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Published: 2021-10-27 00:00:00 ET
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Exhibit 99.1

 

 

 

Antero Midstream Announces Third Quarter 2021 Financial and Operational Results

 

Denver, Colorado, October 27, 2021—Antero Midstream Corporation (NYSE: AM) (“Antero Midstream” or the “Company”) today announced its third quarter 2021 financial and operational results. The relevant unaudited condensed consolidated financial statements are included in Antero Midstream’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.

 

Third Quarter 2021 Earnings Highlights:

 

·Net income was $89 million, or $0.19 per share, compared to $0.22 per share in the prior year quarter
·Adjusted Net Income was $103 million, or $0.22 per share, compared to $0.25 per share in the prior year quarter (non-GAAP measure)
·Adjusted EBITDA was $219 million, a 4% decrease compared to the prior year quarter (non-GAAP measure)
·Capital expenditures were $81 million
·Net cash provided by operating activities was $185 million
·Free Cash Flow before dividends was $94 million and Free Cash Flow After Dividends was $(13) million (non-GAAP measure)
·Net debt to last twelve months Adjusted EBITDA was 3.6x (non-GAAP measure)
·Placed in service Smithburg 1 processing plant, adding 200 MMcf/d of Joint Venture processing capacity
·Connected the 1,000th well to its integrated gathering and compression system since inception

 

Recent Developments:

 

·Extended credit facility maturity from 2022 to 2026 and elected to reduce commitments from $2.13 billion to $1.25 billion
·Published 2020 ESG report highlighting a focus on People, Performance and Purpose
oStrong safety record with a Total Recordable Incident Rate (TRIR) of 0.469, a 22% year-over-year reduction and a 62% reduction since 2016
oContinued reduction in methane leak loss rate to 0.015%, significantly below the ONE future industry goal of 1% and more than 50% lower than the midstream industry peer average of 0.033%
o84% of total wastewater was gathered, recycled and reused in completions. 100% of fresh water used in completions was transported by pipeline.
§In combination, this eliminated 32 million truck traffic miles and avoided 14,000 metric tons of CO2e
oAligned executive compensation with ESG performance and established ESG Committee
oReaffirmed 2025 environmental goals of a 100% reduction in pipeline maintenance emissions and moved towards incorporating elements of TCFD and SASB disclosure frameworks and standards into reporting practices

 

Paul Rady, Chairman and CEO said, “During the third quarter Antero Midstream continued to execute on its business plan, placing in service the Smithburg 1 processing plant adding 200 MMcf/d of incremental Joint Venture processing capacity. In addition, Antero Midstream continued construction on additional low pressure, compression and high pressure infrastructure to support the expected throughput growth from the Antero Resources and QL Capital Partners drilling partnership.”

 

Mr. Rady further added, “We also recently published our 2020 ESG report. The report highlights our commitment to the communities in which we operate and our continued reductions in our methane leak loss rate. In addition, the report highlights Antero Midstream’s unique positioning that directly impacts populations living in energy poverty across the world. In 2020, Antero Midstream provided integrated midstream services that allowed Antero Resources to ship approximately one-third of its LPG exports to developing nations, including the nations of Nigeria, Peru and India, improving people’s health, safety and livelihood through the displacement of more expensive and more carbon-intensive energy sources.”

 

For a discussion of the non-GAAP financial measures including Adjusted Net Income, Adjusted EBITDA, Free Cash Flow and Net Debt please see “Non-GAAP Financial Measures.”

 

1

 

 

Third Quarter 2021 Financial Results

 

Low pressure gathering volumes for the third quarter of 2021 averaged 2,880 MMcf/d, a 6% decrease as compared to the prior year quarter. Compression volumes for the third quarter of 2021 averaged 2,734 MMcf/d, a 3% decrease as compared to the third quarter of 2020. High pressure gathering volumes for the third quarter of 2021 averaged 2,811 MMcf/d, a 7% decrease compared to the third quarter of 2020. Gathering and compression volumes were negatively impacted by approximately 100 MMcf/d due to downtime at the Sherwood and Hopedale processing and fractionation facilities during the quarter. Fresh water delivery volumes averaged 91 MBbl/d during the quarter, an 18% decrease compared to the third quarter of 2020.

