July 31, 2019 - 4:15 PM EDT
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Antero Midstream Reports Second Quarter 2019 Financial and Operating Results

DENVER, July 31, 2019 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream" or the "Company") today released its second quarter 2019 financial and operating results.  The relevant condensed consolidated financial statements are included in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which has been filed with the Securities and Exchange Commission.

Antero Midstream Logo (PRNewsfoto/Antero Midstream)

Second Quarter 2019 Highlights Include:

  • Net income increased by 32% to $69 million compared to the prior year period, or $0.14 per share
  • Adjusted Net Income increased by 19% to $78 million compared to the pro forma prior year quarter, or $0.15 per share (non-GAAP measure)
  • Adjusted EBITDA increased by 18% to $206 million compared to the pro forma prior year quarter (non-GAAP measure)
  • Distributable Cash Flow increased by 9% to $156 million compared to the pro forma prior year quarter (non-GAAP measure)
  • Net Debt to trailing twelve months pro forma Adjusted EBITDA ratio was 3.2x at the end of the quarter (non-GAAP measure)
  • Upsized $650 million senior note offering and priced at 5.75% coupon at par with a 2028 maturity resulting in $1.4 billion of liquidity as of June 30, 2019
  • Planning to expand scope of water business into flowback and produced water operations
  • Declared a dividend of $0.3075 per share ($1.23 per share annualized), resulting in a year-over-year increase of 40% and 146% for previous holders of Antero Midstream Partners and Antero Midstream GP LP, respectively

Commenting on Antero Midstream, Paul Rady, Chairman and CEO said, "Antero Midstream continued to deliver its organic growth strategy during the quarter generating 34% and 54% increases in low pressure gathering and compression volumes, respectively, compared to the second quarter of 2018. Looking forward, Antero Midstream will continue to organically build out the infrastructure needed to support Antero Resources' development plan which targets a 10% compound annual growth rate in net production at current strip pricing. Antero Resources has announced that is has already achieved material well cost savings this year and has initiatives underway to achieve a 10% to 14% reduction in well costs,  as well as further reductions in lease operating expenses, by 2020.  Antero Resources has announced that it believes these well cost and operating cost reductions will enable it to continue executing its development plan at current strip pricing."

Mr. Rady further added, "Importantly, the integrated development program results in capital efficient spending at both Antero Resources and Antero Midstream, allowing for a strong balance sheet at both entities assuming the current commodity price strip."

For a discussion of the non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income and Distributable Cash Flow presented on an actual and pro forma basis, as well as Net Debt, please see "Non-GAAP Financial Measures."

Incremental Flowback and Produced Water Services

In conjunction with Antero Resources' well cost initiatives, Antero Midstream plans to expand the scope of its water business to support the growing flowback and produced water volumes from Antero Resources. Antero Midstream plans to implement localized storage and fresh water blending operations, utilize mobile treatment for flowback and produced water volumes in Antero's northern fairway, repurpose portions of the existing fresh water system to transport flowback and produced water, and construct a limited amount of new pipelines to deliver flowback and produced water to localized blending and treatment operations and the Antero Clearwater Facility.  The fresh water blending and mobile treatment options could be implemented as soon as the second half of 2019 in certain areas of development.  The infrastructure buildout will be a flexible, fit-for-purpose system based on Antero Resources' development plan and Antero Midstream believes the system could be phased in beginning in 2020.  These localized operations would replace a significant amount of the flowback and produced volumes trucked by third parties and generate attractive margins and rates of return for Antero Midstream, while also resulting in significant savings for Antero Resources.

Based on ongoing assessments of drilling and completion designs, Antero Resources announced that it expects to trend lower in water used in completion operations over time. Depending on the areas being developed, Antero Resources expects water use will be reduced by 5 to 7 barrels per foot from the current design of 40 to 45 barrels per foot to 35 to 38 barrels per foot in the Marcellus, beginning in January 2020. Based on Antero's expected completion schedule in 2020, this would result in a reduction in Adjusted EBITDA for Antero Midstream of approximately $25 to $35 million.  Importantly, Antero Resources has announced that the savings from completion optimization, combined with other savings initiatives, is forecast to allow Antero Resources to continue targeting its 10% production CAGR, despite the decline in overall commodity prices.  In combination with the expanded scope of produced water services, the continued development plan for Antero Resources is expected to offset a majority of the cash flow impact to Antero Midstream from reduced water use. 

