DENVER, Feb. 13, 2019 /PRNewswire/ -- Antero Midstream
Partners LP (NYSE: AM) ("Antero Midstream" or the
"Partnership") and Antero Midstream GP LP (NYSE: AMGP)
("AMGP") today released their fourth quarter and full year 2018
financial and operating results. The relevant consolidated
financial statements are included in Antero Midstream's and AMGP's
Annual Reports on Form 10-K for the year ended December 31, 2018, which have been filed with the
Securities and Exchange Commission.
Antero Midstream Fourth Quarter 2018 Highlights
Include:
- Net income increased to $249
million, or $1.10 per limited
partner unit
- Adjusted net income increased by 63% to $143 million compared to the prior year quarter
(non-GAAP measure)
- Adjusted EBITDA increased by 36% to $194 million compared to the prior year quarter
(non-GAAP measure)
- Distributable Cash Flow increased by 43% to $167 million resulting in DCF coverage of 1.3x
(non-GAAP measure)
- Distributions increased by 29% to $0.47 per unit compared to the prior year quarter
and represented the Partnership's sixteenth consecutive
distribution increase since the November
2014 IPO
Antero Midstream Full Year 2018 Highlights Include:
- Announced midstream simplification transaction where AMGP
will convert to a C-Corp and acquire all outstanding AM common
units in a stock and cash transaction resulting in the elimination
of the IDRs, expected to close in March of 2019
- Net income increased to $586
million, or $2.37 per limited
partner unit
- Adjusted net income increased by 47% to $485 million compared to the prior year (non-GAAP
measure)
- Adjusted EBITDA increased by 36% to $717 million compared to the prior year (non-GAAP
measure)
- Distributable Cash Flow increased by 42% to $596 million resulting in DCF coverage of 1.3x
(non-GAAP measure)
- Debt to trailing twelve months Adjusted EBITDA was 2.3x at
year-end 2018, with $1.0 billion of
liquidity
Antero Midstream GP LP Fourth Quarter 2018 Highlights
Include:
- Distributions increased to $0.164 per common share, a 119% increase compared
to the prior year quarter and the sixth consecutive distribution
increase since the May 2017
IPO
Commenting on the 2018 results and outlook for Antero Midstream,
Paul Rady, Chairman and CEO said,
"Antero Midstream delivered another successful year in 2018,
achieving record gathering, compression, processing, fractionation,
and fresh water delivery volumes. These record volumes drove
a 36% year over year increase in Adjusted EBITDA and a 42%
year-over-year increase in Distributable Cash Flow, resulting in
strong DCF coverage of 1.3x."
Mr. Rady further added, "We also had a successful year in terms
of infrastructure buildout, adding 760 MMcf/d of compression
capacity and 600 MMcf/d of processing capacity, respectively. The
significant capacity and throughput growth during the fourth
quarter provides tremendous momentum to deliver on our 2019 organic
infrastructure plan, in turn supporting Antero Resources'
development."
For a discussion of the non-GAAP financial measures adjusted net
income, Adjusted EBITDA, Distributable Cash Flow, and net debt
please see "Non-GAAP Financial Measures."
Recent Developments
Antero Midstream and AMGP previously announced that AMGP's
Registration Statement on Form S-4 relating to the simplification
transaction between the two companies and certain of their
affiliates has become effective under the Securities Act of 1933 as
of January 30, 2019. AMGP and Antero
Midstream have each filed a definitive proxy statement with the
U.S. Securities and Exchange Commission ("SEC") for the separate
special meetings of the AMGP shareholders and Antero Midstream
unitholders to vote on the transaction on March 8, 2019. The special meeting of AMGP
shareholders will be held on March 8,
2019, at 9:00 a.m. local time,
at 1615 Wynkoop Street, Denver,
Colorado 80202. The special meeting of Antero Midstream
unitholders will be held on March 8,
2019, at 10:00 a.m. local
time, at 1615 Wynkoop Street, Denver,
Colorado 80202. All AMGP shareholders and Antero Midstream
unitholders of record as of the close of business on
January 11, 2019, which is the record date for the special
meetings, will be entitled to vote the AMGP common shares and
Antero Midstream common units, respectively, owned by them on the
record date.