 

Gross processing volumes from the Company’s processing and fractionation joint venture with MPLX (“Joint Venture”) averaged 1,539 MMcf/d for the third quarter of 2021, a 4% increase compared to the prior year quarter. The increase in processing volumes was driven by placing the Smithburg 1 processing plant online during the quarter. Gross Joint Venture fractionation volumes averaged 37 MBbl/d, a 5% decrease compared to the prior year quarter.

 

  

Three Months Ended

September 30,

     
Average Daily Volumes:  2020   2021   % Change 
Low Pressure Gathering (MMcf/d)    3,051    2,880    (6)%
Compression (MMcf/d)   2,821    2,734    (3)%
High Pressure Gathering (MMcf/d)    3,008    2,811    (7)%
Fresh Water Delivery (MBbl/d)    111    91    (18)%
Gross Joint Venture Processing (MMcf/d)    1,484    1,539    4%
Gross Joint Venture Fractionation (MBbl/d)    39    37    (5)%

 

For the three months ended September 30, 2021, revenues were $225 million, comprised of $189 million from the Gathering and Processing segment and $54 million from the Water Handling segment, net of $18 million of amortization of customer relationships. Water Handling revenues included $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 $23 million, respectively, for a total of $39 million, compared to $38 million in total direct operating expenses in the prior year quarter. Water Handling operating expenses included $19 million from wastewater handling and high rate water transfer services. General and administrative expenses excluding equity-based compensation were $12 million during the third quarter of 2021. Total operating expenses during the third quarter of 2021 included $3 million of equity-based compensation expense and $27 million of depreciation.

 

Net income was $89 million, or $0.19 per share. Net income adjusted for amortization of customer relationships and impairment expense, net of tax effects of reconciling items, or Adjusted Net Income, was $103 million. Adjusted Net Income per share was $0.22 per share, a 12% decrease compared to the prior year quarter.

 

The following table reconciles Net Income to Adjusted Net Income (in thousands):

 

  

Three Months Ended 

September 30, 

 
   2020   2021 
Net Income  $105,507    89,327 
Amortization of customer relationships   17,800    17,668 
Impairment expense   947    203 
Tax effect of reconciling items(1)   (4,631)   (4,455)
Adjusted Net Income  $119,623    102,743 

 

(1)Statutory tax rate was approximately 24.7% for 2020 and 24.9% for 2021.

 

2

 

 

Adjusted EBITDA was $219 million, a 4% decrease compared to the prior year quarter. Interest expense was $45 million, a 29% increase compared to the prior year quarter, driven by the issuances of senior notes due 2026 and 2029. Capital expenditures were $81 million, a 120% increase compared to the prior year quarter as Antero Midstream continued construction on growth projects supporting the drilling partnership. Free Cash Flow before dividends was $94 million, a 40% decrease compared to the prior year quarter driven primarily by higher capital expenditures during the quarter. Free Cash Flow after dividends was a $13 million deficit compared to $11 million in the prior year quarter. 

 

The following table reconciles Net Income to Adjusted EBITDA and Free Cash Flow before and after dividends (in thousands):

 

  

Three Months Ended 

September 30, 

 
   2020   2021 
Net Income  $105,507    89,327 
Interest expense, net   34,501    44,544 
Provision for income tax expense   34,982    32,038 
Amortization of customer relationships   17,800    17,668 
Depreciation expense   26,801    27,487 
Impairment expense   947    203 
Accretion of asset retirement obligations   39    114 
Equity-based compensation   3,678    3,255 
Equity in earnings of unconsolidated affiliates   (23,173)   (24,088)
Distributions from unconsolidated affiliates   27,485    28,930 
Adjusted EBITDA  $228,567    219,478 
Interest expense   (34,501)   (44,544)
Total capital expenditures (accrual-based)   (36,808)   (80,873)
Free Cash Flow before dividends  $157,258    94,061 
Dividends declared (accrual-based)   (146,566)   (107,436)
Free Cash Flow after dividends  $10,692    (13,375)

 

The following table reconciles net cash provided by operating activities to Free Cash Flow before and after dividends (in thousands):

 

  

Three Months Ended 

September 30, 

 
   2020   2021 
Net cash provided by operating activities  $158,476    185,115 
Amortization of deferred financing costs   (1,109)   (1,419)
Settlement of asset retirement obligations    916    212 
Changes in working capital   35,783    (8,974)
Total capital expenditures (accrual-based)   (36,808)   (80,873)
Free Cash Flow before dividends  $157,258    94,061 
Dividends declared (accrual-based)   (146,566)   (107,436)
Free Cash Flow after dividends  $10,692    (13,375)