Antero Midstream Second Quarter Financial Results

The previously announced simplification transaction between Antero Midstream GP LP ("AMGP") and Antero Midstream Partners LP ("Antero Midstream Partners") closed on March 12, 2019. GAAP financial results for periods prior to the closing of the simplification transaction reflect the financial results of AMGP. The financial and operating results and comparisons for periods prior to the closing of the simplification transaction that are discussed in this release are based on the pro forma results of Antero Midstream Corporation as if the transaction had occurred on January 1, 2018. GAAP and pro forma financial statements can be found in the back of this release.

Low pressure gathering volumes for the second quarter of 2019 averaged 2,662 MMcf/d, a 34% increase as compared to the prior year quarter.  Compression volumes for the second quarter of 2019 averaged 2,396 MMcf/d, a 54% increase as compared to the second quarter of 2018.  High pressure gathering volumes for the second quarter of 2019 averaged 2,620 MMcf/d, a 36% increase over the second quarter of 2018. The year-over-year increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream's area of dedication.  Fresh water delivery volumes averaged 122 MBbl/d during the quarter, a 46% decrease compared to the second quarter of 2018, driven by a decrease in Antero Resources' completion activity. During the quarter, Antero Resources released one of its completion crews, which was subsequently recontracted early in the third quarter of 2019 and is expected to drive an increase in completion activity and fresh water delivery volumes in the second half of 2019. Antero Midstream treated an average of 29 MBbl/d of wastewater at the Antero Clearwater Facility during the second quarter of 2019.  

Gross processing volumes from the 50/50 processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the "Joint Venture") averaged 986 MMcf/d for the second quarter of 2019, an increase of 73% compared to the prior year quarter.  The five Sherwood Joint Venture plants operated at 99% utilization for the quarter.  Gross Joint Venture fractionation volumes averaged 27 MBbl/d, a 170% increase compared to the prior year quarter. The year-over-year increase in processing and fractionation volumes is primarily driven by the increase in Antero Resources' rich gas and C3+ NGL production volumes.



Three Months Ended

June 30


Average Daily Volumes:


2018(1)


2019


%
Change

Low Pressure Gathering (MMcf/d)


1,981


2,662


34%

Compression (MMcf/d)


1,558


2,396


54%

High Pressure Gathering (MMcf/d)


1,932


2,620


36%

Fresh Water Delivery (MBbl/d)


228


122


(46)%

Clearwater Treatment Volumes (MBbl/d)


8


29


263%

Gross Joint Venture Processing (MMcf/d)


571


986


73%

Gross Joint Venture Fractionation (MBbl/d)


10


27


170%



1.

Three months ended June 30, 2018 presented on a pro forma basis

For the three months ended June 30, 2019, revenues were $256 million, comprised of $167 million from the Gathering and Processing segment and $89 million from the Water Handling and Treatment segment, net of $(9) million of amortization of customer contracts. Revenues increased 5% compared to the prior year quarter, driven by growth in gathering, compression, and Clearwater treatment volumes. Water Handling and Treatment segment revenues include $12 million from wastewater treatment at the Antero Clearwater Facility and $40 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.

Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $12 million and $52 million, respectively, for a total of $64 million, compared to $76 million in total direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $9 million from wastewater treatment at the Antero Clearwater Facility and $39 million from wastewater handling and high rate water transfer services, which are billed at cost plus 3%.  General and administrative expenses excluding equity-based compensation were $13 million during the second quarter of 2019.  Total operating expenses were $138 million, including $36 million of depreciation, $22 million of equity-based compensation, $1 million of impairment and $2 million of accretion of contingent acquisition consideration and asset retirement obligations.

Net income was $69 million, or $0.14 per share. Adjusted Net Income was $78 million, or $0.15 per share, representing a 19% increase compared to the prior year quarter.  Adjusted EBITDA was $206 million, an 18% increase compared to the prior year quarter.  Adjusted EBITDA for the quarter included $19 million in combined distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture.  Cash interest paid was $12 million. The increase in cash reserved for bond interest during the quarter was $18 million. Maintenance capital expenditures during the quarter totaled $18 million and Distributable Cash Flow was $156 million, representing a 9% increase over the prior year quarter. Based on the previously declared dividend of $0.3075 per share, Antero Midstream's Distributable Cash Flow coverage ratio was 1.0x.

