Antero Midstream and AMGP Report Fourth Quarter and Full Year 2017 Financial and Operating Results
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:
-- GAAP net income decreased by 13% to $64 million, or $0.22 per limited
partner unit compared to the prior year quarter
-- Adjusted net income increased by 19% to $88 million, or $0.34 per
limited partner unit compared to the prior year quarter
-- Adjusted EBITDA increased by 13% to $142 million compared to the prior
year quarter
-- Distributable Cash Flow ("DCF") increased by 14% to $117 million
resulting in DCF coverage of 1.3x
-- Distributions were $0.365/unit, a 30% increase compared to the prior
year quarter and the Partnership's twelfth consecutive distribution
increase since the November 2014 IPO
-- Antero Midstream's corporate debt ratings have improved to Ba2/BB+/BBB-
(Moody's/S&P/Fitch)
Antero Midstream Full Year 2017 Highlights Include:
-- GAAP net income increased by 30% to $307 million, or $1.28 per limited
partner unit compared to the prior year
-- Adjusted net income increased by 40% to $331 million, or $1.40 per
limited partner unit compared to the prior year
-- Adjusted EBITDA increased by 31% to $529 million compared to the prior
year
-- Distributable Cash Flow increased by 19% to $421 million resulting in
DCF coverage of 1.3x
-- Debt to trailing twelve months Adjusted EBITDA was 2.3x with $1.0
billion of liquidity
Antero Midstream GP LP Fourth Quarter 2017 Highlights Include:
-- Distributions increased to $0.075/share, a 27% increase sequentially and
the second consecutive distribution increase since the May 2017 IPO
-- Long-term distribution per share targets from 2018 through 2020 were
increased by 20%, as compared to previously provided targets, due to the
announced reduction in the U.S. federal corporate tax rate from 35% to
21%
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
Ended
December 31, 2017
-----------------
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 financial performance of the Partnership's assets, without regard to
financing methods in the case of Adjusted EBITDA, capital structure or
historical cost basis;
-- its operating performance and return on capital as compared to other
publicly traded partnerships in the midstream energy sector, without
regard to financing or capital structure; and
-- the viability of acquisitions and other capital expenditure projects.
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
====== =====
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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP
