average number of shares outstanding: |
||||||||||
Basic |
262,049,659 |
262,053,868 |
274,122,567 |
|||||||
Diluted |
262,049,659 |
262,068,106 |
274,143,341 |
ANTERO RESOURCES CORPORATION | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
Years ended December 31, 2013, 2014, and 2015 | ||||||||||
(In thousands) | ||||||||||
2013 |
2014 |
2015 |
||||||||
Cash flows from operating activities: |
||||||||||
Net income (loss) including noncontrolling interest |
$ |
(18,930) |
675,835 |
979,996 |
||||||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||||
Depletion, depreciation, amortization, and accretion |
234,941 |
479,167 |
711,418 |
|||||||
Impairment of unproved properties |
10,928 |
15,198 |
104,321 |
|||||||
Derivative fair value gains |
(491,689) |
(868,201) |
(2,381,501) |
|||||||
Gains on settled derivatives |
163,570 |
135,784 |
856,572 |
|||||||
Deferred income tax expense |
190,210 |
445,672 |
575,890 |
|||||||
Gain on sale of assets |
— |
(40,000) |
— |
|||||||
Equity-based compensation expense |
365,280 |
112,252 |
97,877 |
|||||||
Loss on early extinguishment of debt |
42,567 |
20,386 |
— |
|||||||
Gain on sale of discontinued operations |
(8,506) |
(3,564) |
— |
|||||||
Deferred income tax expense—discontinued operations |
3,249 |
1,354 |
— |
|||||||
Other |
1,173 |
6,433 |
31,741 |
|||||||
Changes in current assets and liabilities: |
||||||||||
Accounts receivable |
(9,314) |
(45,593) |
(3,201) |
|||||||
Accrued revenue |
(50,156) |
(94,733) |
63,316 |
|||||||
Other current assets |
19,543 |
(2,891) |
(2,221) |
|||||||
Accounts payable |
1,039 |
(11,710) |
5,200 |
|||||||
Accrued liabilities |
26,803 |
85,953 |
13,210 |
|||||||
Revenue distributions payable |
50,552 |
85,763 |
(52,403) |
|||||||
Other current liabilities |
3,447 |
1,016 |
6,166 |
|||||||
Net cash provided by operating activities |
534,707 |
998,121 |
1,006,381 |
|||||||
Cash flows used in investing activities: |
||||||||||
Additions to proved properties |
(15,300) |
(64,066) |
— |
|||||||
Additions to unproved properties |
(440,825) |
(777,422) |
(198,694) |
|||||||
Drilling and completion costs |
(1,615,965) |
(2,477,150) |
(1,651,282) |
|||||||
Additions to water handling and treatment systems |
(203,790) |
(196,675) |
(131,051) |
|||||||
Additions to gathering systems and facilities |
(389,453) |
(558,037) |
(360,287) |
|||||||
Additions to other property and equipment |
(6,240) |
(13,218) |
(6,595) |
|||||||
Change in other assets |
(2,019) |
(3,082) |
9,750 |
|||||||
Proceeds from asset sales |
— |
— |
40,000 |
|||||||
Net cash used in investing activities |
(2,673,592) |
(4,089,650) |
(2,298,159) |
|||||||
Cash flows from financing activities: |
||||||||||
Issuance of common stock |
1,578,573 |
— |
537,832 |
|||||||
Issuance of common units in Antero Midstream Partners LP |
— |
1,087,224 |
240,703 |
|||||||
Issuance of senior notes |
1,231,750 |
1,102,500 |
750,000 |
|||||||
Repayment of senior notes |
(690,000) |
(260,000) |
— |
|||||||
Borrowings (repayments) on bank credit facilities, net |
71,000 |
1,442,000 |
(403,000) |
|||||||
Make-whole premium on debt extinguished |
(33,041) |
(17,383) |
— |
|||||||
Payments of deferred financing costs |
(20,899) |
(31,543) |
(17,293) |
|||||||
Distributions to noncontrolling interest in consolidated subsidiary |
— |
— |
(34,129) |
|||||||
Other |
— |
(2,777) |
(4,841) |
|||||||
Net cash provided by financing activities |
2,137,383 |
3,320,021 |
1,069,272 |
|||||||
Net increase (decrease) in cash and cash equivalents |
(1,502) |
228,492 |
(222,506) |
|||||||
Cash and cash equivalents, beginning of period |
18,989 |
17,487 |
245,979 |
|||||||
Cash and cash equivalents, end of period |
$ |
17,487 |
245,979 |
23,473 |
||||||
Supplemental disclosure of cash flow information: |
||||||||||
Cash paid during the period for interest |
$ |
117,832 |
163,055 |
219,945 |
||||||
Supplemental disclosure of noncash investing activities: |
||||||||||
Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment |
$ |
188,123 |
181,591 |
(169,783) |
ANTERO RESOURCES CORPORATION
The following tables set forth selected operating data for the three months ended December 31, 2014 compared to the three months ended December 31, 2015:
Three months ended December 31, |
Amount of |
Percent |
||||||||||
(in thousands) |
2014 |
2015 |
(Decrease) |
Change |
||||||||
Operating revenues: |
||||||||||||
Natural gas sales |
$ |
364,472 |
$ |
228,910 |
$ |
(135,562) |
(37) |
% | ||||
NGLs sales |
83,516 |
76,080 |
