Exhibit 99.1

 

 

 

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

 

Denver, Colorado, November 1, 2017—Antero Midstream Partners LP (NYSE: AM) (“Antero Midstream” or the “Partnership”) and Antero Midstream GP LP (NYSE: AMGP) (“AMGP”) today released their third 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 September 30, 2017, which have been filed with the Securities and Exchange Commission.

 

Antero Midstream Highlights Include:

 

·                  Net income increased by 15% to $81 million, or $0.33  per limited partner unit compared to the prior year quarter

 

·                  Adjusted EBITDA increased by 16% to $128 million compared to the prior year quarter

 

·                  Distribution per unit increased by 28% to $0.34 compared to the prior year quarter, representing the eleventh consecutive quarterly distribution increase since the IPO in 2014

 

·                  Distributable cash flow increased to $104 million, resulting in DCF coverage of 1.3x

 

·                  Debt to trailing twelve months EBITDA was 2.1x with over $1.1 billion of liquidity

 

·                  Low pressure and high pressure gathering volumes increased by 11% and 42%, respectively, compared to the prior year quarter

 

·                  Compression volumes increased by 55% compared to the prior year quarter

 

·                  Second Joint Venture processing plant, Sherwood 8, placed online and fully utilized during the quarter

 

·                  Entered into a new $1.5 billion revolving credit facility extending maturity until October 2022

 

Commenting on the outlook for Antero Midstream, Paul Rady, Chairman and CEO said, “Antero Midstream continued to deliver on its organic growth strategy supported by strong rates of return, high distribution coverage and low leverage. This strategy supports Antero Midstream’s 28% to 30% long-term distribution growth targets and corresponding AMGP’s growth targets through 2020. As an example of our visible organic growth strategy, the processing and fractionation Joint Venture brought online Sherwood 8 and filled the 200 MMcf/d of capacity almost immediately during the third quarter.  This “just-in-time” capital investment delivers strong rates of return for Antero Midstream and builds momentum heading into 2018 where we expect to generate free cash flow before distributions.”

 

Mr. Rady further added, “We are also pleased to announce that the Antero Clearwater advanced wastewater treatment facility is in its final stages of commissioning and is expected to commence commercial operations within the next few weeks. This state-of-the-art facility will be the largest treatment facility supporting oil and gas shale operations in the world and demonstrates Antero’s commitment to environmentally responsible and sustainable development.”

 

Recent Developments

 

New Antero Midstream Revolving Credit Facility

 

Antero Midstream has entered into a new $1.5 billion revolving credit facility with a maturity of October 2022. Additionally, the new revolving credit facility includes fall away covenants that are triggered if and when Antero Midstream is assigned an investment grade credit rating by the ratings agencies.  The credit facility is supported by a bank syndicate, which is co-led by Wells Fargo Bank, N.A and JPMorgan Chase Bank, N.A.  The bank syndicate is comprised of 20 banks, of which 18 were lenders in the prior facility.

 

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Antero Midstream Distribution for the Third Quarter of 2017

 

The Board of Directors of Antero Midstream Partners GP LLC, the general partner of Antero Midstream, declared a cash distribution of $0.34 per unit ($1.36 per unit annualized) for the third quarter of 2017. The distribution represents a 28% increase compared to the prior year quarter and a 6% increase sequentially.  The distribution is Antero Midstream’s eleventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 16, 2017 to unitholders of record as of November 1, 2017.

 

AMGP Distribution for the Third Quarter of 2017

 

The Board of Directors of AMGP GP LLC, the general partner of AMGP, declared a cash distribution of $0.059 per share ($0.236 per share annualized) for the third quarter of 2017.  The third quarter distribution represents AMGP’s first full quarterly distribution since its initial public offering and will be payable on November 23, 2017 to shareholders of record as of November 1, 2017.

