DENVER, Feb. 16, 2022 /PRNewswire/ -- Antero Midstream
Corporation (NYSE: AM) ("Antero Midstream" or the
"Company") today announced its fourth quarter 2021 financial and
operational results and 2022 capital budget and guidance.
Fourth Quarter 2021 Earnings Highlights:
- Net Income was $79 million, or
$0.16 per share, in line with the
prior year quarter
- Adjusted Net Income was $95
million, or $0.20 per share,
compared to $98 million, or
$0.21 per share in the prior year
quarter (non-GAAP measure)
- Adjusted EBITDA was $213
million, a 5% increase compared to the prior year quarter
(non-GAAP measure)
- Capital expenditures were $80
million
- Net cash provided by operating activities was $164 million
- Free Cash Flow before dividends was $88 million and Free Cash Flow after dividends
was a $(19) million deficit (non-GAAP
measure)
- Total debt and Net Debt at year end were $3.1 billion and Net Debt to last twelve months
Adjusted EBITDA was 3.6x (non-GAAP measure)
- Placed the Lincoln Compressor Station in service, adding 240
MMcf/d of compression capacity
- Extended credit facility maturity from 2022 to 2026, with
over $700 million of liquidity at
year-end
Full Year 2021 Earnings Highlights:
- Net Income was $332 million, or
$0.69 per share, compared to a $0.26
per share net loss in the prior year
- Adjusted EBITDA was $876
million, $16 million above the
midpoint of Antero Midstream's guidance range of $860 million (non-GAAP measure)
- Capital expenditures were $262
million, in line with the high end of the guidance
range
- Net cash provided by operating activities was $710 million
- Free Cash Flow before dividends was $439 million and Free Cash Flow after dividends
was $10 million, both above the
midpoint of their respective guidance ranges (non-GAAP
measure)
- Generated a Return on Invested Capital (ROIC) of 18% in 2021
(non-GAAP measure)
2022 Guidance Highlights:
- Forecasting low single digit throughput growth compared to
2021
- Servicing 75 to 80 wells with Antero Midstream's fresh water
delivery system
- Net Income of $330 to
$370 million, representing GAAP
earnings of $0.69 to $0.78 per share
- Adjusted Net Income of $385 to
$425 million, representing adjusted
earnings of $0.81 to $0.89 per share (non-GAAP
measure)
- Adjusted EBITDA of $850 to
$890 million (non-GAAP
measure)
- Capital budget of $275 to
$300 million
- Free Cash Flow before dividends of $385 to $425
million and Free Cash Flow after dividends of a $(45) to $(5)
million deficit assuming an annualized dividend of
$0.90 per share (non-GAAP
measures)
Paul Rady, Chairman and CEO said,
"I'm exceptionally proud of our employees, who once again were able
to achieve safety, operating, and financial records in 2021. Their
perseverance allowed us to generate 3% year-over-year EBITDA growth
in 2021, reduce leverage to 3.6x at year-end, and maintain a flat
total debt profile while continuing to invest in infrastructure
supporting the growth from Antero Resources' and QL Capital
Partners' drilling partnership."
Mr. Rady further added, "Our employees' focus on operating
efficiencies and just-in-time capital investment philosophy
resulted in compression and processing asset utilization rates of
86% and 99% during 2021, respectively. These utilization rates
highlight the effectiveness of our business model focused on
customized midstream solutions matching infrastructure capacity
with production volumes. We believe this benefits all stakeholders
as it has allowed us to consistently generate mid-teens ROIC.
Additionally, we have expanded our emissions goals and are
targeting Net Zero Scope 1 and Scope 2 emissions by 2050."
For a discussion of the non-GAAP financial measures,
including Adjusted EBITDA, Adjusted Net Income, Free Cash Flow
before and after dividends, Return on Invested Capital
and Net Debt, please see "Non-GAAP Financial
Measures."
2022 Guidance and Capital Budget
Antero Midstream is forecasting Net Income of $330 to
$370 million and Adjusted Net Income (adjusted for
amortization of customer relationships and effective tax rate
impact) of $385 to $425 million. The Company is
forecasting Adjusted EBITDA of $850 to $890 million and a
capital budget of $275 to $300 million. The Company
is forecasting low single digit throughput growth in 2022 compared
to 2021, and Antero Midstream's guidance includes four quarterly
low pressure gathering rebates to Antero Resources. Antero
Midstream's 2022 guidance includes approximately $115 to
$125 million of combined distributions from its interests in
the processing and fractionation joint venture with MPLX, LP (the
"Joint Venture") and in Stonewall Gathering LLC. This results in
Free Cash Flow before dividends of $385 to $425 million
and Free Cash Flow after dividends of a $(45) to $(5) million deficit for 2022,
assuming an annualized dividend of $0.90 per share. This Free Cash Flow
profile results in approximately flat total debt at $3.1 billion and leverage of 3.6x.