(7,436) |
(9) |
% | |||||||
Oil sales |
18,021 |
15,126 |
(2,895) |
(16) |
% | |||||||
Gathering, compression, and water handling and treatment |
10,111 |
6,916 |
(3,195) |
(32) |
% | |||||||
Marketing |
30,556 |
32,987 |
2,431 |
8 |
% | |||||||
Commodity derivative fair value gains |
931,921 |
545,103 |
(386,818) |
(42) |
% | |||||||
Gain on sale of assets |
40,000 |
— |
(40,000) |
* |
||||||||
Total operating revenues |
1,478,597 |
905,122 |
(573,475) |
(39) |
% | |||||||
Operating expenses: |
||||||||||||
Lease operating |
10,771 |
10,450 |
(321) |
(3) |
% | |||||||
Gathering, compression, processing, and transportation |
145,535 |
168,728 |
23,193 |
16 |
% | |||||||
Production and ad valorem taxes |
23,795 |
20,867 |
(2,928) |
(12) |
% | |||||||
Marketing |
45,316 |
84,861 |
39,545 |
87 |
% | |||||||
Exploration |
6,717 |
760 |
(5,957) |
(89) |
% | |||||||
Impairment of unproved properties |
7,303 |
60,651 |
53,348 |
730 |
% | |||||||
Depletion, depreciation, and amortization |
156,912 |
161,750 |
4,838 |
3 |
% | |||||||
Accretion of asset retirement obligations |
340 |
428 |
88 |
26 |
% | |||||||
General and administrative (before equity-based compensation) |
27,835 |
37,175 |
9,340 |
34 |
% | |||||||
Equity-based compensation |
26,356 |
18,597 |
(7,759) |
(29) |
% | |||||||
Contract termination and rig stacking |
— |
27,629 |
27,629 |
* |
||||||||
Total operating expenses |
450,880 |
591,896 |
141,016 |
31 |
% | |||||||
Operating income |
1,027,717 |
313,226 |
(714,491) |
(70) |
% | |||||||
Other Expenses: |
||||||||||||
Interest expense |
(48,994) |
(60,471) |
(11,477) |
23 |
% | |||||||
Income from continuing operations before income taxes and discontinued operations |
978,723 |
252,755 |
(725,968) |
(74) |
% | |||||||
Income tax expense |
(369,753) |
(77,181) |
292,572 |
(79) |
% | |||||||
Net income and comprehensive income including noncontrolling interest |
608,970 |
175,574 |
(433,396) |
(71) |
% | |||||||
Net income and comprehensive income attributable to noncontrolling interest |
2,248 |
17,110 |
14,862 |
661 |
% | |||||||
Net income and comprehensive income attributable to Antero Resources Corporation |
$ |
606,722 |
$ |
158,464 |
$ |
(448,258) |
(74) |
% | ||||
Adjusted EBITDAX |
$ |
332,325 |
$ |
307,812 |
$ |
(24,513) |
(7) |
% | ||||
Production data: |
||||||||||||
Natural gas (Bcf) |
100 |
107 |
7 |
7 |
% | |||||||
NGLs (MBbl) |
2,500 |
4,509 |
2,009 |
80 |
% | |||||||
Oil (MBbl) |
301 |
529 |
228 |
76 |
% | |||||||
Combined (Bcfe) |
116 |
138 |
22 |
18 |
% | |||||||
Daily combined production (MMcfe/d) |
1,265 |
1,497 |
232 |
18 |
% | |||||||
Average prices before effects of derivative settlements: |
||||||||||||
Natural gas (per Mcf) |
$ |
3.66 |
$ |
2.13 |
$ |
(1.53) |
(42) |
% | ||||
NGLs (per Bbl) |
$ |
33.41 |
$ |
16.87 |
$ |
(16.54) |
(50) |
% | ||||
Oil (per Bbl) |
$ |
59.85 |
$ |
28.59 |
$ |
(31.26) |
(52) |
% | ||||
Combined (per Mcfe) |
$ |
4.00 |
$ |
2.32 |
$ |
(1.68) |
(42) |
% | ||||
Average realized prices after effects of derivative settlements: |
||||||||||||
Natural gas (per Mcf) |
$ |
4.39 |
$ |
4.40 |
$ |
0.01 |
— |
% | ||||
NGLs (per Bbl) |
$ |
33.41 |
$ |
21.15 |
$ |
(12.26) |
(37) |
% | ||||
Oil (per Bbl) |
$ |
78.24 |
$ |
40.85 |
$ |
(37.39) |
(48) |
% | ||||
Combined (per Mcfe) |
$ |
4.68 |
$ |
4.28 |
$ |
(0.40) |
(9) |
% | ||||
Average Costs (per Mcfe): |
||||||||||||
Lease operating |
$ |
0.09 |
$ |
0.08 |
$ |
(0.01) |
(11) |
% | ||||
Gathering, compression, processing, and transportation |
$ |
1.25 |
$ |
1.23 |
$ |
(0.02) |
(2) |
% | ||||
Production and ad valorem taxes |
$ |
0.20 |
$ |
0.15 |
$ |
(0.05) |
(25) |
% | ||||
Marketing, net |
$ |
0.13 |
$ |
0.38 |
$ |
0.25 |
192 |
% | ||||
Depletion, depreciation, amortization, and accretion |
$ |
1.35 |
$ |
1.18 |
$ |
(0.17) |
(13) |
% | ||||
General and administrative (before equity-based compensation) |
$ |
0.24 |
$ |
0.27 |
$ |
0.03 |
13 |
% |
* |
Not meaningful or applicable |
ANTERO RESOURCES CORPORATION
The following tables set forth selected operating data for the year ended December 31, 2014 compared to the year ended December 31, 2015:
Year ended December 31, |
Amount of |
Percent |
|||||||||||
(in thousands) |
2014 |
2015 |
(Decrease) |
Change |
|||||||||
Operating revenues: |
|||||||||||||
Natural gas sales |
$ |
1,301,349 |
$ |
1,039,892 |
$ |
(261,457) |
(20) |
% | |||||
NGLs sales |
328,323 |
264,483 |
(63,840) |
(19) |
% | ||||||||
Oil sales |
107,080 |
70,753 |
(36,327) |
(34) |
% | ||||||||