 

Antero Midstream Third Quarter 2017 Financial Results

 

Low pressure gathering volumes for the third quarter of 2017 averaged 1,586 MMcf/d, an 11% increase from the third quarter of 2016.  Low pressure gathering volumes were negatively impacted by approximately 90 MMcf/d due to a one-time prior period adjustment.  Compression volumes for the third quarter of 2017 averaged 1,207 MMcf/d, a 55% increase from the third quarter of 2016.  High pressure gathering volumes for the third quarter of 2017 averaged 1,918 MMcf/d, a 42% increase from the third quarter of 2016.  High pressure gathering volumes were in excess of low pressure gathering volumes due to Antero Resources Corporation (“Antero Resources”) temporarily utilizing an Antero Midstream owned high pressure line to avoid downstream pipeline constraints. The 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 142 MBbl/d during the quarter, a 1% increase compared to the prior year quarter. The freshwater delivery system serviced 27% fewer completions as compared to the second quarter of 2017 due to the expected quarter to quarter variance in the completion schedule and movement of completion crews between pads.

 

Gross processing volumes from Antero Midstream’s processing and fractionation joint venture (the “Joint Venture”) for the third quarter of 2017 averaged 368 MMcf/d, an increase of 70% compared to the second quarter of 2017.  Joint Venture processing volumes increased as the Joint Venture’s second 200 MMcf/d processing plant, Sherwood 8, was placed in service during the quarter.  Gross Joint Venture fractionation volumes averaged 6,431 Bbl/d, a 59% increase sequentially, driven by increased C3+ NGL production volumes processed by MPLX and the Joint Venture.

 

 

 

Three Months Ended
September 30,

 

%

 

 

 

2016

 

2017

 

Change

 

Average Daily Volumes:

 

 

 

 

 

 

 

Low Pressure Gathering (MMcf/d)

 

1,431

 

1,586

 

11

%

Compression (MMcf/d)

 

777

 

1,207

 

55

%

High Pressure Gathering (MMcf/d)

 

1,351

 

1,918

 

42

%

Fresh Water Delivery (MBbl/d)

 

140

 

142

 

1

%

Gross Joint Venture Processing (MMcf/d)

 

 

368

 

*

 

Gross Joint Venture Fractionation (Bbl/d)

 

 

6,431

 

*

 

 


*                 Not applicable.  Antero Midstream has a 50% interest in the processing and fractionation JV with MPLX

 

For the three months ended September 30, 2017, the Partnership reported revenues of $194 million, comprised of $101 million from the Gathering and Processing segment and $93 million from the Water Handling and Treatment segment. Revenues increased 29% compared to the prior year quarter, driven by growth in throughput volumes and fresh water delivery volumes. Water Handling and Treatment segment revenues include $45 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 $11 million and $52 million, respectively, for a total of $63 million compared to $33 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $44 million from wastewater handling and high rate water transfer services.  General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the third quarter of 2016.  General and administrative expenses excluding equity-based compensation were $7 million during the third

 

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quarter of 2017, in line with the third quarter of 2016.  Total operating expenses were $111 million, including $31 million of depreciation and $3 million of accretion of contingent acquisition consideration.

 

Net income for the third quarter of 2017 was $81 million, a 15% increase compared to the prior year quarter. Net income per limited partner unit was $0.33 per unit, an 11% decrease compared to the prior year quarter. Adjusted EBITDA was $128 million, a 16% 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 $4 million in distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture.  Cash interest paid was $21 million. Cash reserved for bond interest during the quarter decreased $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 $11 million and distributable cash flow was $104 million, resulting in a DCF coverage ratio of 1.3x. Distributable cash flow is a non-GAAP financial measure.  For a description of distributable cash flow, please read “Non-GAAP Financial Measures,” and for a reconciliation to its nearest GAAP measure, please see the table below.

 

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

 

 

 

Three months ended
September 30,

 

 

 

2016

 

2017

 

Net income

 

$

70,524

 

$

80,893

 

Interest expense

 

5,303

 

9,311

 

Depreciation expense

 

26,136

 

30,556

 

Accretion of contingent acquisition consideration

 

3,527

 

2,556

 

Equity-based compensation

 

6,599

 

7,199

 

Equity in earnings of unconsolidated affiliates

 

(1,544

)

(7,033

)

Distributions from unconsolidated affiliates

 

 

4,300

 

Adjusted EBITDA

 

$

110,545

 

$

127,782

 

Interest paid

 

(4,043

)

(20,554

)

Decrease in cash reserved for bond interest (1)

 

 

8,831

 

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

 

(1,000

)

(1,500

)

Cash distribution to be received from unconsolidated affiliate

 

2,221

 

 

Maintenance capital expenditures(3)

 

(4,638

)

(10,771

)

Distributable cash flow

 

$

103,085

 

$

103,788

 

 

 

 

 

 

 

Distributions Declared to Antero Midstream Holders

 

 

 

 

 

Limited Partners

 

$

47,025

 

$

63,454

 

Incentive distribution rights

 

4,820

 

19,067

 

Total Aggregate Distributions

 

$

51,845

 

$

82,521

 

 

 

 

 

 

 

DCF coverage ratio

 

2.0x

 

1.3x

 

 


(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 outlook, Michael Kennedy, CFO of Antero Midstream said, “Looking ahead to the fourth quarter, we anticipate a sequential increase in throughput and water volumes given a planned increase in Antero Resources’ completion activity, which is consistent with our 2017 guidance. This provides Antero Midstream with significant momentum heading into 2018 to support top-tier distribution growth and coverage. Additionally, AM’s balance sheet strength and attractive project returns allows us to internally fund our organic opportunities while maintaining leverage in the low 2x range.”

 

Gathering and Processing Antero Midstream added 160 MMcf/d of compression capacity during the third quarter of 2017, bringing total compression capacity up to 1.6 Bcf/d in the Marcellus and Utica combined.  Additionally, Antero Midstream connected

 

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25 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 32 well completions during the third quarter of 2017, a 9% decrease from the prior year quarter and 27% decrease sequentially.  Antero Resources is currently operating four completion crews on Antero Midstream dedicated acreage. During the quarter, Antero Midstream began commissioning the Antero Clearwater Facility and expects the facility to commence advanced wastewater treatment operations in the fourth quarter of 2017.

 

Balance Sheet and Liquidity

 

As of September 30, 2017, Antero Midstream had $2 million in cash and $427 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.1 billion of liquidity.  Antero Midstream’s total debt and net debt to trailing twelve months adjusted EBITDA was 2.1x as of September 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 $147 million in the third quarter of 2017 as compared to $114 million in the third quarter of 2016.  Capital invested in gathering systems and related facilities was $99 million and capital invested in water handling and treatment assets was $48 million, including $33 million invested in the Antero Clearwater Facility. Investments in unconsolidated affiliates for the processing and fractionation joint venture were $26 million during the quarter.

 

AMGP Third Quarter 2017 Financial Results

 

AMGP’s equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $19.1 million.  Net income for the third quarter of 2017 was $3.0 million as compared to net income of $2.8 million for the prior year quarter.

 

AMGP’s cash distributions from Antero Midstream were $18.4 million for third quarter of 2017, net of $0.7 million of cash reserved for distributions on Series B units. General and administrative expenses were $0.6 million, provision for income taxes was $7.2 million, and reserve for tax benefit on Series B unit distributions was $0.3 million, resulting in cash available for distribution of $10.9 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 September
30, 2017

 

Cash distributions from Antero Midstream Partners LP

 

$

19,067

 

Cash reserved for distributions to Series B units of IDR LLC

 

(684

)

Cash distributions to Antero Midstream GP LP

 

$

18,383

 

General and administrative expenses

 

(615

)

Provision for income taxes

 

(7,157

)

Reserve for tax benefit on Series B unit distributions

 

272

 

Distributable cash flow

 

$

10,883

 

 

 

 

 

DCF coverage ratio

 

1.0x

 

 

 

 

 

Common shares outstanding

 

186,174

 

 

 

 

 

Cash distribution per common share

 

$

0.059

 

 

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Conference Call

 

A joint conference call for Antero Midstream and AMGP is scheduled on Thursday, November 2, 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, November 10, 2017 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10111892.

 

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, November 10, 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, including cash distributions from unconsolidated affiliates and gain on asset sale.

 

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.

 

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

 

 

 

September 30,

 

 

 

2017

 

 

 

 

 

Bank credit facility

 

$

427,000

 

5.375% AM senior notes due 2024

 

650,000

 

Net unamortized debt issuance costs

 

(9,278

)

Consolidated total debt

 

$

1,067,722

 

Cash and cash equivalents

 

(2,495

)

Consolidated net debt

 

$

1,065,227

 

 

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

 

 

 

Twelve Months
Ended
September 30,

 

 

 

2017

 

 

 

 

 

Net income

 

$

316,510

 

Interest expense

 

36,170

 

Depreciation expense

 

114,366

 

Accretion of contingent acquisition consideration

 

15,777

 

Equity-based compensation

 

27,119

 

Equity in earnings of unconsolidated affiliate

 

(11,345

)

Distributions from unconsolidated affiliates

 

17,822

 

Gain on asset sale

 

(3,859

)

Adjusted EBITDA

 

$

512,560

 

 

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 September 30, 2017

(Unaudited)

(In thousands)

 

 

 

December 31, 2016

 

September 30, 2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

14,042

 

2,495

 

Accounts receivable–Antero Resources

 

64,139

 

84,124

 

Accounts receivable–third party

 

1,240

 

1,165

 

Prepaid expenses

 

529

 

1,013

 

Total current assets

 

79,950

 

88,797

 

Property and equipment, net

 

2,195,879

 

2,508,204

 

Investment in unconsolidated affiliates

 

68,299

 

287,842

 

Other assets, net

 

5,767

 

10,548

 

Total assets

 

$

2,349,895

 

2,895,391

 

Liabilities and Partners’ Capital

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

16,979

 

13,820

 

Accounts payable–Antero Resources

 

3,193

 

4,050

 

Accrued liabilities

 

61,641

 

70,532

 

Other current liabilities

 

200

 

206

 

Total current liabilities

 

82,013

 

88,608

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

849,914

 

1,067,722

 

Contingent acquisition consideration

 

194,538

 

204,210

 

Other

 

620

 

465

 

Total liabilities

 

1,127,085

 

1,361,005

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

Common unitholders - public (70,020 units and 87,753 units issued and outstanding at December 31, 2016 and September 30, 2017, respectively)

 

1,458,410

 

1,708,930

 

Common unitholder - Antero Resources (32,929 units and 98,870 units issued and outstanding at December 31, 2016 and September 30, 2017, respectively)

 

26,820

 

(193,611

)

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

 

(269,963

)

 

General partner

 

7,543

 

19,067

 

Total partners’ capital

 

1,222,810

 

1,534,386

 

Total liabilities and partners’ capital

 

$

2,349,895

 

2,895,391

 

 

7



 

ANTERO MIDSTREAM PARTNERS LP

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended September 30, 2016, and 2017

(Unaudited)

(In thousands, except per unit amounts)

 

 

 

Three Months Ended September 30,

 

 

 

2016

 

2017

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

Gathering and compression–Antero Resources

 

$

77,871

 

100,518

 

Water handling and treatment–Antero Resources

 

72,411

 

93,111

 

Gathering and compression–third party

 

193

 

 

Total revenue

 

150,475

 

193,629

 

Operating expenses:

 

 

 

 

 

Direct operating

 

33,213

 

63,030

 

General and administrative (including $6,599 and $7,199 of equity-based compensation in 2016 and 2017, respectively)