 

Third Quarter 2021 Operating Update

 

Gathering and Processing During the third quarter of 2021, Antero Midstream connected 18 wells to its gathering system. The Company’s 3.2 Bcf/d of compression capacity was approximately 86% utilized during the quarter. During the third quarter the Joint Venture placed in-service the Smithburg 1 processing plant, which added 200 MMcf/d of incremental processing capacity. This expansion of processing capacity brings the Joint Venture’s total processing capacity to 1.6 Bcf/d. Joint Venture processing capacity was approximately 96% utilized and Joint Venture fractionation capacity was 93% utilized during the quarter.

 

Water HandlingAntero Midstream’s water delivery systems serviced 18 well completions during the third quarter of 2021, a 14% decrease from the prior year quarter, driven by a reduction in completion activity by Antero Resources year over year.

 

3

 

 

Credit Facility Extension, Balance Sheet and Liquidity

 

On October 26th, 2021, Antero Midstream extended its bank credit facility from 2022 to 2026 and elected to reduce its commitments from $2.13 billion to $1.25 billion. As of September 30, 2021, Antero Midstream had approximately $521 million drawn on its bank credit facility and over $700 million of pro form available borrowing capacity. Antero Midstream’s Net Debt to trailing twelve months Adjusted EBITDA (“Leverage”) was 3.6x as of September 30, 2021.

 

Brendan Krueger, CFO of Antero Midstream, said, “Antero Midstream continued to enhance its financial flexibility by extending its bank credit facility from 2022 to 2026, resulting in no senior note or bank debt maturities until 2026 and beyond. In addition, we elected to reduce our commitments from $2.13 billion to $1.25 billion, which reflects the Company’s strong liquidity position today and visibility into our long-term plan focused on generating free cash flow after dividends and further reducing absolute debt and leverage.”

 

Capital Investments

 

Total accrued capital expenditures including investments in the Joint Venture were $81 million during the third quarter of 2021. Gathering, compression, and water infrastructure capital investments totaled $80 million and investments in unconsolidated affiliates for the Joint Venture were $1 million. Of the $80 million invested in gathering, compression, and water infrastructure, $69 million was in gathering and compression assets and $11 million was in water handling assets.

 

Conference Call

 

A conference call for Antero Midstream is scheduled on Thursday, October 28, 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, November 4, 2021 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13720354. 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 4, 2021 at 10:00 am MT.

 

2020 ESG Report

 

On October 5, 2021, Antero Midstream published its 2020 ESG Report highlighting its focus on People, Performance and Purpose. The report details Antero Midstream's ongoing commitment to the communities in which it operates, safe operations, environmental excellence and strong governance. The full report is available at www.anteromidstream.com

 

Non-GAAP Financial Measures and Definitions

 

Antero Midstream uses certain non-GAAP financial measures. Antero Midstream defines Adjusted Net Income as net income plus amortization of customer relationships and impairment expense, net of tax effect of reconciling items. Antero Midstream uses Adjusted Net Income to assess the operating performance of its assets. Antero Midstream defines Adjusted EBITDA as net income plus interest expense, provision for income tax expense, amortization of customer relationships, depreciation expense, impairment expense, accretion, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, plus 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 before dividends as Adjusted EBITDA less interest expense and accrued capital expenditures. Free Cash Flow after dividends is defined as Free Cash Flow before dividends less dividends declared for the quarter. Antero Midstream uses Free Cash Flow before and after dividends as a performance metric to compare the cash generating performance of Antero Midstream from period to period.

 

4

 

 

Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow before and after dividends are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Adjusted Net Income is Net Income. The GAAP measure most directly comparable to Free Cash Flow before and after dividends is cash flows provided by (used in) operating activities. Such non-GAAP financial measures should not be considered as alternatives to the GAAP measures of Net Income and cash flows provided by (used in) operating activities. The presentations of such measures are not made in accordance with GAAP and have important limitations as analytical tools because they include some, but not all, items that affect Net Income and cash flows provided by (used in) operating activities. You should not consider any or all such measures in isolation or as a substitute for analyses of results as reported under GAAP. Antero Midstream’s definitions of such measures may not be comparable to similarly titled measures of other companies.

 

Antero Midstream defines 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.

