Exhibit 99.1

 

 

Antero Midstream and AMGP Report Second Quarter 2017 Financial and Operational Results

 

Denver, Colorado, August 2, 2017—Antero Midstream Partners LP (NYSE: AM) (“Antero Midstream” or the “Partnership”) and Antero Midstream GP LP (NYSE: AMGP) (“AMGP”) today released their second quarter 2017 financial and operational results.  The relevant condensed consolidated financial statements are included in Antero Midstream’s and AMGP’s Quarterly Reports on Form 10-Q for the quarter ended June 30, 2017, which have been filed with the Securities and Exchange Commission.

 

Highlights Include:

 

·                  Net income increased by 75% to $87 million, or $0.39  per limited partner unit compared to the prior year quarter

 

·                  Adjusted EBITDA increased by 59% to $139 million compared to the prior year quarter

 

·                  Distribution per unit increased by 28% to $0.32 compared to the prior year quarter, representing the 10th consecutive quarterly distribution increase since the IPO in 2014

 

·                  Distributable cash flow increased by 41% to $110 million compared to prior year quarter, resulting in DCF coverage of 1.5x

 

·                  Low pressure and high pressure gathering volumes increased by 24% and 38%, respectively, compared to the prior year quarter

 

·                  Compression volumes increased by 81% compared to the prior year quarter

 

·                  First Joint Venture processing plant filled to capacity at an average throughput of 216 MMcf/d for the second quarter

 

·                  Fresh water delivery volumes increased by 64% compared to the prior year quarter

 

·                  Debt to trailing twelve months EBITDA was 1.9x with over $1.2 billion of liquidity

 

·                  AMGP declared a $0.027 per unit cash distribution, reflecting a pro-rated distribution for the second quarter following the closing of the AMGP initial public offering on May 9th, 2017

 

Recent Developments

 

Antero Midstream Distribution for the Second Quarter of 2017

 

The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.32 per unit for the second quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 7% increase sequentially.  The distribution is Antero Midstream’s tenth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 16, 2017 to unitholders of record as of August 3, 2017.

 

Completion of AMGP Initial Public Offering

 

On May 9, 2017, AMGP announced the closing of its initial public offering of 37,250,000 common shares representing limited partner interests in AMGP previously held by Antero Resources Investment LLC (“ARI”).  Total gross proceeds to ARI, before underwriters’ fees and estimated expenses, were approximately $875 million.  No proceeds were retained by AMGP.

 

AMGP 2017 Distribution Guidance and Long-term Outlook

 

The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a cash distribution of $0.027 per share for the second quarter of 2017.  The distribution reflects a pro-rated distribution from the closing of the AMGP initial public offering on May 9, 2017 through June 30, 2017. The distribution will be payable on August 23, 2017 to shareholders of record as of August 3, 2017.

 

On June 15, 2017, AMGP announced distribution guidance of $0.15 to $0.17 for the year ended December 31, 2017, which includes the previously announced pro-rated distribution of $0.027 for the second quarter of 2017.  AMGP is targeting distributions per share

 

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of $0.43 to $0.46 for 2018, $0.70 to $0.76 for 2019, and $1.06 to $1.16 for 2020, driven by Antero Midstream’s compound annual distribution growth target per unit of 28% to 30% through 2020.  AMGP’s guidance and long-term targets assume 1.0x DCF coverage and exclude the impact of any future debt or equity offerings, acquisitions, or divestitures at either Antero Midstream or AMGP.

 

Antero Midstream Second Quarter 2017 Financial Results

 

Low pressure gathering volumes for the second quarter of 2017 averaged 1,683 MMcf/d, a 24% increase from the second quarter of 2016 and a 1% increase sequentially.  Compression volumes for the second quarter of 2017 averaged 1,192 MMcf/d, an 81% increase from the second quarter of 2016 and a 16% increase sequentially.  High pressure gathering volumes for the second quarter of 2017 averaged 1,734 MMcf/d, a 38% increase from the second quarter of 2016 and a 10% increase sequentially.  The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream’s area of dedication.  In the second quarter of 2017, which was the first full quarter of operations for the Antero Midstream / MPLX joint venture (the “Joint Venture”), processing volumes averaged 216 MMcf/d and fractionation volumes averaged 4,039 Bbl/d.  Fresh water delivery volumes averaged 173 MBbl/d during the quarter, a 64% increase compared to the prior year quarter and a 17% increase sequentially.