Gathering, compression, and water handling and treatment |
22,075 |
22,000 |
(75) |
— |
% | ||||||||
Marketing |
53,604 |
176,229 |
122,625 |
229 |
% | ||||||||
Commodity derivative fair value gains |
868,201 |
2,381,501 |
1,513,300 |
174 |
% | ||||||||
Gain on sale of gathering system |
40,000 |
— |
(40,000) |
* |
|||||||||
Total operating revenues |
2,720,632 |
3,954,858 |
1,234,226 |
45 |
% | ||||||||
Operating expenses: |
|||||||||||||
Lease operating |
29,341 |
36,011 |
6,670 |
23 |
% | ||||||||
Gathering, compression, processing, and transportation |
461,413 |
659,361 |
197,948 |
43 |
% | ||||||||
Production and ad valorem taxes |
87,918 |
78,325 |
(9,593) |
(11) |
% | ||||||||
Marketing |
103,435 |
299,062 |
195,627 |
189 |
% | ||||||||
Exploration |
27,893 |
3,846 |
(24,047) |
(86) |
% | ||||||||
Impairment of unproved properties |
15,198 |
104,321 |
89,123 |
586 |
% | ||||||||
Depletion, depreciation, and amortization |
477,896 |
709,763 |
231,867 |
49 |
% | ||||||||
Accretion of asset retirement obligations |
1,271 |
1,655 |
384 |
30 |
% | ||||||||
General and administrative (before equity-based compensation) |
104,281 |
135,820 |
31,539 |
30 |
% | ||||||||
Equity-based compensation |
112,252 |
97,877 |
(14,375) |
(13) |
% | ||||||||
Contract termination and rig stacking |
— |
38,531 |
38,531 |
* |
|||||||||
Total operating expenses |
1,420,898 |
2,164,572 |
743,674 |
52 |
% | ||||||||
Operating income |
1,299,734 |
1,790,286 |
490,552 |
38 |
% | ||||||||
Other Expenses: |
|||||||||||||
Interest expense |
(160,051) |
(234,400) |
(74,349) |
46 |
% | ||||||||
Loss on early extinguishment of debt |
(20,386) |
— |
20,386 |
* |
|||||||||
Total other expenses |
(180,437) |
(234,400) |
(53,963) |
30 |
% | ||||||||
Income from continuing operations before income taxes and discontinued operations |
1,119,297 |
1,555,886 |
436,589 |
39 |
% | ||||||||
Income tax expense |
(445,672) |
(575,890) |
(130,218) |
29 |
% | ||||||||
Income from continuing operations |
673,625 |
979,996 |
306,371 |
45 |
% | ||||||||
Income from discontinued operations |
2,210 |
— |
(2,210) |
* |
|||||||||
Net income and comprehensive income including noncontrolling interest |
675,835 |
979,996 |
304,161 |
45 |
% | ||||||||
Net income and comprehensive income attributable to noncontrolling interest |
2,248 |
38,632 |
36,384 |
1,619 |
% | ||||||||
Net income and comprehensive income attributable to Antero Resources Corporation |
$ |
673,587 |
$ |
941,364 |
$ |
267,777 |
40 |
% | |||||
Adjusted EBITDAX |
$ |
1,164,015 |
$ |
1,221,422 |
$ |
57,407 |
5 |
% | |||||
Production data: |
|||||||||||||
Natural gas (Bcf) |
317 |
439 |
122 |
39 |
% | ||||||||
NGLs (MBbl) |
7,102 |
15,550 |
8,448 |
119 |
% | ||||||||
Oil (MBbl) |
1,311 |
2,078 |
767 |
58 |
% | ||||||||
Combined (Bcfe) |
368 |
545 |
177 |
48 |
% | ||||||||
Daily combined production (MMcfe/d) |
1,007 |
1,493 |
486 |
48 |
% | ||||||||
Average prices before effects of derivative settlements: |
|||||||||||||
Natural gas (per Mcf) |
$ |
4.10 |
$ |
2.37 |
$ |
(1.73) |
(42) |
% | |||||
NGLs (per Bbl) |
$ |
46.23 |
$ |
17.01 |
$ |
(29.22) |
(63) |
% | |||||
Oil (per Bbl) |
$ |
81.65 |
$ |
34.05 |
$ |
(47.60) |
(58) |
% | |||||
Combined (per Mcfe) |
$ |
4.73 |
$ |
2.52 |
$ |
(2.21) |
(47) |
% | |||||
Average realized prices after effects of derivative settlements: |
|||||||||||||
Natural gas (per Mcf) |
$ |
4.52 |
$ |
4.15 |
$ |
(0.37) |
(8) |
% | |||||
NGLs (per Bbl) |
$ |
46.23 |
$ |
20.57 |
$ |
(25.66) |
(56) |
% | |||||
Oil (per Bbl) |
$ |
84.66 |
$ |
42.38 |
$ |
(42.28) |
(50) |
% | |||||
Combined (per Mcfe) |
$ |
5.10 |
$ |
4.10 |
$ |
(1.00) |
(20) |
% | |||||
Average Costs (per Mcfe): |
|||||||||||||
Lease operating |
$ |
0.08 |
$ |
0.07 |
$ |
(0.01) |
(13) |
% | |||||
Gathering, compression, processing, and transportation |
$ |
1.26 |
$ |
1.21 |
$ |
(0.05) |
(4) |
% | |||||
Production and ad valorem taxes |
$ |
0.24 |
$ |
0.14 |
$ |
(0.10) |
(42) |
% | |||||
Marketing, net |
$ |
0.14 |
$ |
0.23 |
$ |
0.09 |
64 |
% | |||||
Depletion, depreciation, amortization, and accretion |
$ |
1.30 |
$ |
1.31 |
$ |
0.01 |
1 |
% | |||||
General and administrative (before equity-based compensation) |
$ |
0.28 |
$ |
0.25 |
$ |
(0.03) |
(11) |
% | |||||
* |
Not meaningful or applicable |
Logo - http://photos.prnewswire.com/prnh/20131101/LA09101LOGO
SOURCE Antero Resources Corporation
DENVER, Feb. 17, 2016 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today announced its 2016 capital budget and guidance.