 

The following table reconciles cash paid for capital expenditures and accrued capital expenditures during the period (in thousands):

 

   Three Months Ended September 30, 
   2020   2021 
Capital expenditures (as reported on a cash basis)  $(44,665)   (83,687)
Change in accrued capital costs   (7,857)   (2,814)
Capital expenditures (accrual basis)  $(36,808)   (80,873)

 

The following table reconciles consolidated total debt to consolidated net debt, excluding debt premiums and issuance costs, (“Net Debt”) as used in this release (in thousands):

 

  

June 30,  

2021 

   September 30,
2021
 
Bank credit facility  $513,700    520,700 
7.875% senior notes due 2026   550,000    550,000 
5.75% senior notes due 2027   650,000    650,000 
5.75% senior notes due 2028   650,000    650,000 
5.375% senior notes due 2029   750,000    750,000 
Consolidated total debt    3,113,700    3,120,700 
Cash and cash equivalents   (678)    
Consolidated net debt   $3,113,022    3,120,700 

 

5

 

 

The following table reconciles net income to Adjusted EBITDA for the last twelve months as used in this release (in thousands):

 

  

12 months ended 

June 30, 2021 

  

12 months ended  

September 30, 2021 

 
Net Income  $345,629    329,449 
Interest expense, net   160,436    170,479 
Provision for income tax expense   113,685    110,741 
Amortization of customer relationships   70,797    70,665 
Depreciation expense   107,171    107,857 
Impairment expense    10,475    9,731 
Accretion of asset retirement obligations   310    385 
Equity-based compensation   13,814    13,391 
Equity in earnings of unconsolidated affiliates   (88,665)   (89,580)
Distributions from unconsolidated affiliates   115,215    116,660 
Loss on asset sale   6,317    6,317 
Loss on early extinguishment of debt   20,701    20,701 
Adjusted EBITDA  $875,885    866,796 

 

Antero Midstream Corporation is a Delaware corporation that owns, operates and develops midstream gathering, compression, processing and fractionation assets located in the Appalachian Basin, as well as integrated water assets that primarily service Antero Resources Corporation’s properties.

 

This release includes "forward-looking statements.” Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Midstream’s control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Midstream expects, believes or anticipates will or may occur in the future, such as statements regarding Antero Midstream’s ability to execute its business plan and return capital to its stockholders, information regarding Antero Midstream’s return of capital policy, information regarding long-term financial and operating outlooks for Antero Midstream and Antero Resources, information regarding Antero Resources’ expected future growth and its ability to meet its drilling and development plan and the participation level of Antero Resources’ drilling partner and the impact on demand for Antero Midstream’s services as a result of incremental production by Antero Resources, 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.

 

In addition, many of the standards and metrics used in preparing this release and the ESG 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. In addition, while we seek to align these disclosures with the recommendations of various third-party frameworks, such as the Task Force on Climate-Related Financial Disclosures, we cannot guarantee strict adherence to these framework recommendations. Additionally, our disclosures based on these frameworks may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policy, or other factors, some of which may be beyond our control. The calculation of methane leak loss rate disclosed in this release conforms with ONE Future protocol, which is based on the EPA Greenhouse Gas Reporting Program. With respect to its pipeline emissions goal, Antero Midstream anticipates achieving a 100% reduction in pipeline emissions by 2025 through operational efficiencies and the purchase of carbon offsets.

 

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 health events, including the COVID-19 pandemic, cybersecurity risk, 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, 2020.

 

This release and the ESG 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. These scenarios cannot account for the entire realm of possible risks and have been selected based on what we believe to be a reasonable range of possible circumstances based on information currently available to us and the reasonableness of assumptions inherent in certain scenarios; however, our selection of scenarios may change over time as circumstances change.

 

For more information, contact Brendan Krueger – CFO of Antero Midstream, at (303) 357-7172 or bkrueger@anteroresources.com.