 

 

 

Three Months Ended
June 30,

 

%

 

 

 

2016

 

2017

 

Change

 

Average Daily Volumes:

 

 

 

 

 

 

 

Low Pressure Gathering (MMcf/d)

 

1,353

 

1,683

 

24

%

Compression (MMcf/d)

 

658

 

1,192

 

81

%

High Pressure Gathering (MMcf/d)

 

1,253

 

1,734

 

38

%

Joint Venture Processing (MMcf/d)

 

 

216

 

*

 

Joint Venture Fractionation (Bbl/d)

 

 

4,039

 

*

 

Fresh Water Delivery (MBbl/d)

 

105

 

173

 

64

%

 


*                 Not applicable.

 

For the three months ended June 30, 2017, the Partnership reported revenues of $194 million, comprised of $99 million from the Gathering and Processing segment and $95 million from the Water Handling and Treatment segment. Revenues increased 42% compared to the prior year quarter, driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $36 million from wastewater handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.

 

Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $10 million and $42 million, respectively, for a total of $52 million compared to $43 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $35 million from produced water handling and high rate water transfer services.  General and administrative expenses including equity-based compensation were $15 million, a $2 million increase compared to the second quarter of 2016.  General and administrative expenses excluding equity-based compensation were $8 million during the second quarter of 2017, a $1 million increase compared to the second quarter of 2016.  Total operating expenses were $101 million, including $30 million of depreciation and $4 million of accretion of contingent acquisition consideration.

 

Net income for the second quarter of 2017 was $87 million, a 75% increase compared to the prior year quarter. Net income per limited partner unit was $0.39 per unit, a 44% increase compared to the prior year quarter. Adjusted EBITDA was $139 million, a 59% increase compared to the prior year quarter. The increase in net income and Adjusted EBITDA is primarily driven by increased throughput volumes and fresh water delivery volumes. Adjusted EBITDA for the quarter included $6 million in distributions from Stonewall Gathering LLC (“Stonewall”) and did not include distributions from the processing and fractionation joint venture.  Antero Midstream expects distributions from Stonewall to be approximately $10 to $15 million and distributions from the processing and fractionation joint venture to be approximately $10 million in 2017, both in line with previously provided guidance.  Cash interest paid was $2 million. Cash reserved for bond interest during the quarter was $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $2 million. Maintenance capital expenditures during the quarter totaled $16 million and distributable cash flow was $110 million, resulting in a DCF coverage ratio of 1.5x.

 

Commenting on the outlook for Antero Midstream, Paul Rady, Chairman and CEO said, “The second quarter highlights the benefits of Antero Midstream’s integrated full value chain strategy, as Antero’s advanced completions drove record gathering, compression and fresh water delivery volumes for Antero Midstream. Additionally, Antero Midstream’s processing and fractionation investment is beginning to build significant momentum, as the Joint Venture’s first processing plant, Sherwood 7, was fully utilized during the

 

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second quarter and we recently placed on line the Joint Venture’s second processing plant, Sherwood 8, which is already fully utilized.  The Joint Venture’s next plant, Sherwood 9 (200 MMcf/d), is expected to be in service in January of 2018.”

 

The following table reconciles net income to adjusted EBITDA and distributable cash flow as used in this release (in thousands):

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2016

 

2017

 

Net income

 

$

49,912

 

$

87,175

 

Interest expense

 

3,879

 

9,015

 

Depreciation expense

 

24,140

 

30,512

 

Accretion of contingent acquisition consideration

 

3,461

 

3,590

 

Equity-based compensation

 

6,793

 

6,951

 

Equity in earnings of unconsolidated affiliates

 

(484

)

(3,623

)

Distributions from unconsolidated affiliates

 

 

5,820

 

Adjusted EBITDA

 

$

87,701

 

$

139,440

 

Interest paid

 

(4,264

)

(2,308

)

Cash reserved/paid for bond interest (1)

 

 

(8,734

)

Cash reserved for payment of income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2)

 

(1,000

)

(2,431

)

Cash distribution to be received from unconsolidated affiliate

 

778

 

 

Maintenance capital expenditures(3)

 

(5,710

)

(16,422

)

Distributable cash flow

 

$

77,505

 

$

109,545

 

 

 

 

 

 

 

Distributions Declared to Antero Midstream Holders

 

 

 

 

 

Limited Partners

 

$

44,044

 

$

59,695

 

Incentive distribution rights

 

2,731

 

15,328

 

Total Aggregate Distributions

 

$

46,775

 

$

75,023

 

 

 

 

 

 

 

DCF coverage ratio

 

1.7x

 

1.5x

 

 


(1)         Cash reserved for bond interest expense on Antero Midstream’s 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year.