During 2022, Antero Midstream plans to expand its existing
Marcellus and Utica Shale gathering, compression and fresh water
delivery systems. The midpoint of the capital budget includes
approximately $230 million of investment in gathering and
compression infrastructure primarily in the Marcellus Shale to
expand the system further into rich gas areas in Tyler and Wetzel Counties in West Virginia. This infrastructure investment
includes $45 million in 2022 for the
construction of two compressor stations with 240 MMcf/d of capacity
each that will be phased in from 2022 through 2023. In addition,
Antero Midstream's 2022 capital budget includes approximately
$50 million of remaining capital for
a 20 mile high pressure trunkline from Wetzel County to the Sherwood and Smithburg processing complex. This
infrastructure will be utilized on a just-in-time basis to support
throughput growth from Antero Resources' and QL's drilling
partnership in the liquids-rich Marcellus Shale over the next
several years. Antero Midstream has budgeted an investment of
$55 million for fresh water delivery and wastewater blending
and pipeline infrastructure. The Company is forecasting an
immaterial capital investment in the Joint Venture in 2022.
Antero Midstream expects to invest approximately 70% to 75% of
its full year capital budget in the first half of 2022, resulting
in declining capital investments on a quarterly basis throughout
the year. Over 95% of Antero Midstream's 2022 capital budget is
focused in the Marcellus Shale and the remaining capital is focused
in the Utica Shale. Antero Midstream expects to fund its 2022
capital budget through net cash provided by operating
activities.
The following is a summary of Antero Midstream's 2022 guidance
($ in millions):
|
|
Twelve Months
Ended
December 31,
2022
|
|
|
Low
|
|
High
|
Net Income
|
|
$
330
|
—
|
$
370
|
Adjusted Net
Income
|
|
385
|
—
|
425
|
Adjusted
EBITDA
|
|
850
|
—
|
890
|
Capital
Expenditures
|
|
275
|
—
|
300
|
Interest
Expense
|
|
170
|
—
|
180
|
Free Cash Flow Before
Dividends
|
|
385
|
—
|
425
|
Total Dividends
(assuming $0.90 per share)
|
|
430
|
—
|
430
|
Free Cash Flow After
Dividends
|
|
(45)
|
—
|
(5)
|
|
|
|
|
|
|
Brendan Krueger, CFO of Antero
Midstream, said "Antero Midstream is quickly approaching an
inflection point in its long-term outlook, transitioning to a
business model that we believe will generate consistent and
sustainable Free Cash Flow after dividends beginning in the second
half of 2022. This transition, aided by EBITDA growth and declining
capital budgets, further de-risks our long-term outlook. Antero
Midstream is well positioned to meet our long-term leverage target
of 3.0x over the next few years, at which point we can begin
evaluating further return of capital to shareholders."
Fourth Quarter 2021 Financial Results
Low pressure gathering volumes for the fourth quarter of 2021
averaged 2,961 MMcf/d, a 3% decrease as compared to the prior
year quarter. Low pressure gathering volumes were in excess
of the fourth quarter 2021 growth incentive fee threshold of 2,900
MMcf/d, resulting in a $12 million
rebate to Antero Resources. Compression volumes for the fourth
quarter of 2021 averaged 2,843 MMcf/d, in line with the fourth
quarter of 2020. High pressure gathering volumes for the
fourth quarter averaged 2,915 MMcf/d, a 3% decrease compared
to the fourth quarter of 2020. Fresh water delivery volumes
averaged 80 MBbl/d during the quarter, an 86% increase
compared to the fourth quarter of 2020, due to an increase in
completion activities by the drilling partnership between Antero
Resources and QL Capital Partners.
Gross processing volumes from the Joint Venture averaged 1,539
MMcf/d for the fourth quarter of 2021, a 2% increase compared to
the prior year quarter. Joint Venture processing capacity was
96% utilized during the quarter based on nameplate processing
capacity of 1.6 Bcf/d. Gross Joint Venture fractionation
volumes averaged 37 MBbl/d, an 8% decrease compared to the
prior year quarter. Joint Venture fractionation capacity was 93%
utilized during the quarter based on nameplate fractionation
capacity of 40 MMBbl/d.
|
|
Three Months
Ended
December
31,
|
|
Average Daily
Volumes:
|
|
2020
|
|
2021
|
|
%
Change
|
Low Pressure Gathering
(MMcf/d)
|
|
3,053
|
|
2,961
|
|
(3)%
|
Compression
(MMcf/d)
|
|
2,851
|
|
2,843
|
|
0%
|
High Pressure
Gathering (MMcf/d)
|
|
3,017
|
|
2,915
|
|
(3)%
|
Fresh Water Delivery
(MBbl/d)
|
|
43
|
|
80
|
|
86%
|
Gross Joint Venture
Processing (MMcf/d)
|
|
1,510
|
|
1,539
|
|
2%
|
Gross Joint Venture
Fractionation (MBbl/d)
|
|
40
|
|
37
|
|
(8)%
|
|
|
|
|
|
|
|
|
For the three months ended December 31,
2021, revenues were $234
million comprised of $183
million from the Gathering and Processing segment and
$51 million from the Water Handling segment, net of
$18 million of amortization of customer relationships.
Water Handling revenues include $22
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 $37 million in total direct
operating expenses in the prior year quarter. Water Handling
operating expenses include $19 million from wastewater
handling and high rate water transfer services. General and
administrative expenses excluding equity-based compensation were
$14 million during the fourth quarter of 2021. Total
operating expenses during the fourth quarter of 2021 included
$3 million of equity-based compensation expense,
$3 million impairment, $1
million loss on extinguishment of debt related to the
extension of Antero Midstream's credit facility and
$28 million of depreciation.
Net Income was $79 million, or $0.16 per share. Net Income adjusted for
amortization of customer relationships, impairment expense and loss
on extinguishment of debt, net of tax effects of reconciling items,
or Adjusted Net Income, was $95 million. Adjusted Net Income
per share was $0.20 per share, a 5%
decrease compared to the prior year quarter.
The following table reconciles Net Income to Adjusted Net Income
(in thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended December
31,
|
|
|
|
2020
|
|
|
2021
|
Net
Income
|
|
$
|
76,458
|
|
|
78,626
|
Amortization of
customer relationships
|
|
|
17,661
|
|
|
17,668
|
Impairment
expense
|
|
|
8,149
|
|
|
3,460
|
Loss on asset
sale
|
|
|
2,689
|
|
|
—
|
Loss on
extinguishment of debt
|
|
|
—
|
|
|
1,056
|
Tax effect of
reconciling items(1)
|
|
|
(7,039)
|
|
|
(5,715)
|
Adjusted Net
Income
|
|
$
|
97,918
|
|
|
95,095
|
|
(1)
Statutory tax rate was approximately 24.7% for 2020 and 25.8%
for 2021.
|
Adjusted EBITDA was $213 million, a 5% increase compared to
the prior year quarter. Interest expense was $44 million, a
12% increase compared to the prior year quarter, driven by the
issuances of senior notes due 2026 and 2029. Capital expenditures
were $80 million, a 179% 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 $88 million, a 35% decrease compared to
the prior year quarter driven primarily by higher capital
expenditures during the quarter. Free Cash Flow after dividends was
a $19 million deficit compared to a $12 million deficit
in the prior year quarter. Free Cash Flow after dividends for the
full year 2021 was $10 million.
The following table reconciles Net Income to Adjusted EBITDA and
Free Cash Flow before and after dividends (in thousands):
|
|
Three Months
Ended December
31,
|
|
|
|
2020
|
|
|
2021
|
Net
Income
|
|
$
|
76,458
|
|
|
78,626
|
Interest expense,
net
|
|
|
39,564
|
|
|
44,366
|
Income tax
expense
|
|
|
22,194
|
|
|
28,576
|
Amortization of
customer relationships
|
|
|
17,661
|
|
|
17,668
|
Depreciation
expense
|
|
|
26,901
|
|
|
27,834
|
Impairment
expense
|
|
|
8,149
|
|
|
3,460
|
Loss on asset
sale
|
|
|
2,689
|
|
|
—
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
1,056
|
Accretion of asset
retirement obligations
|
|
|
38
|
|
|
113
|
Equity-based
compensation
|
|
|
3,065
|
|
|
3,203
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(23,233)
|
|
|
(24,104)
|
Distributions from
unconsolidated affiliates
|
|
|
29,545
|
|
|
31,875
|
Adjusted
EBITDA
|
|
$
|
203,031
|
|
|
212,673
|
Interest
expense
|
|
|
(39,564)
|
|
|
(44,366)
|
Total capital
expenditures (accrual-based)
|
|
|
(28,770)
|
|
|
(80,197)
|
Free Cash Flow
before dividends
|
|
$
|
134,697
|
|
|
88,110
|
Dividends declared
(accrual-based)
|
|
|
(146,649)
|
|
|
(107,479)
|
Free Cash Flow
after dividends
|
|
$
|
(11,952)
|
|
|
(19,369)
|
The following table reconciles net cash provided by operating
activities to Free Cash Flow before and after dividends (in
thousands):
|
|
Three Months
Ended December
31,
|
|
|
|
2020
|
|
|
2021
|
Net cash provided
by operating activities
|
|
$
|
206,493
|
|
|
164,262
|
Amortization of
deferred financing costs
|
|
|
(1,204)
|
|
|
(1,397)
|
Settlement of asset
retirement obligations
|
|
|
666
|
|
|
571
|
Income tax
expense
|
|
|
22,194
|
|
|
28,576
|
Deferred income tax
expense
|
|
|
(21,254)
|
|
|
(28,576)
|
Changes in working
capital
|
|
|
(43,428)
|
|
|
4,871
|
Total capital
expenditures (accrual-based)
|
|
|
(28,770)
|
|
|
(80,197)
|
Free Cash Flow
before dividends
|
|
$
|
134,697
|
|
|
88,110
|
Dividends declared
(accrual-based)
|
|
|
(146,649)
|
|
|
(107,479)
|
Free Cash Flow
after dividends
|
|
$
|
(11,952)
|
|
|
(19,369)
|
Fourth Quarter 2021 Operating Update
Gathering and Processing — During the
fourth quarter of 2021, Antero Midstream connected 14 wells to
its gathering system. The Company expanded its compression capacity
by placing in service one compressor station in the Marcellus
Shale, adding 240 MMcf/d of compression capacity. Antero
Midstream's average compression capacity during the quarter was
approximately 87% utilized.