The following table reconciles net income to Adjusted Net Income, Adjusted EBITDA and Distributable Cash Flow as used in this release (in thousands):


Three Months Ended
June 30,



2018(1)



2019

Net income

$

52,614



69,274

Amortization of customer relationships


8,533



8,534

Impairment expense


4,614



594

Adjusted Net Income


65,761



78,402

Interest expense


20,085



31,521

Provision for income tax expense


19,974



30,419

Depreciation expense


44,820



36,447

Accretion of contingent acquisition consideration


3,947



2,297

Accretion of asset retirement obligations


34



69

Equity-based compensation


14,978



21,543

Equity in earnings of unconsolidated affiliates


(6,272)



(13,623)

Distributions from unconsolidated affiliates


10,810



19,085

Adjusted EBITDA


174,137



206,160

Interest paid


(6,270)



(11,896)

Decrease (increase) in cash reserved for bond interest (2)


(8,734)



(18,390)

Maintenance capital expenditures


(17,289)



(17,909)

AMGP general and administrative expenses


2,398



Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards (3)


(1,500)



(1,827)

Distributable Cash Flow

$

142,742



156,138







Distributions or Dividends Declared to Antero Midstream Holders






Distributions to Limited Partners

$

77,624



Distributions to incentive distribution rights and Series B unitholders


23,782



Dividends




154,093

Total Aggregate Distributions and Dividends

$

101,046



154,093







Distributable Cash Flow Coverage Ratio


 1.4x



 1.0x



1)

Three months ended June 30, 2018 presented on a pro forma basis.

2)

Cash reserved for bond interest expense on Antero Midstream's senior notes outstanding during the period that is paid on a semi-annual basis.

3)

Maintenance capital expenditures represent the portion of our estimated capital expenditures associated with (i) the connection of new wells to our gathering and processing systems that we believe will be necessary to offset the natural production declines Antero Resources will experience on all of its wells over time, and (ii) water delivery to new wells necessary to maintain the average throughput volume on our systems.

Gathering and Processing During the second quarter of 2019, Antero Midstream connected 44 wells to its gathering system and Antero Midstream's compression capacity was approximately 88% utilized throughout the quarter. Antero Midstream expects to add 120 MMcf/d of additional compression capacity in the Marcellus Shale during the second half of 2019 to support the anticipated growth in Antero Resources' production. Antero Resources is currently operating four drilling rigs on Antero Midstream dedicated acreage. The Joint Venture's processing capacity is currently 1.0 Bcf/d, which was 99% utilized in the second quarter of 2019. The Sherwood 12 processing plant with 200 MMcf/d of capacity is mechanically complete and will be placed into commercial service in the third quarter on a just-in-time basis to support the anticipated growth in liquids-rich production from Antero Resources. The Joint Venture expects the Sherwood 13 processing plant to be placed into service in the fourth quarter of 2019, bringing the Joint Venture's total processing capacity to 1.4 Bcf/d.

Water Handling and Treatment Antero Midstream's Marcellus water delivery systems serviced 25 well completions during the second quarter of 2019, a 48% decrease from the prior year quarter. During the second quarter, Antero Resources operated three completion crews. During the third quarter Antero Resources added an additional completion crew that is expected to drive an increase in fresh water delivery volumes during the second half of 2019 as compared to the second quarter of 2019. During the quarter, Antero Midstream treated an average of 29 MBbl/d of wastewater at the Antero Clearwater Facility. The facility was voluntarily shut down for approximately two weeks during the quarter for the installation of additional equipment designed to improve the quality and consistency of the byproducts and reduce the associated operating expenses with the disposal of those byproducts. Excluding the shut-down, the Antero Clearwater Facility treated approximately 36 MBbl/d on average during the second quarter.

Balance Sheet and Liquidity

As of June 30, 2019, Antero Midstream had approximately $595 million drawn on its $2.0 billion bank credit facility, resulting in approximately $1.4 billion of liquidity.  Antero Midstream's Net Debt to trailing twelve months pro forma Adjusted EBITDA was 3.2x as of June 30, 2019.