2016 Capital Budget and Guidance Highlights:
Commenting on the 2016 capital budget and guidance, Paul Rady, Antero's Chairman and CEO, said, "Given the current commodity price environment, we have reduced our capital program by 23% as compared to last year. Further, we have structured our 2016 development program to give us significant operational flexibility to react to significant changes in commodity prices, up or down, throughout the year. For example, we have the ability to reduce our current $1.3 billion development plan as six of our rig contracts expire over the course of the year. Conversely, to the extent commodity prices improve from current levels, we are well positioned to accelerate activity as a result of our sizable inventory of drilled but uncompleted wells. Lastly, we are in the unique position of having sold essentially all of our forecasted 2016 and 2017 production forward through hedging at attractive fixed prices. Combined with our peer leading firm transportation portfolio to favorable markets and large inventory of low cost reserves, we are well positioned to grow and prosper in one of the lowest commodity price cycles in decades."
Further commenting on the 2016 capital budget and guidance, Glen Warren, President and CFO, said, "We plan to continue delivering top-tier production growth, cash flow growth and margins in 2016, while continuing to target production growth of 20% for 2017. The ability to generate production growth of 15% in 2016 and target 20% in 2017, while reducing the 2016 budget by 23%, is a testament to the momentum we have established and efficiencies we have gained from having the largest and most active development program in Appalachia. We have built a highly sustainable business model with a large and growing production base, a market-leading firm transportation position, a significant long-term hedge position with a current mark-to-market value of $3.3 billion and $3.0 billion of liquidity under our credit facility. Driven by the incremental firm transport recently placed in service in the Marcellus, we are forecasting a premium to Nymex, before hedges, on our natural gas production in 2016 and beyond, based on current futures pricing. When we combine this forecasted uptick in pricing with the well cost reductions that we are continuing to achieve today and the 23% reduction in the 2016 capital budget, we project that we will reduce our outspend level by over 40% in 2016 versus last year."
2016 Capital Budget
Antero's initial capital budget for 2016 includes $1.3 billion for drilling and completion and $100 million for core leasehold acreage acquisitions and extensions. Antero's 2016 capital budget excludes Antero Midstream's (NYSE: AM) $435 million capital budget relating to low and high pressure gathering pipelines, compressor stations, fresh water pipelines and advanced wastewater treatment infrastructure. Antero Midstream announced its 2016 capital budget and guidance today in a separate news release, which can be found at www.anteromidstream.com.
The $1.3 billion drilling and completion budget represents a 21% reduction in drilling and completion capital as compared to 2015. The budget decrease is primarily driven by continuing capital efficiency improvements, a reduction in rig count and the deferral and carryover of a total of 70 Marcellus and Ohio Utica well completions into 2017. Twenty of the deferred completions are Marcellus wells located on Antero acreage in West Virginia that are dedicated to a third-party midstream provider that were carried over from 2015 and will now be carried over into 2017.
Approximately 75% of the drilling and completion budget for 2016 is allocated to the Marcellus Shale and the remaining 25% is allocated to the Ohio Utica Shale. Antero plans to operate an average of five drilling rigs in the Marcellus Shale in West Virginia and two drilling rigs in the Utica Shale in Ohio. In the Marcellus, Antero has budgeted the completion of 21 wells in its Highly-Rich Gas / Condensate regime and 59 wells in its Highly-Rich Gas regime, or a total of 80 wells. In the Ohio Utica, Antero has budgeted the completion of 11 wells in its Highly-Rich Gas regime and 19 wells in its Rich Gas regime, or a total of 30 wells. The relative shift in activity in 2016 from the Ohio Utica to the Marcellus is primarily driven by firm transportation constraints in the Ohio Utica, as the Company projects utilizing all of its 600,000 MMBtu/d of Rockies Express capacity during the year. Beyond Antero's Rockies Express capacity to Chicago, the Company's next available outlet would be Tetco M2, a current unfavorably priced index, until the Rover Pipeline project is completed. For this reason, Antero plans to shift some activity from the Ohio Utica to the Marcellus Shale in 2016. The Company will gain an additional 800,000 MMBtu/d of takeaway capacity from the Ohio Utica upon the completion of the Rover Pipeline, which is now anticipated to be placed into service in mid-2017. The Rover Pipeline will enable Antero to transport incremental Ohio Utica gas production in the second half of 2017 and beyond to the favorably priced Chicago and Gulf Coast markets.
Antero entered 2016 running 10 drilling rigs, but is forecasting a step down throughout the year to average a total of seven rigs for the year. As six drilling contracts expire over the course of the year, Antero has the flexibility to reduce its 2016 capital budget further should market conditions deteriorate.