Under the terms of the documents governing the simplification
transaction, each Antero Midstream unitholder, other than Antero
Resources, has the opportunity to receive as consideration for each
Antero Midstream common unit owned, at its election and subject to
proration, one of (i) $3.415 in cash
without interest and 1.6350 shares of New AM common stock, (ii)
1.6350 shares of New AM common stock plus an additional number of
shares of New AM common stock equal to the quotient of (A)
$3.415 and (B) the average of the
20-day volume-weighted average price per AMGP share prior to the
Election Deadline (the "AMGP VWAP") or (iii) $3.415 in cash without interest plus an
additional amount of cash without interest equal to the product of
(A) 1.6350 and (B) the AMGP VWAP. In order for an election to
be properly made and effective, American Stock Transfer & Trust
Company, LLC (the exchange agent in connection with the
transaction) must receive a completed and signed election form and
I.R.S. Form W-9 (or Form W-8, as applicable) no later than
5:00 p.m., New York City time, on March 4, 2019 (the "Election Deadline").
Antero Midstream Fourth Quarter Financial Results
Low pressure gathering volumes for the fourth quarter of 2018
averaged 2,602 MMcf/d, a 52% increase as compared to the fourth
quarter of 2017 and a 20% increase sequentially. Compression
volumes for the fourth quarter of 2018 averaged 2,215 MMcf/d, a 63%
increase as compared to the fourth quarter of 2017 and 26% increase
sequentially. Compression capacity was 93% utilized during
the fourth quarter of 2018. High pressure gathering volumes for the
fourth quarter of 2018 averaged 2,569 MMcf/d, a 39% increase from
the fourth quarter of 2017 and 18% increase sequentially. The
increase in gathering and compression volume was driven by Antero
Midstream connecting 73 wells and 38 wells to the gathering system
in the third and fourth quarter of 2018, respectively. Low pressure
gathering, compression, and high pressure gathering volumes for the
fourth quarter of 2018 all were Antero Midstream records.
Fresh water delivery volumes averaged 136 MBbl/d during the
quarter, a 9% decrease as compared to the fourth quarter of 2017
due to fewer completions during the quarter as anticipated.
Gross processing volumes from our processing and fractionation
joint venture with MarkWest (a wholly-owned subsidiary of MPLX)
(the "Joint Venture"), averaged 796 MMcf/d, for the fourth quarter
of 2018, an increase of 87% compared to the fourth quarter of 2017
and 31% increase sequentially. Gross Joint Venture
fractionation volumes averaged 18,672 Bbl/d, a 105% increase
compared to the fourth quarter of 2017 and 8% increase
sequentially.
Average Daily
Volumes:
|
Three months
ended
|
|
Years
ended
|
December
31,
|
|
December
31,
|
2017
|
|
2018
|
|
%
Change
|
|
2017
|
|
2018
|
|
%
Change
|
Low Pressure Gathering
(MMcf/d)
|
|
1,711
|
|
|
2,602
|
|
52%
|
|
|
1,660
|
|
|
2,148
|
|
29%
|
Compression
(MMcf/d)
|
|
1,355
|
|
|
2,215
|
|
63%
|
|
|
1,196
|
|
|
1,738
|
|
45%
|
High Pressure
Gathering (MMcf/d)
|
|
1,842
|
|
|
2,569
|
|
39%
|
|
|
1,770
|
|
|
2,112
|
|
19%
|
Fresh Water Delivery
(MBbl/d)
|
|
149
|
|
|
136
|
|
(9)%
|
|
|
153
|
|
|
195
|
|
27%
|
Clearwater Treatment
Volumes (MBbl/d)
|
|
—
|
|
|
9
|
|
*
|
|
|
—
|
|
|
7
|
|
*
|
Gross Joint Venture
Processing (MMcf/d)
|
|
425
|
|
|
796
|
|
87%
|
|
|
267
|
|
|
622
|
|
133%
|
Gross Joint Venture
Fractionation (Bbl/d)
|
|
9,096
|
|
|
18,672
|
|
105%
|
|
|
5,099
|
|
|
13,107
|
|
157%
|
________________________
|
* Not meaningful or
applicable.
|
For the three months ended December 31,
2018, the Partnership reported revenues of $282 million, comprised of $161 million from the Gathering and Processing
segment and $121 million from the
Water Handling and Treatment segment. Revenues increased 34%
compared to the prior year quarter, driven by growth in throughput
volumes. Water Handling and Treatment segment revenues include
$70 million from wastewater handling
and high rate water transfer services provided to Antero Resources,
which are billed at cost plus 3%.