 

(2)         Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter.

 

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

 

Commenting on Antero Midstream’s quarterly results, Michael Kennedy, CFO of Antero Midstream said, “Antero Midstream reported another strong quarter with operating revenues and adjusted EBITDA increasing by 42% and 59% over the prior year quarter, respectively. Importantly, the strong second quarter results and peer leading distribution growth and DCF coverage keep us on track to achieve our 2017 guidance. Antero Midstream remains well capitalized, with debt to trailing twelve months adjusted EBITDA of 1.9x and over $1.2 billion of liquidity.”

 

Gathering and Processing Current compression capacity is approximately 1.4 Bcf/d in the Marcellus and Utica combined and was over 83% utilized on average in the second quarter. Additionally, Antero Midstream connected 28 wells to its gathering system during the quarter.  Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.

 

Water Handling and Treatment Antero Midstream’s Marcellus and Utica fresh water delivery systems serviced 44 well completions during the second quarter of 2017, a 42% increase from the prior year quarter and 29% increase sequentially.  Antero Resources is currently operating five completion crews on Antero Midstream dedicated acreage. During the quarter, Antero Midstream continued construction on the Antero Clearwater Facility, which is expected to be placed into service in the fourth quarter of 2017 and have up to 60,000 Bbl/d of treating capacity.

 

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Balance Sheet and Liquidity

 

As of June 30, 2017, Antero Midstream had $18 million in cash and $305 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.2 billion of liquidity.  Antero Midstream’s net debt to trailing twelve months adjusted EBITDA was 1.9x as of June 30, 2017.  For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.”

 

Capital Investments

 

Capital expenditures, excluding investments in the processing and fractionation joint venture, were $146 million in the second quarter of 2017 as compared to $90 million in the second quarter of 2016.  Capital invested in gathering systems and facilities was $88 million and capital invested in water handling and treatment assets was $58 million, including $46 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the processing and fractionation joint venture were $31 million during the quarter.

 

AMGP Second Quarter 2017 Financial Results

 

AMGP’s equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $15.3 million.  Net loss for the second quarter of 2017 was $3.3 million as compared to net income of $1.6 million for the prior year quarter.  AMGP’s net loss and cash available for distribution for the three months ending June 30, 2017 included non-recurring and non-tax deductible general and administrative expenses related to the AMGP initial public offering. These general and administrative expenses are not included in the post-IPO period, as presented below.

 

AMGP’s cash distributions from Antero Midstream were $8.5 million for the period following the closing of the AMGP initial public offering on May 9, 2017 through June 30, 2017, net of $0.3 million of cash distributions on Series B units. General and administrative expenses and income taxes were $0.3 million and $3.2 million, respectively, resulting in cash available for distribution of $5.0 million.

 

The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):

 

 

 

Three months ended
June 30, 2017

 

Post-IPO
Period

 

Cash distributions from Antero Midstream Partners LP

 

$

15,328

 

$

8,784

 

Cash distributions to AMGP

 

14,861

 

8,517

 

Cash distributions on Series B units of IDR LLC

 

467

 

267

 

 

 

 

 

 

 

AMGP

 

 

 

 

 

 

 

 

 

 

 

Cash distributions to AMGP

 

$

14,861

 

$

8,517

 

General and administrative expenses

 

(3,203

)

(300

)

Provision for income taxes

 

(5,755

)

(3,248

)

Cash available for distribution

 

$

5,903

 

$

4,969

 

 

 

 

 

 

 

DCF Coverage Ratio

 

 

1.0x

 

 

 

 

 

 

 

Common shares outstanding

 

 

186,170

 

Cash distribution per common share

 

$

 

$

0.027

 

 

Conference Call

 

A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, August 3, 2017 at 10:00 am MT to discuss the quarterly results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in at 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference “Antero Midstream”.  A telephone replay of the call will be available until Friday, August 11, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10108843.