During 2015 in the Marcellus, Antero averaged 24 drilling days per well with an average lateral length of 8,900 feet, representing a five day improvement compared to the 2014 development program. Additionally, Antero averaged four completion stages per day, an 8% increase over the 2014 completion program average. These operational improvements were driven by multiple enhancements, including increased mud pump circulation rates and improved plug drill out times, along with longer laterals drilled and shorter drilling days to total depth. Antero is currently drilling and completing wells at an average budgeted cost of $1.14 million per 1,000' of lateral in the Marcellus, representing a 16% improvement over 2014 well costs. These well costs include $1.2 million for roads, pads and wellhead equipment. Drilling and completion costs also include legacy drilling and completion contracts that expire in 2016 and 2017. Based on current spot market pricing for drilling rigs and completion crews, Antero projects that well costs will decline by over 11% by 2017.
During 2015 in the Ohio Utica, Antero averaged 30 drilling days per well with an average lateral length of 8,600 feet, representing a four day improvement compared to the 2014 development program. Additionally, Antero averaged four completion stages per day, a 17% increase over the 2014 completion program average. Antero is currently drilling and completing wells at an average budgeted cost of $1.29 million per 1,000' of lateral in the Utica, representing an 18% improvement over 2014 well costs. These well costs also include $1.2 million for roads, pads and wellhead equipment. Similar to the Marcellus, these estimated drilling and completion costs include legacy drilling and completion contracts that expire in 2016 and 2017. Based on current spot market pricing for drilling rigs and completion crews, Antero projects that well costs will decline by over 12% by 2017.
In 2016, Antero plans to continue consolidating acreage in the core of its Marcellus and Utica leasehold positions. However, given the current low commodity price environment, Antero has reduced its 2016 land budget to $100 million, a 38% reduction from 2015. Consistent with historical practices, the Company does not budget for acquisitions.
The following is a comparison of the 2016 capital budget to 2015 preliminary unaudited capital costs.
($ in MM) |
||||||||||
Capital Comparison |
2015 |
2016 |
% Change | |||||||
Drilling & Completion |
$1,650 |
$1,300 |
(21%) | |||||||
Land (1) |
160 |
100 |
(38%) | |||||||
Total Capital |
$1,810 |
$1,400 |
(23%) | |||||||
Average Operated Drilling Rigs |
14 |
7 |
(50%) | |||||||
Operated Wells Completed |
131 |
110 |
(16%) | |||||||
Deferred Completions |
50 |
70 |
40% | |||||||
(1) |
Preliminary unaudited 2015 capital costs exclude $39 million for acquisitions. |
The 2016 capital budget is expected to be fully funded through internally generated operating cash flow and available borrowing capacity within Antero's bank credit facility. As of September 30, 2015, Antero had $3.0 billion of available borrowing capacity under its existing bank revolver.
2016 Guidance
Antero's 2016 net daily production, including liquids, is forecast to grow approximately 15% to 1.715 Bcfe/d compared to 2015 average net production of 1.493 Bcfe/d. Net liquids production is forecast to increase 24% to an average of 60,000 Bbl/d in 2016, including 10,000 Bbl/d of ethane and 3,500 Bbl/d of condensate. In anticipation of the start-up of Mariner East II in 2017 and Antero's corresponding ethane sales agreement with Borealis upon the Mariner East II in-service date, MarkWest installed a de-ethanizer at the Sherwood Complex in Doddridge County, West Virginia. The de-ethanizer was commissioned in the fourth quarter of 2015 and Antero recovered approximately 10,000 Bbl/d of gross ethane for the month of December 2015. The Company projects recovery of approximately 10,000 Bbl/d of net ethane during 2016. Once Mariner East II is placed in-service, Antero projects recovering 11,500 Bbl/d of ethane to fulfill the Borealis contract at an expected premium to the Nymex natural gas-equivalent price.
Price Realizations
Antero projects the percentage of natural gas production sold at current favorably priced indices to increase significantly in 2016 with the recent completion of the Stonewall gathering pipeline and early termination of unfavorable firm sales contracts resulting in gas price realizations at a premium compared to Nymex. The Stonewall pipeline, which was placed in-service on November 30, 2015, allows Antero the flexibility to shift volumes from Dominion South and TETCO M2 pricing to the more favorable TCO and Gulf Coast markets. A portion of that volume shift was previously contracted as a 130 BBtu/d firm sales contract at Dominion South pricing. Antero elected in October 2015 to terminate this firm sale agreement with a buy-back cost of approximately $28 million. Based on current strip pricing, the expected incremental revenues over the next two years from terminating this contract and selling the volumes at a more favorably priced index is projected to substantially exceed the termination charge associated with this transaction, which was recorded as a one-time expense in Antero's fourth quarter 2015 results. This transition to favorable gas markets, including the impact from Stonewall and the firm sales buy-back, is projected to result in approximately $135 million in incremental EBITDAX for Antero's production volumes in 2016 based on current strip pricing. Antero now has the ability to transport and sell virtually all of its gas in 2016 to current favorably priced indices, including Nymex, TCO, Chicago and Gulf Coast pricing.
Based on expected improved pricing for butane and heavier NGL volumes, Antero is forecasting a C3+ NGL realized price of 35% to 40% of WTI oil prices in 2016 compared to a 35% of WTI realization in 2015. Additionally, Antero has hedged 100% of its forecasted propane production at $0.59 per gallon, $0.22 per gallon higher than current 2016 Mont Belvieu pricing of $0.37 per gallon. Furthermore, once Mariner East II is placed in-service, Antero will have the ability to market 61,500 Bbl/d of its ethane, propane and normal-butane volumes to international buyers at netback prices currently superior to local Appalachian netback prices, partly due to lower transport costs.