Water Handling— Antero Midstream's water
delivery systems serviced 16 well completions during the
fourth quarter of 2021, bringing the year-to-date total wells
serviced by Antero Midstream's water delivery system to 75
wells.
Capital Investments
Total accrued capital expenditures including investments in the
Joint Venture were $80 million during the fourth quarter of
2021. Of the $80 million invested in gathering, compression,
and water infrastructure, $71 million was in gathering and
compression assets and $9 million was in water handling
assets. There were no investments in the Joint Venture during
the quarter.
Conference Call
A conference call for Antero Midstream is scheduled on
Thursday, February 17, 2022 at
10:00 am MT to discuss the financial
and operational results. A brief Q&A session for security
analysts will immediately follow the discussion of the results for
the quarter. To participate in the call, dial in at
877-407-9126 (U.S.), or 201-493-6751 (International) and reference
"Antero Midstream." A telephone replay of the call will be
available until Thursday, February 24,
2022 at 10:00 am MT at
877-660-6853 (U.S.) or 201-612-7415 (International) using the
conference ID: 13726194. To access the live webcast and view the
related earnings conference call presentation, visit Antero
Midstream's website at www.anteromidstream.com. The webcast
will be archived for replay until Thursday,
February 24, 2022 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 relationships and impairment expense,
excluding loss on asset sale and loss on early extinguishment of
debt, 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, income tax expense, amortization of customer
relationships, depreciation expense, impairment expense, loss on
asset sale and loss on early extinguishment of debt, accretion of
asset retirement obligations, equity-based compensation expense,
excluding equity in earnings of unconsolidated affiliates, plus
distributions from unconsolidated affiliates.
Antero Midstream uses Adjusted EBITDA to assess:
- the financial performance of Antero Midstream's assets, without
regard to financing methods, capital structure or historical cost
basis;
- its operating performance and return on capital as compared to
other publicly traded companies in the midstream energy sector,
without regard to financing or capital structure; and
- the viability of acquisitions and other capital expenditure
projects.
Antero Midstream defines Free Cash Flow before dividends as
Adjusted EBITDA less interest expense and accrual-based capital
expenditures. Free Cash Flow after dividends is defined as Free
Cash Flow before dividends less accrual-based dividends declared
for the quarter. Antero Midstream uses Free Cash Flow before and
after dividends as a performance metric to compare the cash
generating performance of Antero Midstream from period to
period.
Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow before
and after dividends are non-GAAP financial measures. The GAAP
measure most directly comparable to 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,
excluding unamortized debt premiums and debt issuance costs, less
cash and cash equivalents. Antero Midstream views Net Debt as an
important indicator in evaluating Antero Midstream's financial
leverage. The GAAP measure most directly comparable to Net Debt is
total debt, excluding unamortized debt premiums and debt issuance
costs.