 

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Presentation

 

To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream’s website at www.anteromidstream.com or AMGP’s website at www.anteromidstreamgp.com.  The webcast will be archived for replay on Antero Midstream’s website and AMGP’s website until Friday, August 11, 2017 at 10:00 am MT.  Information on Antero Midstream’s website and AMGP’s website does not constitute a portion of this press release.

 

Non-GAAP Financial Measures

 

Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership’s performance.  Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, accretion of contingent acquisition consideration, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates, and including cash distributions from unconsolidated affiliates.

 

Antero Midstream uses Adjusted EBITDA to assess:

 

·                  the financial performance of the Partnership’s assets, without regard to financing methods in the case of Adjusted EBITDA, capital structure or historical cost basis;

 

·                  its operating performance and return on capital as compared to other publicly traded partnerships in the midstream energy sector, without regard to financing or capital structure; and

 

·                  the viability of acquisitions and other capital expenditure projects.

 

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

 

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

 

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

 

 

 

June 30,

 

 

 

2017

 

 

 

 

 

Bank credit facility

 

$

305,000

 

5.375% AM senior notes due 2024

 

650,000

 

Net unamortized debt issuance costs

 

(9,551

)

Consolidated total debt

 

$

945,449

 

Cash and cash equivalents

 

(17,533

)

Consolidated net debt

 

$

927,916

 

 

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The following table reconciles net income to adjusted EBITDA for the twelve months ended June 30, 2017 as used in this release (in thousands):

 

 

 

Twelve Months
Ended
June 30,

 

 

 

2017

 

 

 

 

 

Net income

 

$

306,141

 

Interest expense

 

32,162

 

Depreciation expense

 

109,946

 

Accretion of contingent acquisition consideration

 

16,748

 

Equity-based compensation

 

26,520

 

Equity in earnings of unconsolidated affiliate

 

(5,855

)

Distributions from unconsolidated affiliates

 

13,522

 

Gain on asset sale

 

(3,859

)

Adjusted EBITDA

 

$

495,325

 

 

Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation’s properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.

 

AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes.  Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares.  AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.

 

This release includes “forward-looking statements” within the meaning of federal securities laws.  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership’s and AMGP’s control.  All statements, other than historical facts included in this release, are forward-looking statements.  All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions.  Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved.  For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release.  Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.  Nothing in this release is intended to constitute guidance with respect to Antero Resources.

 

Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership’s and AMGP’s control, incident to the gathering and processing and fresh water and waste water treatment businesses.  These risks include, but are not limited to, Antero Resources’ expected future growth, Antero Resources’ ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership’s business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under “Risk Factors” in Antero Midstream’s Annual Report on Form 10-K for the year ended December 31, 2016.

 

For more information, contact Michael Kennedy — CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.

 

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ANTERO MIDSTREAM PARTNERS LP

Condensed Consolidated Balance Sheets

December 31, 2016 and June 30, 2017

(Unaudited)

(In thousands)

 

 

 

December 31, 2016

 

June 30, 2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

14,042

 

17,533

 

Accounts receivable—Antero Resources

 

64,139

 

79,062

 

Accounts receivable—third party

 

1,240

 

1,237

 

Prepaid expenses

 

529

 

294

 

Total current assets

 

79,950

 

98,126

 

Property and equipment, net

 

2,195,879

 

2,394,276

 

Investment in unconsolidated affiliates

 

68,299

 

259,697

 

Other assets, net

 

5,767

 

9,838

 

Total assets

 

$

2,349,895

 

2,761,937

 

 

 

 

 

 

 

Liabilities and Partners’ Capital

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

16,979

 

15,077

 

Accounts payable—Antero Resources

 

3,193

 

2,989

 

Accrued liabilities

 

61,641

 

77,096

 

Other current liabilities

 

200

 

204

 

Total current liabilities

 

82,013

 

95,366

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

849,914

 

945,449

 

Contingent acquisition consideration

 

194,538

 

201,654

 

Other

 

620

 

515

 

Total liabilities

 

1,127,085

 

1,242,984

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

Common unitholders - public (70,020 units and 77,672 units issued and outstanding at December 31, 2016 and June 30, 2017, respectively)

 

1,458,410

 

1,722,808

 

Common unitholder - Antero Resources (32,929 units and 108,870 units issued and outstanding at December 31, 2016 and June 30, 2017, respectively)

 

26,820

 

(219,183

)