Commenting on Antero Midstream's growth and balance sheet, Michael Kennedy, CFO of Antero Midstream said, "Antero Midstream exited the second quarter with a strong balance sheet with Net Debt to trailing twelve months pro forma Adjusted EBITDA of 3.2x and $1.4 billion of liquidity after a successful upsized senior note offering at an attractive 5.75% coupon.  Consistent with prior expectations, Antero Midstream does not need to access the equity markets to deliver on its organic project backlog and is targeting high single digit return of capital growth to shareholders in 2020 as compared to 2019."

Capital Investments

Total capital expenditures including investments in the Joint Venture were $163 million during the second quarter of 2019. Gathering, compression, and water infrastructure capital investments totaled $125 million and investments in unconsolidated affiliates for the Joint Venture were $38 million during the quarter. Capital invested in gathering systems and related facilities was $82 million and capital invested in water handling and treatment assets was $43 million.    

Conference Call

A conference call for Antero Midstream is scheduled on Thursday, August 1, 2019 at 10:00 am MT to discuss the financial and operational results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in 877-407-9126 (U.S.), or 201-493-6751 (International) and reference "Antero Midstream".  A telephone replay of the call will be available until Thursday, August 8, 2019 at 10:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13691275.

A simultaneous webcast of the call and presentation may be accessed over the internet at www.anteromidstream.com.  The webcast will be archived for replay on Antero Midstream's website until Thursday, August 8, 2019 at 10:00 am MT.

Presentation

An updated Company Presentation will be posted to Antero Midstream's website. The presentation can be found at www.anteromidstream.com on the homepage.  Information on Antero Midstream's website does not constitute a portion of, and is not incorporated by reference into, this press release.

Pro Forma Information

The pro forma information presented herein is for illustrative purposes only. If this simplification transaction had occurred in the past, operating results might have been materially different from those presented in the pro forma financial information. The pro forma financial information should not be relied upon as an indication of operating results that Antero Midstream would have achieved if the simplification transaction had taken place on January 1, 2018. In addition, future results may vary significantly from the pro forma results reflected in this release and should not be relied upon as an indication of Antero Midstream's future results. For more information, please see Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Non-GAAP Financial Measures and Definitions

Antero Midstream uses non-GAAP financial measures that are presented on an actual and pro forma basis. The definitions, uses, reconciliations to the nearest GAAP financial measure, and disclosures discussed in this release apply to both an actual and pro forma basis. Antero Midstream uses Adjusted EBITDA as an important indicator of Antero Midstream's performance.  Antero Midstream defines Adjusted EBITDA as net income before amortization of customer relationships, impairment expense, interest expense, provision for income taxes, depreciation expense, accretion, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates.

Antero Midstream uses Adjusted EBITDA to assess:

  • 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's defines Distributable Cash Flow as Adjusted EBITDA less interest paid, cash reserved for bond interest, income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards and ongoing maintenance capital expenditures paid. Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of Antero Midstream from period to period and to compare the cash generating performance for specific periods to the cash dividends (if any) that are expected to be paid to shareholders.  Distributable Cash Flow does not reflect changes in working capital balances.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures.  The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income.  The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income.  Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA.  You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP.  Antero Midstream's definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.

Antero Midstream defines consolidated net debt as consolidated total debt less cash and cash equivalents.  Antero Midstream views consolidated net debt as an important indicator in evaluating Antero Midstream's financial leverage.

The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this release (in thousands):



June 30, 2019

Bank credit facility


$594,500

5.375% senior notes due 2024


652,600

5.75% senior notes due 2027


653,250

5.75% senior notes due 2028


650,000

Net unamortized debt issuance costs


(24,016)

Consolidated total debt


$2,526,334

Cash and cash equivalents


(7,791)

Consolidated net debt


$2,518,543

Antero Midstream defines Adjusted Net Income as net income plus amortization of customer contracts and impairment. Antero Midstream believes Adjusted Net Income is useful to investors in evaluating operational trends and its performance relative to other midstream companies. Adjusted Net Income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance. 