The following table reconciles cash paid for capital
expenditures and accrued capital expenditures during the period (in
thousands):
|
|
Three Months Ended
December 31,
|
|
|
|
2020
|
|
|
2021
|
Capital
expenditures (as reported on a cash basis)
|
|
$
|
31,924
|
|
|
75,877
|
Change in accrued
capital costs
|
|
|
(3,154)
|
|
|
4,320
|
Capital
expenditures (accrual basis)
|
|
$
|
28,770
|
|
|
80,197
|
The following table reconciles consolidated total debt to
consolidated net debt, excluding debt premiums and issuance costs,
("Net Debt") as used in this release (in thousands):
|
|
December
31, 2021
|
|
Bank credit
facility
|
|
$
|
547,200
|
|
7.875% senior notes
due 2026
|
|
|
550,000
|
|
5.75% senior notes due
2027
|
|
|
650,000
|
|
5.75% senior notes due
2028
|
|
|
650,000
|
|
5.375% senior notes
due 2029
|
|
|
750,000
|
|
Consolidated total
debt
|
|
|
3,147,200
|
|
Cash and cash
equivalents
|
|
|
—
|
|
Consolidated net
debt
|
|
$
|
3,147,200
|
The following table reconciles Net Income to Adjusted EBITDA and
Free Cash Flow before and after dividends for the last twelve
months as used in this release (in thousands):
|
|
12 months
ended December 31,
2021
|
Net
Income
|
|
$
|
331,617
|
Interest expense,
net
|
|
|
175,281
|
Income tax
expense
|
|
|
117,123
|
Amortization of
customer relationships
|
|
|
70,672
|
Depreciation
expense
|
|
|
108,790
|
Impairment
expense
|
|
|
5,042
|
Accretion of asset
retirement obligations
|
|
|
460
|
Equity-based
compensation
|
|
|
13,529
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(90,451)
|
Distributions from
unconsolidated affiliates
|
|
|
118,990
|
Loss on asset
sale
|
|
|
3,628
|
Loss on early
extinguishment of debt
|
|
|
21,757
|
Adjusted
EBITDA
|
|
$
|
876,438
|
Interest
expense
|
|
|
(175,281)
|
Total capital
expenditures (accrual-based)
|
|
|
(261,891)
|
Free Cash Flow
before dividends
|
|
|
439,266
|
Dividends declared
(accrual-based)
|
|
|
(429,749)
|
Free Cash Flow
after dividends
|
|
|
9,517
|
Antero Midstream defines Return on Invested Capital ("ROIC") as
earnings before interest and income taxes excluding amortization of
customer relationships, impairment expense, loss on asset sale,
loss on early extinguishment of debt, and the tax-effects of such
amounts, divided by average total liabilities and stockholders'
equity, excluding current liabilities, intangible assets and
impairment of property and equipment in order to derive an
operating asset driven ROIC calculation.
The following table reconciles Return on Invested Capital for
the last twelve months as used in this release (in thousands):
|
|
12 months
ended December 31,
2021
|
Net
Income
|
|
$
|
331,617
|
Amortization of
customer relationships
|
|
|
70,672
|
Impairment
expense
|
|
|
5,042
|
Loss on asset
sale
|
|
|
3,628
|
Loss on early
extinguishment of debt
|
|
|
21,757
|
Tax effect of
reconciling items
|
|
|
(26,043)
|
Adjusted Net
Income
|
|
|
406,673
|
Interest
expense
|
|
|
175,281
|
Income tax
expense
|
|
|
117,123
|
Tax effect of
reconciling items
|
|
|
26,043
|
Adjusted
EBIT
|
|
|
725,120
|
Average Invested
Capital
|
|
|
4,132,949
|
Return on Invested
Capital
|
|
|
18%
|
Antero Midstream has not included a reconciliation of Adjusted
EBITDA and Free Cash Flow to the nearest GAAP financial measure for
2022 because it cannot do so without unreasonable effort and any
attempt to do so would be inherently imprecise. Antero Midstream is
able to forecast the following reconciling items between such
measures and Net Income (in millions):
|
|
Twelve Months
Ending
December 31,
2022
|
|
|
Low
|
|
High
|
Depreciation
Expense
|
|
110
|
—
|
120
|
Equity-based
compensation expense
|
|
10
|
—
|
20
|
Amortization of
customer relationships
|
|
70
|
—
|
80
|
Distributions from
unconsolidated affiliates
|
|
115
|
—
|
125
|
Interest
Expense
|
|
170
|
—
|
180
|
|
|
|
|
|
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 the ESG Report is based on 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 and Net Zero Scope 1
and Scope 2 emissions through 2050 through operational efficiencies
and the purchase of carbon offsets. Scope 1 emissions are the
Company's direct greenhouse gas emissions, and Scope 2 emissions
are the Company's indirect greenhouse gas emissions associated with
the purchase of electricity, steam, heat or cooling; however, such
goals are aspirational and we could face unexpected material costs
as a result of our efforts to meet these goals. Moreover, given
uncertainties related to the use of emerging technologies, the
state of markets for and availability of verified quality carbon
offsets, we cannot predict whether or not we will be able to timely
meet these goals, if at all.
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, 2021.