Subordinated unitholder - Antero Resources (75,941 issued and outstanding at December 31, 2016)

 

(269,963

)

 

General partner

 

7,543

 

15,328

 

Total partners’ capital

 

1,222,810

 

1,518,953

 

Total liabilities and partners’ capital

 

$

2,349,895

 

2,761,937

 

 

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ANTERO MIDSTREAM PARTNERS LP

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended June 30, 2016, and 2017

(Unaudited)

(In thousands, except per unit amounts)

 

 

 

Three Months Ended June 30,

 

 

 

2016

 

2017

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

Gathering and compression—Antero Resources

 

$

71,715

 

98,633

 

Water handling and treatment—Antero Resources

 

64,893

 

95,004

 

Gathering and compression—third party

 

202

 

129

 

Total revenue

 

136,810

 

193,766

 

Operating expenses:

 

 

 

 

 

Direct operating

 

42,597

 

52,308

 

General and administrative (including $6,793 and $6,951 of equity-based compensation in 2016 and 2017, respectively)

 

13,305

 

14,789

 

Depreciation

 

24,140

 

30,512

 

Accretion of contingent acquisition consideration

 

3,461

 

3,590

 

Total operating expenses

 

83,503

 

101,199

 

Operating income

 

53,307

 

92,567

 

Interest expense, net

 

(3,879

)

(9,015

)

Equity in earnings of unconsolidated affiliates

 

484

 

3,623

 

Net income and comprehensive income

 

49,912

 

87,175

 

Net income attributable to incentive distribution rights

 

(2,731

)

(15,328

)

Limited partners’ interest in net income

 

$

47,181

 

71,847

 

 

 

 

 

 

 

Net income per limited partner unit - basic and diluted

 

$

0.27

 

0.39

 

 

 

 

 

 

 

Weighted average limited partner units outstanding - basic

 

176,172

 

186,065

 

Weighted average limited partner units outstanding - diluted

 

176,226

 

186,533

 

 

8



 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Results of Segment Operations

Three Months Ended June 30, 2016, and 2017

(Unaudited)

(In thousands)

 

 

 

 

 

Water

 

 

 

 

 

Gathering and

 

Handling and

 

Consolidated

 

 

 

Processing

 

Treatment

 

Total

 

Three months ended June 30, 2016

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

71,715

 

64,893

 

136,608

 

Revenue - third-party

 

202

 

 

202

 

Total revenues

 

71,917

 

64,893

 

136,810

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Direct operating

 

7,447

 

35,150

 

42,597

 

General and administrative (before equity-based compensation)

 

4,837

 

1,675

 

6,512

 

Equity-based compensation

 

5,301

 

1,492

 

6,793

 

Depreciation

 

16,964

 

7,176

 

24,140

 

Accretion of contingent acquisition consideration

 

 

3,461

 

3,461

 

Total expenses

 

34,549

 

48,954

 

83,503

 

Operating income

 

$

37,368

 

15,939

 

53,307

 

 

 

 

 

 

 

 

 

Segment and consolidated Adjusted EBITDA

 

$

59,633

 

28,068

 

87,701

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2017

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

98,633

 

95,004

 

193,637

 

Revenue - third-party

 

129

 

 

129

 

Total revenues

 

98,762

 

95,004

 

193,766

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Direct operating

 

9,922

 

42,386

 

52,308

 

General and administrative (before equity-based compensation)

 

5,468

 

2,370

 

7,838

 

Equity-based compensation

 

5,237

 

1,714

 

6,951

 

Depreciation

 

22,271

 

8,241

 

30,512

 

Accretion of contingent acquisition consideration

 

 

3,590

 

3,590

 

Total expenses

 

42,898

 

58,301

 

101,199

 

Operating income

 

$

55,864

 

36,703

 

92,567

 

 

 

 

 

 

 

 

 

Segment and consolidated Adjusted EBITDA

 

$

89,192

 

50,248

 

139,440

 

 

9



 

ANTERO MIDSTREAM PARTNERS LP

Selected Operating Data

Three Months Ended June 30, 2016, and 2017

(Unaudited)

 

 

 

 

 

 

 

Amount of

 

 

 

 

 

Three Months Ended June 30,

 

Increase

 

Percentage

 

 

 

2016

 

2017

 

(Decrease)

 

Change

 

Revenue:

 

 

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

136,608

 