The following table reconciles pro forma net income to pro forma Adjusted EBITDA for the twelve months ended June 30, 2019 as used in this release (in thousands):




Twelve Months
Ended
June 30, 2019

Pro forma net income


$

366,616

Amortization of customer relationships



34,228

Impairment expense



8,733

Pro forma Adjusted Net Income



409,577

Interest expense



104,835

Income tax expense



131,532

Depreciation expense



149,628

Accretion of contingent acquisition consideration



(95,566)

Accretion of asset retirement obligations



209

Equity-based compensation



61,804

Equity in earnings of unconsolidated affiliates



(43,536)

Distributions from unconsolidated affiliates



64,985

Pro forma Adjusted EBITDA


$

783,468

Antero Midstream Corporation is a Delaware corporation that owns, operates and develops midstream gathering, compression, processing and fractionation assets located in West Virginia and Ohio, as well as integrated water assets that primarily service Antero Resources Corporation's properties. The Company's website is located at www.anteromidstream.com

This release includes "forward-looking statements."  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Midstream's control.  All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Midstream expects, believes or anticipates will or may occur in the future, such as Antero Midstream's ability to  execute its business plan, information regarding potential incremental flowback and produced water services, which are subject to approval by the Board of Antero Midstream, and there can be no assurance that such approval will be obtained, information regarding long-term financial and operating outlooks for Antero Midstream and Antero Resources and information regarding Antero Resources' expected future growth and its ability to meet its drilling and development plan are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All forward-looking statements speak only as of the date of this release.  Although Antero Midstream believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved.  Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.  Except as required by law, Antero Midstream expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond Antero Midstream's control.  These risks include, but are not limited to, Antero Resources' expected future growth, Antero Resources' ability to meet its drilling and development plan, commodity price volatility, Antero Midstream's ability to execute its business strategy, competition and governmental regulations, actions taken by third party producers, operators, processors and transporters, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A.  Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2019

For more information, contact Michael Kennedy – CFO of Antero Midstream at (303) 357-6782 or [email protected].

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2018 and June 30, 2019

(Unaudited)

(In thousands)



December 31, 2018


June 30, 2019

Assets

Current assets:






Cash and cash equivalents

$

2,822



7,791

Accounts receivable–Antero Resources




103,898

Accounts receivable–third party




586

Other current assets


87



3,092

Total current assets


2,909



115,367

Property and equipment, net




3,744,336

Investments in unconsolidated affiliates


43,492



1,186,161

Deferred tax asset


1,304



Customer relationships




547,685

Goodwill




1,135,266

Other assets, net




40,194

Total assets

$

47,705



6,769,009







Liabilities and Equity

Current liabilities:






Accounts payable–Antero Resources

$

731



5,021

Accounts payable–third party


28



27,003

Accrued liabilities


407



82,077

Contingent acquisition consideration




120,270

Asset retirement obligations




2,615

Taxes payable


15,678



Other current liabilities




518

Total current liabilities


16,844



237,504

Long-term liabilities:






Long-term debt




2,526,334

Asset retirement obligations




3,402

Deferred tax liability




26,738

Other




2,672

Total liabilities


16,844



2,796,650







Partners' Capital and Stockholders' Equity:






Common shareholders—186,219 shares issued and outstanding at December 31, 2018; none issued and outstanding at June 30, 2019


(41,969)



IDR LLC Series B units (66 units vested at December 31, 2018; none issued and outstanding at June 30, 2019)


72,830



Preferred stock, $0.01 par value: none authorized or issued at December 31, 2018; 100,000 authorized at June 30, 2019






Series A non-voting perpetual preferred stock; none designated, issued or outstanding at December 31, 2018; 12 designated and 10 issued and outstanding at June 30, 2019




Common stock, $0.01 par value; none authorized, issued or outstanding at December 31, 2018; 2,000,000 authorized and 506,847 issued and outstanding at June 30, 2019




5,068

Additional paid-in capital




3,874,820

Accumulated earnings




92,471

Total partners' capital and stockholders' equity


30,861



3,972,359

Total liabilities and partners' capital and stockholders' equity

$

47,705



6,769,009

 

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended June 30, 2018 and 2019

(Unaudited)

(In thousands)



Three Months Ended June 30,


2018


2019

Revenue:






Gathering and compression–Antero Resources

$



168,925

Water handling and treatment–Antero Resources




95,181

Water handling and treatment–third party




46

Amortization of customer relationships




(8,534)

Total revenue




255,618

Operating expenses:






Direct operating




63,998

General and administrative (including $9,111 and $21,543 of equity-based compensation in 2018 and 2019, respectively)