ANTERO MIDSTREAM
CORPORATION
Consolidated Balance Sheets
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2020
|
|
2021
|
|
Assets
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
640
|
|
|
—
|
|
Accounts
receivable–Antero Resources
|
|
|
73,722
|
|
|
81,197
|
|
Accounts
receivable–third party
|
|
|
839
|
|
|
747
|
|
Income tax
receivable
|
|
|
17,251
|
|
|
940
|
|
Other current
assets
|
|
|
1,479
|
|
|
920
|
|
Total current
assets
|
|
|
93,931
|
|
|
83,804
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
3,254,044
|
|
|
3,394,746
|
|
Investments in
unconsolidated affiliates
|
|
|
722,478
|
|
|
696,009
|
|
Deferred income tax
asset
|
|
|
103,402
|
|
|
—
|
|
Customer
relationships
|
|
|
1,427,447
|
|
|
1,356,775
|
|
Other assets,
net
|
|
|
9,610
|
|
|
12,667
|
|
Total
assets
|
|
$
|
5,610,912
|
|
|
5,544,001
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–Antero Resources
|
|
$
|
3,862
|
|
|
4,956
|
|
Accounts payable–third
party
|
|
|
9,495
|
|
|
23,592
|
|
Accrued
liabilities
|
|
|
74,947
|
|
|
80,838
|
|
Other current
liabilities
|
|
|
5,701
|
|
|
4,623
|
|
Total current
liabilities
|
|
|
94,005
|
|
|
114,009
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
3,091,626
|
|
|
3,122,910
|
|
Deferred income tax
liability
|
|
|
—
|
|
|
13,721
|
|
Other
|
|
|
6,995
|
|
|
6,663
|
|
Total
liabilities
|
|
|
3,192,626
|
|
|
3,257,303
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 100,000 authorized as of December 31, 2020 and
2021
|
|
|
|
|
|
|
|
Series A non-voting
perpetual preferred stock; 12 designated and 10 issued
and
outstanding as of December 31, 2020
and 2021
|
|
|
—
|
|
|
—
|
|
Common stock, $0.01
par value; 2,000,000 authorized; 476,639 and 477,495 issued
and
outstanding as of December 31, 2020
and 2021, respectively
|
|
|
4,766
|
|
|
4,775
|
|
Additional paid-in
capital
|
|
|
2,877,612
|
|
|
2,414,398
|
|
Accumulated
deficit
|
|
|
(464,092)
|
|
|
(132,475)
|
|
Total stockholders'
equity
|
|
|
2,418,286
|
|
|
2,286,698
|
|
Total liabilities and
stockholders' equity
|
|
$
|
5,610,912
|
|
|
5,544,001
|
|
ANTERO MIDSTREAM
CORPORATION
Consolidated
Statements of Operations and Comprehensive Income
(In thousands, except
per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2020
|
|
2021
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
184,125
|
|
|
183,193
|
|
Water handling–Antero
Resources
|
|
|
37,396
|
|
|
50,789
|
|
Water handling–third
party
|
|
|
—
|
|
|
176
|
|
Amortization of
customer relationships
|
|
|
(17,661)
|
|
|
(17,668)
|
|
Total
revenue
|
|
|
203,860
|
|
|
216,490
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
36,539
|
|
|
38,752
|
|
General and
administrative (including $3,065 and $3,203 of equity-based
compensation in
2020 and 2021,
respectively)
|
|
|
13,022
|
|
|
16,847
|
|
Facility
idling
|
|
|
1,539
|
|
|
964
|
|
Impairment of property
and equipment
|
|
|
8,149
|
|
|
3,460
|
|
Depreciation
|
|
|
26,901
|
|
|
27,834
|
|
Accretion of asset
retirement obligations
|
|
|
38
|
|
|
113
|
|
Loss on asset
sale
|
|
|
2,689
|
|
|
—
|
|
Total operating
expenses
|
|
|
88,877
|
|
|
87,970
|
|
Operating
income
|
|
|
114,983
|
|
|
128,520
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(39,564)
|
|
|
(44,366)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
23,233
|
|
|
24,104
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
(1,056)
|
|
Total other
expense
|
|
|
(16,331)
|
|
|
(21,318)
|
|
Income before income
taxes
|
|
|
98,652
|
|
|
107,202
|
|
Income tax
expense
|
|
|
(22,194)
|
|
|
(28,576)
|
|
Net income and
comprehensive income
|
|
$
|
76,458
|
|
|
78,626
|
|
|
|
|
|
|
|
|
|
Net income per
share–basic
|
|
$
|
0.16
|
|
|
0.16
|
|
Net income per
share–diluted
|
|
$
|
0.16
|
|
|
0.16
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
476,633
|
|
|
477,491
|
|
Diluted
|
|
|
478,757
|
|
|
480,150
|
|
ANTERO MIDSTREAM
CORPORATION
Selected Operating
Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Amount
of
|
|
|
|
|
|
|
December 31,
|
|
Increase
|