 

6

 

 

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)

 

       (Unaudited) 
   December 31,   September 30, 
   2020   2021 
Assets
Current assets:          
Cash and cash equivalents  $640     
Accounts receivable–Antero Resources   73,722    85,152 
Accounts receivable–third party   839    857 
Income tax receivable   17,251    940 
Other current assets   1,479    541 
Total current assets   93,931    87,490 
           
Property and equipment, net   3,254,044    3,345,843 
Investments in unconsolidated affiliates   722,478    703,780 
Deferred tax asset   103,402    14,855 
Customer relationships   1,427,447    1,374,443 
Other assets, net   9,610    7,222 
Total assets  $5,610,912    5,533,633 
           
Liabilities and Stockholders' Equity 
Current liabilities:          
Accounts payable–Antero Resources  $3,862    3,157 
Accounts payable–third party   9,495    24,944 
Accrued liabilities   74,947    85,576 
Other current liabilities   5,701    5,013 
Total current liabilities   94,005    118,690 
Long-term liabilities:          
Long-term debt   3,091,626    3,095,560 
Other   6,995    6,790 
Total liabilities   3,192,626    3,221,040 
           
Stockholders' Equity:          
Preferred stock, $0.01 par value: 100,000 authorized as of December 31, 2020 and September 30, 2021          
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding as of December 31, 2020 and September 30, 2021        
Common stock, $0.01 par value; 2,000,000 authorized; 476,639 and 477,460 issued and outstanding as of December 31, 2020 and September 30, 2021, respectively   4,766    4,775 
Additional paid-in capital   2,877,612    2,518,919 
Accumulated deficit   (464,092)   (211,101)
Total stockholders' equity   2,418,286    2,312,593 
Total liabilities and stockholders' equity  $5,610,912    5,533,633 

 

7

 

 

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In thousands, except per share amounts)

 

   Three Months Ended September 30, 
   2020   2021 
Revenue:          
Gathering and compression–Antero Resources  $190,214    188,716 
Water handling–Antero Resources   61,001    53,511 
Water handling–third party       245 
Amortization of customer relationships   (17,800)   (17,668)
Total revenue   233,415    224,804 
Operating expenses:          
Direct operating   38,052    39,499 
General and administrative (including $3,678 and $3,255 of equity-based compensation in 2020 and 2021, respectively)   13,232    14,810 
Facility idling   2,527    870 
Impairment of property and equipment   947    203 
Depreciation   26,801    27,487 
Accretion of asset retirement obligations   39    114 
Total operating expenses   81,598    82,983 
Operating income   151,817    141,821 
Other income (expense):          
Interest expense, net   (34,501)   (44,544)
Equity in earnings of unconsolidated affiliates   23,173    24,088 
Total other expense   (11,328)   (20,456)
Income before income taxes   140,489    121,365 
Provision for income tax expense   (34,982)   (32,038)
Net income and comprehensive income  $105,507    89,327 
           
Net income per share–basic  $0.22    0.19 
Net income per share–diluted  $0.22    0.19 
           
Weighted average common shares outstanding:          
Basic   476,578    477,442 
Diluted   478,694    479,695 

 

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ANTERO MIDSTREAM CORPORATION

Selected Operating Data (Unaudited) 

 

   Three Months Ended   Amount of     
   September 30,   Increase   Percentage 
   2020   2021   or Decrease   Change 
Operating Data:                    
Gathering—low pressure (MMcf)   280,688    264,999    (15,689)   (6)%
Gathering—high pressure (MMcf)   276,699    258,585    (18,114)   (7)%
Compression (MMcf)   259,523    251,555    (7,968)   (3)%
Fresh water delivery (MBbl)   10,202    8,335    (1,867)   (18)%
Other fluid handling (MBbl)   5,151    4,325    (826)   (16)%
Wells serviced by fresh water delivery   21    18    (3)   (14)%
Gathering—low pressure (MMcf/d)   3,051    2,880    (171)   (6)%
Gathering—high pressure (MMcf/d)   3,008    2,811    (197)   (7)%
Compression (MMcf/d)   2,821    2,734    (87)   (3)%
Fresh water delivery (MBbl/d)   111    91    (20)   (18)%
Other fluid handling (MBbl/d)   56    47    (9)   (16)%
Average Realized Fees:                    
Average gathering—low pressure fee ($/Mcf)  $0.33    0.33        * 
Average gathering—high pressure fee ($/Mcf)  $0.21    0.20    (0.01)   (5)%
Average compression fee ($/Mcf)  $0.20    0.20        * 
Average fresh water delivery fee ($/Bbl)  $3.96    3.96        * 
Joint Venture Operating Data:                    
Processing—Joint Venture (MMcf)   136,555    141,580    5,025    4%
Fractionation—Joint Venture (MBbl)   3,552    3,408    (144)   (4)%
Processing—Joint Venture (MMcf/d)   1,484    1,539    55    4%
Fractionation—Joint Venture (MBbl/d)   39    37    (2)   (5)%