11,509



34,622

Impairment of property and equipment




594

Depreciation




36,447

Accretion and change in fair value of contingent acquisition consideration




2,297

Accretion of asset retirement obligations




69

Total operating expenses


11,509



138,027

Operating income (loss)


(11,509)



117,591

Interest expense, net


(18)



(31,521)

Equity in earnings of unconsolidated affiliates


33,145



13,623

Income before taxes


21,618



99,693

Provision for income tax expense


(7,231)



(30,419)

Net income and comprehensive income

$

14,387



69,274







Net income per share–basic and diluted

$

0.07



0.14







Weighted average common shares outstanding:






Basic


186,199



506,816

Diluted


186,199



507,767

 

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2018 and 2019

(Unaudited)

(In thousands)



Six Months Ended June 30,


2018


2019

Cash flows provided by (used in) operating activities:






Net income

$

27,192



78,922

Adjustments to reconcile net income to net cash provided by operating activities:






Distributions received from Antero Midstream Partners LP, prior to the Transactions


52,232



43,492

Depreciation




44,097

Accretion and change in fair value of contingent acquisition consideration




3,346

Accretion of asset retirement obligations




79

Impairment of property and equipment




594

Deferred income taxes




28,042

Equity-based compensation


17,745



32,966

Equity in earnings of unconsolidated affiliates


(61,598)



(16,503)

Distributions from unconsolidated affiliates




23,860

Amortization of customer relationships




10,315

Amortization of deferred financing costs


18



1,102

Changes in assets and liabilities:






Accounts receivable–Antero Resources




38,414

Accounts receivable–third party




9

Other current assets


(974)



(1,867)

Accounts payable–Antero Resources


(6)



973

Accounts payable–third party


31



(4,629)

Accrued liabilities


506



(15,370)

Income taxes payable


(548)



(15,678)

Net cash provided by operating activities


34,598



252,164

Cash flows provided by (used in) investing activities:






Additions to gathering systems and facilities




(89,206)

Additions to water handling and treatment systems




(51,984)

Investments in unconsolidated affiliates




(103,409)

Cash received on acquisition of Antero Midstream Partners LP




619,532

Cash consideration paid to Antero Midstream Partners LP unitholders




(598,709)

Change in other assets




2,375

Net cash used in investing activities




(221,401)

Cash flows provided by (used in) financing activities:






Distributions to shareholders


(34,073)



(182,625)

Distributions to Series B unitholders


(1,197)



(3,720)

Distributions to preferred shareholders




(98)

Issuance of senior notes




650,000

Payments of deferred financing costs


(15)



(6,952)

Payments on bank credit facilities, net




(480,500)

Employee tax withholding for settlement of equity compensation awards




(1,828)

Other




(71)

Net cash used in financing activities


(35,285)



(25,794)

Net increase (decrease) in cash and cash equivalents


(687)



4,969

Cash and cash equivalents, beginning of period


5,987



2,822

Cash and cash equivalents, end of period

$

5,300



7,791

Supplemental disclosure of cash flow information:






Cash paid during the period for interest

$

3



31,147

Cash paid during the period for income taxes

$

13,867



16,001

Increase in accrued capital expenditures and accounts payable for property and equipment

$



9,447

 

PRO FORMA ANTERO MIDSTREAM CORPORATION

Selected Operating Data

Three Months Ended June 30, 2018 and 2019

(Unaudited)









Amount of






Three Months Ended June 30,


 Increase


Percentage


2018(1)


2019


or Decrease


Change

Operating Data:













Gathering—low pressure (MMcf)


180,268



242,266



61,998



34

%

Gathering—high pressure (MMcf)


175,818



238,406



62,588



36

%

Compression (MMcf)


141,819



218,020



76,201



54

%

Fresh water delivery (MBbl)


20,766



11,147



(9,619)



(46)

%

Treated water (MBbl)


700



2,658



1,958



280

%

Other fluid handling (MBbl)


4,382



5,086



704



16

%

Wells serviced by fresh water delivery


48



25



(23)



(48)

%

Gathering—low pressure (MMcf/d)


1,981



2,662



681



34

%

Gathering—high pressure (MMcf/d)


1,932



2,620



688



36

%

Compression (MMcf/d)


1,558



2,396



838



54

%

Fresh water delivery (MBbl/d)


228



122



(106)



(46)

%

Treated water (MBbl/d)