|
Percentage
|
|
|
2020
|
|
2021
|
|
or
Decrease
|
|
Change
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
280,872
|
|
|
272,451
|
|
|
(8,421)
|
|
|
(3)
|
%
|
Compression
(MMcf)
|
|
|
262,259
|
|
|
261,568
|
|
|
(691)
|
|
|
*
|
|
Gathering—high
pressure (MMcf)
|
|
|
277,595
|
|
|
268,225
|
|
|
(9,370)
|
|
|
(3)
|
%
|
Fresh water delivery
(MBbl)
|
|
|
3,937
|
|
|
7,338
|
|
|
3,401
|
|
|
86
|
%
|
Other fluid handling
(MBbl)
|
|
|
4,761
|
|
|
4,273
|
|
|
(488)
|
|
|
(10)
|
%
|
Wells serviced by
fresh water delivery
|
|
|
5
|
|
|
16
|
|
|
11
|
|
|
220
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
3,053
|
|
|
2,961
|
|
|
(92)
|
|
|
(3)
|
%
|
Compression
(MMcf/d)
|
|
|
2,851
|
|
|
2,843
|
|
|
(8)
|
|
|
*
|
|
Gathering—high
pressure (MMcf/d)
|
|
|
3,017
|
|
|
2,915
|
|
|
(102)
|
|
|
(3)
|
%
|
Fresh water delivery
(MBbl/d)
|
|
|
43
|
|
|
80
|
|
|
37
|
|
|
86
|
%
|
Other fluid handling
(MBbl/d)
|
|
|
52
|
|
|
46
|
|
|
(6)
|
|
|
(12)
|
%
|
Average Realized
Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.33
|
|
|
0.33
|
|
|
—
|
|
|
*
|
|
Average compression
fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.20
|
|
|
0.01
|
|
|
5
|
%
|
Average gathering—high
pressure fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.20
|
|
|
0.01
|
|
|
5
|
%
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.96
|
|
|
3.97
|
|
|
0.01
|
|
|
*
|
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing—Joint
Venture (MMcf)
|
|
|
138,879
|
|
|
141,619
|
|
|
2,740
|
|
|
2
|
%
|
Fractionation—Joint
Venture (MBbl)
|
|
|
3,651
|
|
|
3,388
|
|
|
(263)
|
|
|
(7)
|
%
|
Processing—Joint
Venture (MMcf/d)
|
|
|
1,510
|
|
|
1,539
|
|
|
29
|
|
|
2
|
%
|
Fractionation—Joint
Venture (MBbl/d)
|
|
|
40
|
|
|
37
|
|
|
(3)
|
|
|
(8)
|
%
|
|
* Not
meaningful or applicable.
|
ANTERO MIDSTREAM
CORPORATION
Consolidated Results
of Segment Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2021
|
|
|
|
Gathering and
|
|
Water
|
|
|
|
Consolidated
|
|
(in
thousands)
|
|
Processing
|
|
Handling
|
|
Unallocated
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
195,193
|
|
|
50,789
|
|
|
—
|
|
|
245,982
|
|
Revenue–third-party
|
|
|
—
|
|
|
176
|
|
|
—
|
|
|
176
|
|
Gathering—low pressure
rebate
|
|
|
(12,000)
|
|
|
—
|
|
|
—
|
|
|
(12,000)
|
|
Amortization of
customer relationships
|
|
|
(9,273)
|
|
|
(8,395)
|
|
|
—
|
|
|
(17,668)
|
|
Total
revenues
|
|
|
173,920
|
|
|
42,570
|
|
|
—
|
|
|
216,490
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
15,574
|
|
|
23,178
|
|
|
—
|
|
|
38,752
|
|
General and
administrative (excluding equity-based
compensation)
|
|
|
7,392
|
|
|
5,264
|
|
|
988
|
|
|
13,644
|
|
Equity-based
compensation
|
|
|
2,529
|
|
|
446
|
|
|
228
|
|
|
3,203
|
|
Facility
idling
|
|
|
—
|
|
|
964
|
|
|
—
|
|
|
964
|
|
Depreciation
|
|
|
15,424
|
|
|
12,410
|
|
|
—
|
|
|
27,834
|
|
Impairment of property
and equipment
|
|
|
3,390
|
|
|
70
|
|
|
—
|
|
|
3,460
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
113
|
|
Total operating
expenses
|
|
|
44,309
|
|
|
42,445
|
|
|
1,216
|
|
|
87,970
|
|
Operating
income
|
|
|
129,611
|
|
|
125
|
|
|
(1,216)
|
|
|
128,520
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
—
|
|
|
—
|
|
|
(44,366)
|
|
|
(44,366)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
24,104
|
|
|
—
|
|
|
—
|
|
|
24,104
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
(1,056)
|
|
|
(1,056)
|
|
Total other income
(expense)
|
|
|
24,104
|
|
|
—
|
|
|
(45,422)
|
|
|
(21,318)
|
|
Income before income
taxes
|
|
|
153,715
|
|
|
125
|
|
|
(46,638)
|
|
|
107,202
|
|
Income tax
expense
|
|
|
—
|
|
|
—
|
|
|
(28,576)
|
|
|
(28,576)
|
|
Net income and
comprehensive income
|
|
$
|
153,715
|
|
|
125
|
|
|
(75,214)
|
|
|
78,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
$
|
212,673
|
|
ANTERO MIDSTREAM
CORPORATION
Consolidated
Statements of Cash Flows
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(355,114)
|
|
|
(122,527)
|
|
|
331,617
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
95,526