Assuming the execution of the $1.3 billion drilling and completion capital plan discussed above, the Company is using the following key assumptions in its projections for 2016:
Production |
||
Net Daily Production (MMcfe/d) |
1,715 | |
Net Daily Residue Natural Gas Production (MMcf/d) |
1,355 | |
Net Daily Liquids Production (Bbl/d) |
60,000 | |
Net Daily C3+ NGL Production (Bbl/d) |
46,500 | |
Net Daily Ethane Production (Bbl/d) |
10,000 | |
Net Daily Oil Production (Bbl/d) |
3,500 | |
Realized Pricing |
||
Natural Gas Realized Price Premium to Nymex Henry Hub Before Hedging ($/Mcf)(1)(2) |
$0.00 – $0.10 | |
Oil Realized Price Differential to Nymex WTI Oil Before Hedging ($/Bbl) |
$(10.00) – $(11.00) | |
C3+ NGL Realized Price Before Hedging (% of Nymex WTI) (1) |
35% – 40% | |
Ethane Realized Price (Differential to Mont Belvieu) ($/Bbl) |
$0.00 | |
Cash Expenses |
||
Cash Production Expense ($/Mcfe)(3) |
$1.50 – $1.60 | |
Marketing Expense, Net of Marketing Revenue ($/Mcfe) |
$0.15 – $0.20 | |
G&A Expense ($/Mcfe) |
$0.20 – $0.25 | |
(1) |
Based on strip pricing as of December 31, 2015 |
(2) |
Includes Btu upgrade as Antero's processed tailgate and unprocessed dry gas production is greater than 1000 Btu on average |
(3) |
Includes lease operating expenses, gathering, compression, transportation expenses and production taxes |
Commodity Price Sensitivity
Including Antero's substantial hedge position, and based on commodity prices as of December 31, 2015, a $0.50/MMBtu change in the average Nymex Henry Hub prices, assuming regional basis prices maintain the current relationship to Nymex Henry Hub, results in no change to 2016 EBITDAX. For oil pricing, a $10.00/Bbl change to the average Nymex WTI price, assuming NGLs maintain the current price relationship to Nymex WTI, results in an estimated change to 2016 EBITDAX of $25 million.
Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.
Cautionary Statements
This release includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero 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. Nothing in this press release is intended to constitute guidance with respect to Antero Midstream.
Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility and continued low commodity prices, Antero's ability to meet development and drilling plans, the Company's ability to implement its hedge strategy and results, risk regarding the timing and amount of future production of natural gas, NGLs and oil, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, marketing and transportation risks, the ability to satisfy applicable minimum volume requirements, regulatory changes, the uncertainty inherent in estimating natural gas, NGL and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2014.
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SOURCE Antero Resources Corporation
DENVER, Feb. 17, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced its 2016 capital budget and guidance.
2016 Capital Budget and Guidance Highlights:
2016 Capital Budget
During 2016, Antero Midstream plans to expand its existing Marcellus and Utica Shale gathering, compression, and fresh water delivery infrastructure to accommodate Antero Resources Corporation's (NYSE: AR) ("Antero Resources") development plans. Today in a separate news release, Antero Resources announced its 2016 drilling and completion capital budget of $1.3 billion which is forecast to generate production growth of 15%, and can be found at www.anteroresources.com. In the Marcellus, Antero Resources plans to operate an average of 5 drilling rigs and complete approximately 80 horizontal wells in 2016, all located on acreage dedicated to Antero Midstream. In the Utica, Antero Resources plans to operate an average of 2 drilling rigs and complete 35 horizontal wells in 2016, all located on acreage dedicated to Antero Midstream.
Antero Resources plans to execute a development program in 2016 supported by the following key attributes:
Commenting on the Antero Resources 2016 capital budget and development program, along with its impact on Antero Midstream operations, Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream, said, "Similar to Antero Resources' 2015 development plan, the 2016 capital budget and production guidance assumes the deferral of 50 completions in the Marcellus and Utica combined from the second and third quarter of 2016 into the first half of 2017, which provides Antero Resources with significant operational flexibility to react to changes in commodity prices throughout the year. Additionally, Antero Resources expects to complete all 30 previously deferred wells that are located on Antero Midstream dedicated acreage in 2016, and the remaining 20 wells located on third-party gathering and compression dedicated acreage in 2017, which will allow Antero Resources to target 20% production growth in 2017. The strong production growth profile, plus the fact that Antero Midstream will gather an incrementally larger proportion of Antero Resources' overall production, combine to drive even stronger growth in Antero Midstream's gas and water throughput volumes."
The Partnership has budgeted investment of $410 million and $25 million in expansion and maintenance capital, respectively, resulting in a total Antero Midstream capital budget of $435 million in 2016. This capital budget includes $90 million of expansion capital for gathering infrastructure, which is forecast to result in 9 miles and 22 miles of additional low pressure and high pressure gathering pipelines, respectively. The gathering and compression expansion capital also includes $150 million for the construction of five compressor stations in the Marcellus Shale and Utica Shale. Antero Midstream expects to place two of the stations in-service in 2016, which will add 240 MMcf/d of incremental compression capacity in the Marcellus Shale. Approximately 90% of the gathering and compression capital is planned to be invested in the Marcellus Shale and the remaining 10% invested in the Utica Shale. This mix is driven by Antero Resources' focus on Marcellus Shale drilling and completions in 2016 due to constraints on firm transportation to favorable markets in the Ohio Utica Shale. At year-end 2016, Antero Midstream expects to have over 170 miles and 134 miles of low pressure and high pressure gathering pipelines, respectively, and over 1 Bcf/d of compression capacity in-service in the Marcellus and Utica Shale plays combined.