8



29



21



263

%

Other fluid handling (MBbl/d)


48



56



8



17

%

Average realized fees:













Average gathering—low pressure fee ($/Mcf)

$

0.32



0.33



0.01



3

%

Average gathering—high pressure fee ($/Mcf)

$

0.19



0.20



0.01



5

%

Average compression fee ($/Mcf)

$

0.19



0.19





%

Average fresh water delivery fee ($/Bbl)

$

3.78



3.90



0.12



3

%

Average treatment fee ($/Bbl)

$

4.11



4.50



0.39



9

%

Joint Venture Operating Data:













Processing—Joint Venture (MMcf)


51,921



89,770



37,849



73

%

Fractionation—Joint Venture (MBbl)


914



2,470



1,556



170

%

Processing—Joint Venture (MMcf/d)


571



986



415



73

%

Fractionation—Joint Venture (MBbl/d)


10



27



17



170

%

______________________________

1) Three months ended June 30, 2018 are presented on a pro forma basis

*      Not meaningful or applicable.

 

ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Results of Segment Operations

Three Months Ended June 30, 2019

(Unaudited)

(In thousands)






Water




Pro Forma


Gathering and


Handling and




Consolidated


Processing


Treatment


Unallocated


Total

Three months ended June 30, 2019










Revenues:










Revenue–Antero Resources

$

168,925


95,181




264,106

Revenue–third-party



46




46

Amortization of customer contracts


(2,402)


(6,132)




(8,534)

Total revenues


166,523


89,095




255,618











Operating expenses:










Direct operating


12,377


51,621




63,998

General and administrative (excluding equity-based compensation)


7,335


3,958


1,786



13,079

Equity-based compensation


2,285


927


18,331



21,543

Impairment of property and equipment


592


2




594

Depreciation


12,721


23,726




36,447

Accretion and change in fair value of contingent acquisition consideration



2,297




2,297

Accretion of asset retirement obligations



69




69

Total expenses


35,310


82,600


20,117



138,027

Operating income


131,213


6,495


(20,117)



117,591

Other income (expenses):










Interest expense, net




(31,521)



(31,521)

Equity in earnings of unconsolidated affiliates


13,623





13,623

Income before taxes


144,836


6,495


(51,638)



99,693

Provision for income tax expense




(30,419)



(30,419)

Net income and comprehensive income

$

144,836


6,495


(82,057)



69,274











Adjusted EBITDA








$

206,160

 

PRO FORMA ANTERO MIDSTREAM CORPORATION

Condensed Consolidated Results of Segment Operations

Three Months Ended June 30, 2018

(Unaudited)

(In thousands)






Water






Pro Forma


Gathering and

Handling and

Pro Forma


Consolidated


Processing

Treatment

Adjustments

Unallocated

Total

Three months ended June 30, 2018








Revenues:








Revenue–Antero Resources

$

118,136

132,231


250,367

Revenue–third-party


25


25

Gain on sale of assets–Antero Resources


583


583

Amortization of customer contracts


(8,533)


(8,533)

Total revenues


118,719

132,256

(8,533)


242,442









Operating expenses:








Direct operating


12,405

63,218


75,623

General and administrative (excluding equity-based compensation)


7,240

2,387

2,398


12,025

Equity-based compensation


4,754


1,113

9,111


14,978

Impairment of property and equipment


4,614



4,614

Depreciation


24,258


12,175

8,387


44,820

Accretion and change in fair value of contingent acquisition consideration



3,947


3,947

Accretion of asset retirement obligations



34


34

Total expenses


53,271


82,874

8,387

11,509


156,041

Operating income


65,448


49,382

(16,920)

(11,509)


86,401

Other income (expenses):










Interest expense, net



(5,439)


(14,646)



(20,085)

Equity in earnings of unconsolidated affiliates


9,264


(2,992)




6,272

Income before taxes


74,712


49,382

(25,351)


(26,155)



72,588

Provision for income tax expense




(12,743)


(7,231)



(19,974)

Net income and comprehensive income

$

74,712


49,382


(38,094)


(33,386)



52,614













Pro Forma Adjusted EBITDA










$

174,137

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/antero-midstream-reports-second-quarter-2019-financial-and-operating-results-300894388.html

SOURCE Antero Midstream Corporation


Source: PR Newswire (July 31, 2019 - 4:15 PM EDT)

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