|
|
|
108,790
|
|
|
108,790
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
8,263
|
|
|
180
|
|
|
460
|
|
Payment of contingent
consideration in excess of acquisition date fair value
|
|
|
—
|
|
|
(8,076)
|
|
|
—
|
|
Impairment
|
|
|
761,960
|
|
|
673,640
|
|
|
5,042
|
|
Deferred income tax
expense (benefit)
|
|
|
(101,927)
|
|
|
(171)
|
|
|
117,123
|
|
Equity-based
compensation
|
|
|
73,517
|
|
|
12,778
|
|
|
13,529
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(51,315)
|
|
|
(86,430)
|
|
|
(90,451)
|
|
Distributions from
unconsolidated affiliates
|
|
|
64,320
|
|
|
98,858
|
|
|
118,990
|
|
Distributions from
Antero Midstream Partners LP, prior to the Transactions
|
|
|
43,492
|
|
|
—
|
|
|
—
|
|
Amortization of
customer relationships
|
|
|
57,010
|
|
|
70,672
|
|
|
70,672
|
|
Amortization of
deferred financing costs
|
|
|
3,183
|
|
|
4,503
|
|
|
5,549
|
|
Settlement of asset
retirement obligations
|
|
|
—
|
|
|
(2,183)
|
|
|
(1,385)
|
|
Loss on asset
sale
|
|
|
—
|
|
|
2,929
|
|
|
3,628
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
21,757
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
|
42,484
|
|
|
27,306
|
|
|
(7,475)
|
|
Accounts
receivable–third party
|
|
|
185
|
|
|
1,434
|
|
|
904
|
|
Income tax
receivable
|
|
|
—
|
|
|
(17,251)
|
|
|
16,311
|
|
Other current
assets
|
|
|
(335)
|
|
|
155
|
|
|
550
|
|
Accounts
payable–Antero Resources
|
|
|
(2,103)
|
|
|
716
|
|
|
792
|
|
Accounts payable–third
party
|
|
|
(9,762)
|
|
|
1,201
|
|
|
695
|
|
Income taxes
payable
|
|
|
(15,678)
|
|
|
—
|
|
|
—
|
|
Accrued
liabilities
|
|
|
8,681
|
|
|
(13,142)
|
|
|
(7,346)
|
|
Net cash provided by
operating activities
|
|
|
622,387
|
|
|
753,382
|
|
|
709,752
|
|
Cash flows provided
by (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
Additions to gathering
systems and facilities
|
|
|
(267,383)
|
|
|
(157,931)
|
|
|
(186,588)
|
|
Additions to water
handling systems
|
|
|
(124,607)
|
|
|
(38,793)
|
|
|
(46,237)
|
|
Investments in
unconsolidated affiliates
|
|
|
(154,359)
|
|
|
(25,267)
|
|
|
(2,070)
|
|
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
|
|
|
—
|
|
|
822
|
|
|
1,653
|
|
Change in other
assets
|
|
|
901
|
|
|
1,938
|
|
|
—
|
|
Change in other
liabilities
|
|
|
(1,050)
|
|
|
—
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(525,675)
|
|
|
(219,231)
|
|
|
(233,242)
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
Dividends to
stockholders
|
|
|
(492,103)
|
|
|
(589,640)
|
|
|
(471,171)
|
|
Dividends to preferred
stockholders
|
|
|
(374)
|
|
|
(550)
|
|
|
(550)
|
|
Distributions to
Series B unitholders
|
|
|
(3,720)
|
|
|
—
|
|
|
—
|
|
Repurchases of common
stock
|
|
|
(125,519)
|
|
|
(24,713)
|
|
|
—
|
|
Issuance of senior
notes
|
|
|
650,000
|
|
|
550,000
|
|
|
750,000
|
|
Redemption of senior
notes
|
|
|
—
|
|
|
—
|
|
|
(667,472)
|
|
Payments of deferred
financing costs
|
|
|
(8,894)
|
|
|
(6,283)
|
|
|
(16,603)
|
|
Repayments on bank
credit facilities, net
|
|
|
(115,500)
|
|
|
(346,000)
|
|
|
(66,300)
|
|
Payment of contingent
acquisition consideration
|
|
|
—
|
|
|
(116,924)
|
|
|
—
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(2,015)
|
|
|
(476)
|
|
|
(5,013)
|
|
Other
|
|
|
(174)
|
|
|
(160)
|
|
|
(41)
|
|
Net cash used in
financing activities
|
|
|
(98,299)
|
|
|
(534,746)
|
|
|
(477,150)
|
|
Net decrease in cash
and cash equivalents
|
|
|
(1,587)
|
|
|
(595)
|
|
|
(640)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
2,822
|
|
|
1,235
|
|
|
640
|
|
Cash and cash
equivalents, end of period
|
|
$
|
1,235
|
|
|
640
|
|
|
—
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
83,016
|
|
|
140,732
|
|
|
179,748
|
|
Cash received (paid)
during the period for income taxes
|
|
$
|
(16,079)
|
|
|
39,205
|
|
|
16,311
|
|
Increase (decrease) in
accrued capital expenditures and accounts payable for property and
equipment
|
|
$
|
(6,215)
|
|
|
(14,472)
|
|
|
26,995
|
|
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SOURCE Antero Midstream Corporation