 

13,316

 

14,316

 

Depreciation

 

26,136

 

30,556

 

Accretion of contingent acquisition consideration

 

3,527

 

2,556

 

Total operating expenses

 

76,192

 

110,458

 

Operating income

 

74,283

 

83,171

 

Interest expense, net

 

(5,303

)

(9,311

)

Equity in earnings of unconsolidated affiliates

 

1,544

 

7,033

 

Net income and comprehensive income

 

70,524

 

80,893

 

Net income attributable to incentive distribution rights

 

(4,807

)

(19,067

)

Limited partners’ interest in net income

 

$

65,717

 

61,826

 

 

 

 

 

 

 

Net income per limited partner unit - basic and diluted

 

$

0.37   

 

0.33   

 

 

 

 

 

 

 

Weighted average limited partner units outstanding - basic

 

176,395   

 

186,581   

 

Weighted average limited partner units outstanding - diluted

 

176,766   

 

187,145   

 

 

8



 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Results of Segment Operations

Three Months Ended September 30, 2016, and 2017

(Unaudited)

(In thousands)

 

 

 

 

 

Water

 

 

 

 

 

Gathering and

 

Handling and

 

Consolidated

 

 

 

Processing

 

Treatment

 

Total

 

Three months ended September 30, 2016

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

77,871

 

72,411

 

150,282

 

Revenue - third-party

 

193

 

 

193

 

Total revenues

 

78,064

 

72,411

 

150,475

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Direct operating

 

4,692

 

28,521

 

33,213

 

General and administrative (before equity-based compensation)

 

5,068

 

1,649

 

6,717

 

Equity-based compensation

 

5,213

 

1,386

 

6,599

 

Depreciation

 

18,298

 

7,838

 

26,136

 

Accretion of contingent acquisition consideration

 

 

3,527

 

3,527

 

Total expenses

 

33,271

 

42,921

 

76,192

 

Operating income

 

$

44,793

 

29,490

 

74,283

 

 

 

 

 

 

 

 

 

Segment and consolidated Adjusted EBITDA

 

$

68,304

 

42,241

 

110,545

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2017

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

100,518

 

93,111

 

193,629

 

Revenue - third-party

 

 

 

 

Total revenues

 

100,518

 

93,111

 

193,629

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Direct operating

 

10,560

 

52,470

 

63,030

 

General and administrative (before equity-based compensation)

 

4,225

 

2,892

 

7,117

 

Equity-based compensation

 

5,111

 

2,088

 

7,199

 

Depreciation

 

21,803

 

8,753

 

30,556

 

Accretion of contingent acquisition consideration

 

 

2,556

 

2,556

 

Total expenses

 

41,699

 

68,759

 

110,458

 

Operating income

 

$

58,819

 

24,352

 

83,171

 

 

 

 

 

 

 

 

 

Segment and consolidated Adjusted EBITDA

 

$

90,033

 

37,749

 

127,782

 

 

9



 

ANTERO MIDSTREAM PARTNERS LP

Selected Operating Data

Three Months Ended September 30, 2016, and 2017

(Unaudited)

 

 

 

 

 

 

 

Amount of

 

 

 

 

 

Three Months Ended September 30,

 

Increase

 

Percentage

 

 

 

2016

 

2017

 

(Decrease)

 

Change

 

Revenue:

 

 

 

 

 

 

 

 

 

Revenue - Antero Resources

 

$

150,282

 

193,629

 

43,347

 

29

%

Revenue - third-party

 

193

 

 

(193

)

*

 

Total revenue

 

150,475

 

193,629

 

43,154

 

29

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Direct operating

 

33,213

 

63,030

 

29,817

 

90

%

General and administrative (before equity-based compensation)

 

6,717

 

7,117

 

400

 

6

%

Equity-based compensation

 

6,599

 

7,199

 

600

 

9

%

Depreciation

 

26,136

 

30,556

 