 

*        Not meaningful or applicable

 

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ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Results of Segment Operations (Unaudited) 

 

   Three Months Ended September 30, 2021 
   Gathering and   Water       Consolidated 
(in thousands)  Processing   Handling   Unallocated (1)   Total 
Revenues:                    
Revenue–Antero Resources  $188,716    53,511        242,227 
Revenue–third-party       245        245 
Amortization of customer relationships   (9,271)   (8,397)       (17,668)
Total revenues   179,445    45,359        224,804 
Operating expenses:                    
Direct operating   16,161    23,338        39,499 
General and administrative (excluding equity-based compensation)   6,533    4,069    953    11,555 
Equity-based compensation   2,543    485    227    3,255 
Facility idling       870        870 
Impairment of property and equipment       203        203 
Depreciation   15,151    12,336        27,487 
Accretion of asset retirement obligations       114        114 
Total operating expenses   40,388    41,415    1,180    82,983 
Operating income   139,057    3,944    (1,180)   141,821 
Other income (expense):                    
Interest expense, net           (44,544)   (44,544)
Equity in earnings of unconsolidated affiliates   24,088            24,088 
Total other income (expense)   24,088        (44,544)   (20,456)
Income before income taxes   163,145    3,944    (45,724)   121,365 
Provision for income tax expense           (32,038)   (32,038)
Net income and comprehensive income  $163,145    3,944    (77,762)   89,327 
                     
Adjusted EBITDA                 $219,478 

 

(1)Corporate expenses that are not directly attributable to either the gathering and processing or water handling segments.

 

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ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

   Nine Months Ended September 30, 
   2020   2021 
Cash flows provided by (used in) operating activities:          
Net income (loss)  $(198,985)   252,991 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation   81,889    80,956 
Payment of contingent consideration in excess of acquisition date fair value   (8,076)    
Accretion of asset retirement obligations   142    347 
Impairment   665,491    1,582 
Deferred income tax expense (benefit)   (21,425)   88,547 
Equity-based compensation   9,713    10,326 
Equity in earnings of unconsolidated affiliates   (63,197)   (66,347)
Distributions from unconsolidated affiliates   69,313    87,115 
Amortization of customer relationships   53,011    53,004 
Amortization of deferred financing costs   3,299    4,152 
Loss on early extinguishment of debt       20,701 
Settlement of asset retirement obligations   (1,517)   (814)
Loss on asset sale   240    3,628 
Changes in assets and liabilities:          
Accounts receivable–Antero Resources   17,081    (11,429)
Accounts receivable–third party   1,139    594 
Income tax receivable   (17,547)   16,311 
Other current assets   1,036    810 
Accounts payable–Antero Resources   (717)   (705)
Accounts payable–third party   6,239    11,058 
Accrued liabilities   (50,240)   (7,337)
Net cash provided by operating activities   546,889    545,490 
Cash flows provided by (used in) investing activities:          
Additions to gathering systems and facilities   (137,978)   (120,727)
Additions to water handling systems   (27,287)   (36,221)
Investments in unconsolidated affiliates   (24,802)   (2,070)
Cash received in asset sale   123    1,653 
Change in other assets   1,938     
Net cash used in investing activities   (188,006)   (157,365)
Cash flows provided by (used in) financing activities:          
Dividends to stockholders   (443,059)   (363,712)
Dividends to preferred stockholders   (413)   (413)
Repurchases of common stock   (24,713)    
Issuance of senior notes       750,000 
Redemption of senior notes       (667,472)
Payments of deferred financing costs       (9,449)
Borrowings (repayments) on bank credit facilities, net   228,000    (92,800)
Payment of contingent acquisition consideration   (116,924)    
Employee tax withholding for settlement of equity compensation awards   (466)   (4,885)
Other   (150)   (34)
Net cash used in financing activities   (357,725)   (388,765)
Net increase (decrease) in cash and cash equivalents   1,158    (640)
Cash and cash equivalents, beginning of period   1,235    640 
Cash and cash equivalents, end of period  $2,393     
Supplemental disclosure of cash flow information:          
Cash paid during the period for interest  $135,426    132,630 
Cash received during the period for income taxes  $38,910    16,913 
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment  $(11,318)   22,675 

 

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