193,637

 

57,029

 

42

%

Revenue - third-party

 

202

 

129

 

(73

)

(36

)%

Total revenue

 

136,810

 

193,766

 

56,956

 

42

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Direct operating

 

42,597

 

52,308

 

9,711

 

23

%

General and administrative (before equity-based compensation)

 

6,512

 

7,838

 

1,326

 

20

%

Equity-based compensation

 

6,793

 

6,951

 

158

 

2

%

Depreciation

 

24,140

 

30,512

 

6,372

 

26

%

Accretion of contingent acquisition consideration

 

3,461

 

3,590

 

129

 

4

%

Total operating expenses

 

83,503

 

101,199

 

17,696

 

21

%

Operating income

 

53,307

 

92,567

 

39,260

 

74

%

Interest expense

 

(3,879

)

(9,015

)

(5,136

)

132

%

Equity in earnings of unconsolidated affiliates

 

484

 

3,623

 

3,139

 

649

%

Net income

 

$

49,912

 

87,175

 

37,263

 

75

%

Adjusted EBITDA

 

$

87,701

 

139,440

 

51,739

 

59

%

Operating Data:

 

 

 

 

 

 

 

 

 

Gathering—low pressure (MMcf)

 

123,116

 

153,180

 

30,064

 

24

%

Gathering—high pressure (MMcf)

 

114,013

 

157,806

 

43,793

 

38

%

Compression (MMcf)

 

59,834

 

108,451

 

48,617

 

81

%

Condensate gathering (MBbl)

 

180

 

*

 

*

 

*

 

Processing - Joint Venture (Mcf)

 

 

19,662

 

*

 

*

 

Fractionation - Joint Venture (Bbl)

 

 

368

 

*

 

*

 

Fresh water delivery (MBbl)

 

9,589

 

15,761

 

6,172

 

64

%

Wastewater handling (MBbl)

 

2,740

 

3,400

 

660

 

24

%

Wells serviced by fresh water delivery

 

31

 

44

 

13

 

42

%

Gathering—low pressure (MMcf/d)

 

1,353

 

1,683

 

330

 

24

%

Gathering—high pressure (MMcf/d)

 

1,253

 

1,734

 

481

 

38

%

Compression (MMcf/d)

 

658

 

1,192

 

534

 

81

%

Condensate gathering (MBbl/d)

 

2

 

*

 

*

 

*

 

Processing - Joint Venture (MMcf/d)

 

 

216

 

*

 

*

 

Fractionation - Joint Venture (Bbl/d)

 

 

4

 

*

 

*

 

Fresh water delivery (MBbl/d)

 

105

 

173

 

68

 

64

%

Wastewater handling (MBbl/d)

 

30

 

37

 

7

 

24

%

Average realized fees:

 

 

 

 

 

 

 

 

 

Average gathering—low pressure fee ($/Mcf)

 

$

0.31

 

0.32

 

0.01

 

3

%

Average gathering—high pressure fee ($/Mcf)

 

$

0.19

 

0.19

 

 

 

Average compression fee ($/Mcf)

 

$

0.19

 

0.19

 

 

 

Average gathering—condensate fee ($/Bbl)

 

$

4.17

 

 

(4.17

)

(100

)%

Average fresh water delivery fee - Antero Resources($/Bbl)

 

$

3.68

 

3.72

 

0.04

 

1

%

 


*                 Not meaningful or applicable.

 

10



 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2016, and 2017

(Unaudited)

 

 

 

Six months ended June 30,

 

 

 

2016

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

92,829

 

162,267

 

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

 

 

 

 

 

Depreciation

 

47,963

 

58,048

 

Accretion of contingent acquisition consideration

 

6,857

 

7,116

 

Equity-based compensation

 

12,766

 

13,237

 

Equity in earnings of unconsolidated affiliates

 

(484

)

(5,854

)

Distributions from unconsolidated affiliates

 

 

5,820

 

Amortization of deferred financing costs

 

726

 

1,267

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable—Antero Resources

 

10,918

 

(14,923

)

Accounts receivable—third party

 

1,448

 

3

 

Prepaid expenses

 

(106

)

235

 

Accounts payable

 

4,515

 

(523

)

Accounts payable—Antero Resources

 

4

 

(204

)

Accrued liabilities

 

(8,837

)

8,449

 

Net cash provided by operating activities

 