4,420

 

17

%

Accretion of contingent acquisition consideration

 

3,527

 

2,556

 

(971

)

(28

)%

Total operating expenses

 

76,192

 

110,458

 

34,266

 

45

%

Operating income

 

74,283

 

83,171

 

8,888

 

12

%

Interest expense

 

(5,303

)

(9,311

)

(4,008

)

76

%

Equity in earnings of unconsolidated affiliates

 

1,544

 

7,033

 

5,489

 

356

%

Net income

 

$

70,524

 

80,893

 

10,369

 

15

%

Adjusted EBITDA

 

$

110,545

 

127,782

 

17,237

 

16

%

Operating Data:

 

 

 

 

 

 

 

 

 

Gathering—low pressure (MMcf)

 

131,625

 

145,898

 

14,273

 

11

%

Gathering—high pressure (MMcf)

 

124,266

 

176,471

 

52,205

 

42

%

Compression (MMcf)

 

71,470

 

111,070

 

39,600

 

55

%

Condensate gathering (MBbl)

 

48

 

 

(48

)

*

 

Processing - Joint Venture (MMcf)

 

 

33,841

 

33,841

 

*

 

Fractionation - Joint Venture (MBbl)

 

 

592

 

592

 

*

 

Fresh water delivery (MBbl)

 

12,895

 

13,022

 

127

 

1

%

Wastewater handling (MBbl)

 

2,577

 

3,723

 

1,146

 

44

%

Wells serviced by fresh water delivery

 

35

 

32

 

(3

)

(9

)%

Gathering—low pressure (MMcf/d)

 

1,431

 

1,586

 

155

 

11

%

Gathering—high pressure (MMcf/d)

 

1,351

 

1,918

 

567

 

42

%

Compression (MMcf/d)

 

777

 

1,207

 

430

 

55

%

Condensate gathering (MBbl/d)

 

1

 

 

(1

)

*

 

Processing - Joint Venture (MMcf/d)

 

 

368

 

368

 

*

 

Fractionation - Joint Venture (MBbl/d)

 

 

6

 

6

 

*

 

Fresh water delivery (MBbl/d)

 

140

 

142

 

2

 

1

%

Wastewater handling (MBbl/d)

 

28

 

40

 

12

 

44

%

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

)

*

 

Average fresh water delivery fee ($/Bbl)

 

$

3.68

 

3.71

 

0.03

 

1

%

 


*                 Not meaningful or applicable.

 

10



 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2016, and 2017

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2016

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

163,352

 

243,160

 

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

 

 

 

 

 

Depreciation

 

74,100

 

88,604

 

Accretion of contingent acquisition consideration

 

10,384

 

9,672

 

Equity-based compensation

 

19,366

 

20,436

 

Equity in earnings of unconsolidated affiliates

 

(2,027

)

(12,887

)

Distributions from unconsolidated affiliates

 

 

10,120

 

Amortization of deferred financing costs

 

1,185

 

1,906

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable—Antero Resources

 

7,314

 

(19,985

)

Accounts receivable—third party

 

1,464

 

75

 

Prepaid expenses

 

(53

)

(484

)

Accounts payable

 

1,467

 

1,181

 

Accounts payable—Antero Resources

 

99

 

857

 

Accrued liabilities

 

(17,516

)

1,612

 

Net cash provided by operating activities

 

259,135

 

344,267

 

Cash flows used in investing activities:

 

 

 

 

 

Additions to gathering systems and facilities

 

(152,769

)

(254,619

)

Additions to water handling and treatment systems

 

(137,355

)

(143,470

)

Investment in unconsolidated affiliates

 

(45,044

)

(216,776

)

Change in other assets

 

(2,409

)

(5,877

)

Net cash used in investing activities

 

(337,577

)

(620,742

)

Cash flows provided by financing activities:

 

 

 

 

 

Distributions to unitholders

 

(129,752

)

(200,037

)

Issuance of senior notes

 

