Antero Midstream Reports Second Quarter 2020 Results and Announces Updated 2020 Capital Budget & Guidance
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:
-- Net income was $88 million, or $0.19 per share, a 36% increase compared
to the prior year quarter
-- Adjusted Net Income was $106 million, or $0.22 per share, a 36% increase
compared to the prior year quarter (non-GAAP measure)
-- Adjusted EBITDA was $201 million, a 2% decline compared to the prior
year quarter (non-GAAP measure)
-- Distributable Cash Flow was $152 million, resulting in 1.0x DCF coverage
on the previously declared dividend of $0.3075 per share (non-GAAP
measure)
-- Capital expenditures were $59 million, a 63% decrease compared to the
prior year quarter
-- Free Cash Flow before return of capital and changes in working capital
was $108 million compared to $15 million in the prior year quarter
(non-GAAP measure)
-- Received $39 million of the $55 million tax refund related to net
operating losses in prior tax years under the CARES Act; remaining $16
million expected to be received by year-end 2020
-- Repurchased 3.2 million shares at an average price of $2.77 per share
for approximately $8.9 million
-- Total debt as of June 30, 2020 was $3.1 billion, unchanged from March
31, 2020
Updated 2020 Capital Budget & Free Cash Flow Guidance:
-- Further decreased 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
-- A 67% decrease compared to 2019 capital expenditures
-- Increased 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
-- Increase driven by capital budget reduction with no change to
previously provided Adjusted EBITDA guidance of $800 to $830 million
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
June 30,
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:
-- the financial performance of Antero Midstream's assets, without regard
to financing methods, capital structure or historical cost basis;
-- its operating performance and return on capital as compared to other
publicly traded companies in the midstream energy sector, without regard
to financing or capital structure; and
-- the viability of acquisitions and other capital expenditure projects.
Antero Midstream defines Free Cash Flow as Adjusted EBITDA less interest paid, decrease in cash reserved for bond interest and capital expenditures. Free Cash Flow is before dividend payments, share repurchases and changes in working capital. Antero Midstream uses Free Cash Flow as a performance metric to compare the cash generating performance of Antero Midstream from period to period.
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
June 30, 2020
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
Condensed Consolidated Balance Sheets
December 31, 2019 and June 30, 2020
(In thousands)
(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
Condensed Consolidated Statements of Operations and Comprehensive Income
Three Months Ended June 30, 2019 and 2020
(In thousands, except per share amounts)
(Unaudited)
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
Selected Operating Data
Three Months Ended June 30, 2019 and 2020
(Unaudited)
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 $
3.90 3.96 0.06 2
($/Bbl)
%
Average treatment fee ($/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
Condensed Consolidated Results of Segment Operations
Three Months Ended June 30, 2020
(Unaudited)
(In thousands)
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
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2019 and 2020
(In thousands)
(Unaudited)
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