168,599

 

234,938

 

Cash flows used in investing activities:

 

 

 

 

 

Additions to gathering systems and facilities

 

(96,969

)

(155,365

)

Additions to water handling and treatment systems

 

(78,625

)

(95,451

)

Investment in unconsolidated affiliates

 

(45,044

)

(191,364

)

Change in other assets

 

(3,090

)

(4,804

)

Net cash used in investing activities

 

(223,728

)

(446,984

)

Cash flows provided by financing activities:

 

 

 

 

 

Distributions to unitholders

 

(82,977

)

(125,014

)

Borrowings on bank credit facilities, net

 

140,000

 

95,000

 

Issuance of common units, net of offering costs

 

 

246,585

 

Employee tax withholding for settlement of equity compensation awards

 

 

(932

)

Other

 

(93

)

(102

)

Net cash provided by financing activities

 

56,930

 

215,537

 

Net increase in cash and cash equivalents

 

1,801

 

3,491

 

Cash and cash equivalents, beginning of period

 

6,883

 

14,042

 

Cash and cash equivalents, end of period

 

$

8,684

 

17,533

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for interest

 

$

7,708

 

21,976

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

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

 

$

7,770

 

5,627

 

 

11



 

Antero Midstream GP LP

Condensed Consolidated Balance Sheets

December 31, 2016 and June 30, 2017

(Unaudited)

(In thousands)

 

 

 

December 31, 2016

 

June 30, 2017

 

Assets

 

Current assets:

 

 

 

 

 

Cash

 

$

9,609

 

11,391

 

Accounts receivable - related party

 

217

 

358

 

Total current assets

 

9,826

 

11,749

 

Investment in Antero Midstream Partners LP

 

7,543

 

15,328

 

Total assets

 

$

17,369

 

27,077

 

 

 

 

 

 

 

Liabilities and Partners’ Capital

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

 

347

 

Accrued liabilities

 

426

 

1,483

 

Income taxes payable

 

6,674

 

3,584

 

Total current liabilities

 

7,100

 

5,414

 

Liability for equity-based compensation

 

 

2,723

 

Total liabilities

 

7,100

 

8,137

 

Partners’ capital

 

10,269

 

18,940

 

Total liabilities and partners’ capital

 

$

17,369

 

27,077

 

 

Antero Midstream GP LP

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2016 and 2017

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended June 30,

 

 

 

2016

 

2017

 

Equity in earnings of Antero Midstream Partners LP

 

$

2,731

 

15,328

 

Total income

 

2,731

 

15,328

 

General and administrative expense

 

145

 

3,203

 

Equity-based compensation

 

 

9,631

 

Total expenses

 

145

 

12,834

 

Income before income taxes

 

2,586

 

2,494

 

Provision for income taxes

 

(1,036

)

(5,755

)

Net income (loss) and comprehensive income (loss)

 

$

1,550

 

(3,261

)

 

 

 

 

 

 

Net loss attributable to Antero Midstream GP LP subsequent to IPO

 

 

 

$

(1,621

)

 

 

 

 

 

 

Net loss per common share

 

 

 

$

(0.01

)

 

 

 

 

 

 

Weighted average number of common shares outstanding (basic and diluted):

 

 

 

186,170

 

 

12



 

Antero Midstream GP LP

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2016 and 2017

(Unaudited)

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2016

 

2017

 

Cash flows provided by operating activities:

 

 

 

 

 

Net income (loss)

 

$

2,658

 

(6,560

)

Adjustment to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Equity in earnings of Antero Midstream Partners LP

 

(4,581

)

(26,881

)

Distributions received from Antero Midstream Partners LP

 

2,819

 

19,096

 

Equity-based compensation

 

 

17,954

 

Deferred income taxes

 

(368

)

 

Changes in current assets and liabilities:

 

 

 

 

Accounts receivable - related party

 

(201

)

(141

)

Accounts payable

 

 

347

 

Accrued liabilities

 

145

 

1,057

 

Income taxes payable

 

1,941

 

(3,090

)

Net cash provided by operating activities

 

2,413

 

1,782

 

Cash flows used in investing activities

 

 

 

Cash flows used in financing activities

 

 

 

Net increase in cash

 

2,413

 

1,782

 

Cash, beginning of period

 

72

 

9,609

 

Cash, end of period

 

$

2,485

 

11,391

 

 

13