650,000

 

 

Borrowings (repayments) on bank credit facilities, net

 

(450,000

)

217,000

 

Issuance of common units, net of offering costs

 

19,605

 

248,949

 

Payments of deferred financing costs

 

(8,940

)

 

Employee tax withholding for settlement of equity compensation awards

 

 

(932

)

Other

 

(133

)

(52

)

Net cash provided by financing activities

 

80,780

 

264,928

 

Net increase (decrease) in cash and cash equivalents

 

2,338

 

(11,547

)

Cash and cash equivalents, beginning of period

 

6,883

 

14,042

 

Cash and cash equivalents, end of period

 

$

9,221

 

2,495

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for interest

 

$

11,751

 

42,530

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment

 

$

(21,971

)

2,936

 

 

11



 

Antero Midstream GP LP

Condensed Consolidated Balance Sheets

December 31, 2016 and September 30, 2017

(Unaudited)

(In thousands)

 

 

 

December 31, 2016

 

September 30, 2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

9,609

 

2,419

 

Accounts receivable - related party

 

217

 

 

Prepaid expenses

 

 

49

 

Total current assets

 

9,826

 

2,468

 

Investment in Antero Midstream Partners LP

 

7,543

 

19,067

 

Total assets

 

$

17,369

 

21,535

 

 

 

 

 

 

 

Liabilities and Partners’ Capital

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accrued liabilities

 

426

 

611

 

Income taxes payable

 

6,674

 

8,900

 

Total current liabilities

 

7,100

 

9,511

 

Liability for equity-based compensation

 

 

3,344

 

Total liabilities

 

7,100

 

12,855

 

Partners’ capital

 

10,269

 

8,680

 

Total liabilities and partners’ capital

 

$

17,369

 

21,535

 

 

Antero Midstream GP LP

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended September 30, 2016 and 2017

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

 

2016

 

2017

 

Equity in earnings of Antero Midstream Partners LP

 

$

4,807

 

19,067

 

Total income

 

4,807

 

19,067

 

General and administrative expense

 

205

 

615

 

Equity-based compensation

 

 

8,317

 

Total expenses

 

205

 

8,932

 

Income before income taxes

 

4,602

 

10,135

 

Provision for income taxes

 

(1,825

)

(7,157

)

Net income and comprehensive income

 

$

2,777

 

2,978

 

 

 

 

 

 

 

 

Net income per common share - basic and diluted

 

 

 

$

0.02

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

 

 

186,173

 

Weighted average number of common shares outstanding - diluted

 

 

 

191,175

 

 

12



 

Antero Midstream GP LP

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2016 and 2017

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2016

 

2017

 

Cash flows provided by operating activities:

 

 

 

 

 

Net income (loss)

 

$

5,435

 

(3,582

)

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

 

 

 

 

 

Equity in earnings of Antero Midstream Partners LP

 

(9,388

)

(45,948

)

Distributions received from Antero Midstream Partners LP

 

5,550

 

34,424

 

Equity-based compensation

 

 

26,271

 

Deferred income taxes

 

(368

)

 

Changes in current assets and liabilities:

 

 

 

 

 

Accounts receivable - related party

 

(202

)

 

Prepaid expenses

 

 

(49

)

Accounts payable

 

 

 

Accrued liabilities

 

350

 

185

 

Income taxes payable

 

3,741

 

2,226

 

Net cash provided by operating activities

 

5,118

 

13,527

 

Cash flows used in investing activities

 

 

 

Cash flows used in financing activities

 

 

 

 

 

Distributions to Antero Resources Investment LLC

 

 

(15,691

)

Distributions to shareholders

 

 

(5,026

)

Net cash used in financing activities

 

 

(20,717

)

Net increase (decrease) in cash

 

5,118

 

(7,190

)

Cash, beginning of period

 

72

 

9,609

 

Cash, end of period

 

$

5,190

 

2,419

 

 

13