In addition to gathering and compression capital expenditures, Antero Midstream has budgeted investment of $40 million for water infrastructure expansion capital to construct one fresh water storage impoundment as well as 11 miles and 19 miles of fresh water trunklines and surface pipelines, respectively. Approximately 75% of the water infrastructure budget will be allocated to the Marcellus Shale and the remaining 25% will be allocated to the Utica Shale, excluding capital invested for the ongoing construction of the advanced wastewater treatment facility, or "Antero Clearwater Facility."
The 2016 budget includes $130 million for the continued construction of the Antero Clearwater Facility, which is expected to be placed into service in late 2017. The 60,000 barrel per day facility, which is centrally located on Antero's footprint in the southwestern core of the Marcellus Shale, is forecast to generate attractive returns at full utilization.
Antero Midstream expects to fund all 2016 capital expenditures through internally generated operating cash flow and available borrowing capacity within Antero Midstream's existing $1.5 billion bank credit facility. As of September 30, 2015, Antero Midstream had over $1.0 billion of liquidity.
Below is a comparison of the 2016 capital budget to 2015 preliminary unaudited capital costs.
Year Ended December 31, |
||||||
Capital Comparison ($MM) |
2015(2) |
2016 |
% Change | |||
Gathering and Compression Infrastructure(1) |
$349 |
$240 |
(31)% | |||
Fresh Water Infrastructure |
6 |
40 |
567% | |||
Advanced Wastewater Treatment |
55 |
130 |
136% | |||
Maintenance Capital |
13 |
25 |
92% | |||
Total Capital |
$423 |
$435 |
3% | |||
1) Excludes $40 million adjustment for unpaid payables retained by Antero Resources for capital expenditures associated with assets contributed to Antero Midstream during the Partnership's IPO. |
2) 2015 fresh water infrastructure and advanced wastewater treatment represents only capital invested by Antero Midstream. |
2016 Guidance
Antero Midstream is forecasting adjusted EBITDA of $300 million to $325 million and Distributable Cash Flow ("DCF") of $250 million to $275 million for 2016. Additionally, Antero Midstream is forecasting aggregate distributions attributable to calendar year 2016 that are 28% to 30% higher than the aggregate 2015 distributions of $0.795 per unit, while maintaining an average DCF coverage ratio in excess of the Partnership's targeted ratio of 1.1x to 1.2x on an annual basis. Antero Midstream's 2016 guidance excludes any impact from potential third party volumes, potential third party acquisitions and the exercise of the option to acquire a 15% interest in the Stonewall gathering pipeline.
Full Year 2016 | ||||
Low |
High | |||
Adjusted EBITDA ($MMs) |
$300 |
— |
$325 | |
Distributable Cash Flow ($MMs) |
$250 |
— |
$275 | |
Year-Over-Year Distribution Growth |
28% |
— |
30% | |
DCF Coverage Ratio |
> 1.1x to 1.2x Target |
Commenting on the Antero Midstream 2016 capital budget and guidance, Michael Kennedy, Antero Midstream's CFO, said, "Looking ahead into 2016, we believe Antero Midstream will continue to benefit from Antero Resources' industry-leading production growth profile, which is focused on attractive rate of return locations on acreage dedicated to Antero Midstream. Further, much of Antero Resources' planned 2016 development is expected to occur in areas in which Antero Midstream has existing gathering and compression infrastructure, which allows Antero Midstream to forecast a reduction in gathering and compression capital expenditures by 31% year over year and only a slight increase in the 2016 total capital budget despite the inclusion of significant capital to be invested in water infrastructure and the construction of the Antero Clearwater Facility. We believe Antero Resources' sizable hedge position, which is forecast to cover 100% of 2016 guided natural gas production, 100% of 2016 guided propane production, and 100% of its 2017 targeted production, significantly de-risks the Antero Resources development plan and in turn Antero Midstream's cash flows."
Mr. Kennedy further added, "Antero Midstream's top tier distribution growth of 28% to 30% in 2016 keeps us on track to deliver our previously announced distribution growth target of 28% to 30% per year through 2017. While our strong volumetric growth and the contribution from our recently acquired water business are expected to generate DCF coverage in excess of our 1.1x to 1.2x target during 2016, we believe it is prudent to run at a higher DCF coverage ratio during challenging commodity price environments given our already industry-leading distribution growth. This retained cash flow, along with the ability to efficiently deploy "just-in-time" capital in attractive, fixed-fee organic growth opportunities, gives Antero Midstream the unique ability to maintain a strong financial profile with a clear visibility for funding projects in an uncertain commodity price environment."
Option on Stonewall Gathering Pipeline
As previously disclosed, Antero Midstream has the right to participate in up to a 15% non-operating equity interest in the 67-mile Stonewall gathering pipeline for which Antero Resources is an anchor shipper. The Stonewall gathering pipeline was placed into service on November 30, 2015 and Antero Resources has a firm commitment of 900 MMcf/d through the system, which provides access to the Gulf Coast on the Tennessee Pipeline as well as to the Mid-Atlantic area through a long-term firm sales agreement with WGL Midstream, a subsidiary of WGL Holdings, LLC. Antero Midstream's option expires on May 30, 2016. As of today, Antero Midstream has not elected to participate in this project. If Antero Midstream exercises this option, it expects the capital contribution from exercising its option to be approximately $45 million to $55 million, which is not included in the $435 million capital budget or financial guidance previously discussed.
Non-GAAP Disclosures
As used in this news release, adjusted EBITDA means net income plus interest expense, depreciation and amortization expense, income tax expense (if applicable), non-cash long-term compensation expense and other non-cash adjustments. As used in this news release, distributable cash flow means adjusted EBITDA less interest expense and ongoing maintenance capital expenditures. Distributable cash flow should not be viewed as indicative of the actual amount of cash that the Partnership has available for distributions from operating surplus or that the Partnership plans to distribute. Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of the Partnership's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
The Partnership believes that adjusted EBITDA and distributable cash flow provide useful information to investors in assessing the Partnership's financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because adjusted EBITDA and distributable cash flow may be defined differently by other companies in its industry, the Partnership's definition of adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The partnership does not provide financial guidance for projected net income or changes in working capital, and, therefore, is unable to provide a reconciliation of its adjusted EBITDA and distributable cash flow projections to net income, operating income, or net cash flow provided by operating activities, the most comparable financial measures calculated in accordance with GAAP.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that primarily service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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. Nothing in this release is intended to constitute guidance with respect to Antero Resources.
The Partnership cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the gathering and compression and water handling business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership's business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2014 and "Item 1A. Risk Factors" in Antero Midstream's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015.
For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
DENVER, Jan. 13, 2016 /PRNewswire/ -- Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") today announced an increased fourth quarter 2015 distribution and provided its fourth quarter 2015 operations update.
Highlights include:
Increased Quarterly Distribution
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.22 per unit ($0.88 per unit annualized) for the fourth quarter of 2015. The distribution represents a 29% increase over the minimum quarterly distribution and a 7% increase quarter-over-quarter. The distribution represents the Partnership's fourth consecutive quarterly distribution increase since its initial public offering in November 2014. The distribution will be payable on February 29, 2016 to unitholders of record as of February 15, 2016.
Operations Update
All operational figures are as of the date of this release unless otherwise noted.
Low pressure gathering volumes for the fourth quarter of 2015 averaged 1,124 MMcf/d, a 52% increase from the fourth quarter of 2014 and an 8% increase from the third quarter of 2015. High pressure gathering volumes for the fourth quarter of 2015 averaged 1,195 MMcf/d, a 32% increase from the fourth quarter of 2014 and a 2% decrease compared to the third quarter of 2015. The sequential decrease in high pressure gathering volumes was driven by throughput volumes transported on the third-party Stonewall gathering pipeline, which was placed into service on December 1, 2015. These volumes previously flowed to an Antero Midstream owned high pressure pipeline as a temporary solution until the Stonewall pipeline was commissioned. Compression volumes for the fourth quarter of 2015 averaged 478 MMcf/d, a 115% increase from the fourth quarter of 2014 and a 10% increase from the third quarter of 2015. Additionally, Antero Midstream placed on line its first compressor station in the Utica Shale late in the fourth quarter with 120 MMcf/d of capacity. Condensate gathering volumes averaged 3,967 Bbl/d during the quarter, a 48% increase compared to the prior year quarter and a 39% increase sequentially. The sequential increase in condensate gathering volumes was driven by the increase in contribution to Antero Resources Corporation's ("Antero Resources") production from the Utica Shale.
Freshwater delivery volumes averaged 119,671 Bbl/d during the quarter, a 36% decrease compared to the prior year quarter and 78% increase sequentially. The year-over-year decrease in volumes was driven by the reduction in overall completion activities by Antero Resources including the deferral of 50 Marcellus completions on wells drilled during 2015. The significant quarter-over-quarter increase was the result of an increase in completions in the Marcellus as the Stonewall gathering pipeline was completed, resulting in increased Antero Resources takeaway to more favorably priced indices.
Three Months Ended December 31, |
|||||||
Average Daily Throughput: |
2015 |
2014 |
% | ||||
Low Pressure Gathering (MMcf/d) |
1,124 |
738 |
52% | ||||
High Pressure Gathering (MMcf/d) |
1,195 |
908 |
32% | ||||
Compression (MMcf/d) |
478 |
222 |
115% | ||||
Condensate Gathering (Bbl/d) |
3,967 |
2,676 |
48% | ||||
Average Daily Volumes: |
|||||||
Freshwater Delivery (Bbl/d) |
119,671 |
186,221 |
(36)% |
In conjunction with Antero Midstream's operations update, Antero Resources released fourth quarter 2015 operating results, which can be found at www.anteroresources.com.
Antero Midstream Fourth Quarter and Full Year 2015 Earnings Release and Call
Antero Midstream plans to issue its fourth quarter 2015 earnings release on Wednesday, February 24, 2016 after the close of trading on the New York Stock Exchange.
Antero Midstream will hold a call on Thursday, February 25, 2016 at 10:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Midstream". A telephone replay of the call will be available until Friday, March 4, 2016 at 10:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10078389.
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 on the Partnership's website until Friday, March 4, 2016 at 10:00 am MT.
Antero Midstream Partners LP is a limited partnership that owns, operates and develops midstream gathering and compression assets located in West Virginia, Ohio and Pennsylvania, as well as integrated water assets that service Antero Resources' properties located in West Virginia and Ohio.
This release includes "forward-looking statements" within the meaning of federal securities laws. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although the Partnership 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 forecasted in such statements.
The Partnership cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership's control, related to the gathering, compression and water business. These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, inflation, environmental risks,drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014 and "Item 1A. Risk Factors" in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
For more information, contact Michael Kennedy – SVP – Finance and CFO of Antero Midstream, at (303) 357-6782 or mkennedy@anteroresources.com.
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SOURCE Antero Midstream Partners LP
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