Direct operating expenses for the Gathering and Processing, and
Water Handling and Treatment segments were $13 million and $79
million, respectively, for a total of $92 million compared to $70 million in direct operating expenses in the
prior year quarter. The increase in operating expenses was driven
primarily by an increase in throughput volumes. Water Handling and
Treatment direct operating expenses include $67 million from wastewater handling and high
rate water transfer services. General and administrative
expenses including equity-based compensation were $17 million, a $2
million increase compared to the fourth quarter of
2017. General and administrative expenses excluding
equity-based compensation were $12
million during the fourth quarter of 2018, a $4 million increase as compared to the fourth
quarter of 2017. The increase in general and administrative
expenses was driven primarily by financial and legal fees incurred
during the fourth quarter of 2018 related to the midstream
simplification transaction. Total operating expenses were
$27 million, including $23 million of depreciation, $106 million decrease from the change in fair
value of contingent acquisition consideration related to the second
earn-out payment, and $1 million of
accretion of contingent acquisition consideration. Depreciation
decreased by $8 million as compared
to the fourth quarter of 2017 driven by a change in the estimated
useful lives of the gathering systems and facilities. The change in
fair value of contingent acquisition consideration is related to
the second freshwater earn-out payment not anticipated to be
achieved based on Antero Resource's current development plan.
Net income for the fourth quarter of 2018 was $249 million. The increase in net income was
driven by an increase in natural gas gathering and compression
volumes and a $105 million non-cash
change in fair value of the contingent acquisition consideration
related to the water drop-down transaction. Net income was
$1.09 per diluted limited partner
unit. Adjusted net income excluding the impact from the
non-cash change in fair value of the contingent acquisition
consideration was $143 million, a 63%
increase compared to the prior year quarter. Adjusted EBITDA
was $194 million, a 36% increase
compared to the prior year quarter. The increase in Adjusted EBITDA
was primarily driven by increased natural gas throughput volumes
and contribution from the Joint Venture. Adjusted EBITDA for the
quarter included $17 million in
distributions from Stonewall Gathering LLC and the processing and
fractionation Joint Venture. Cash interest paid was
$9 million. Cash reserved for
bond interest during the quarter increased $9 million and income tax withholding upon
vesting of Antero Midstream equity-based compensation awards was
$1 million. Maintenance capital
expenditures during the quarter totaled $8
million and Distributable Cash Flow was $167 million, resulting in a DCF coverage ratio
of 1.3x.
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
|
|
Years
ended
|
December
31,
|
|
December
31,
|
2017
|
|
2018
|
|
2017
|
|
2018
|
Net
income
|
$
|
64,155
|
|
$
|
248,609
|
|
$
|
307,315
|
|
$
|
585,944
|
Impairment of property
and equipment
|
|
23,431
|
|
|
—
|
|
|
23,431
|
|
|
5,771
|
Change in fair value of
contingent acquisition consideration
|
|
—
|
|
|
(105,872)
|
|
|
—
|
|
|
(105,872)
|
Adjusted Net
Income
|
$
|
87,586
|
|
$
|
142,737
|
|
$
|
330,746
|
|
$
|
485,843
|
Interest expense,
net
|
|
10,395
|
|
|
18,993
|
|
|
37,557
|
|
|
61,906
|
Depreciation
|
|
30,958
|
|
|
22,692
|
|
|
119,562
|
|
|
130,013
|
Accretion of contingent
acquisition consideration
|
|
3,804
|
|
|
1,012
|
|
|
13,476
|
|
|
12,853
|
Accretion of asset
retirement obligation
|
|
—
|
|
|
34
|
|
|
|
|
|
135
|
Equity-based
compensation
|
|
6,847
|
|
|
4,467
|
|
|
27,283
|
|
|
21,073
|
Equity in earnings of
unconsolidated affiliates
|
|
(7,307)
|
|
|
(12,448)
|
|
|
(20,194)
|
|
|
(40,280)
|
Distributions from
unconsolidated affiliates
|
|
10,075
|
|
|
16,755
|
|
|
20,195
|
|
|
46,415
|
Gain on sale of assets
– Antero Resources
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(583)
|
Adjusted
EBITDA
|
$
|
142,358
|
|
$
|
194,242
|
|
$
|
528,625
|
|
$
|
717,375
|
Interest
paid
|
|
(4,136)
|
|
|
(9,268)
|
|
|
(46,666)
|
|
|
(62,844)
|
Decrease (increase) in
cash reserved for bond interest (1)
|
|
(8,734)
|
|
|
(8,734)
|
|
|
291
|
|
|
—
|
Income tax withholding
upon vesting of Antero Midstream Partners LP equity-based
compensation awards
|
|
(514)
|
|
|
(1,029)
|
|
|
(5,945)
|
|
|
(5,529)
|
Maintenance capital
expenditures(2)
|
|
(12,063)
|
|
|
(7,988)
|
|
|
(55,159)
|
|
|
(52,729)
|
Distributable Cash
Flow
|
$
|
116,911
|
|
$
|
167,223
|
|
$
|
421,146
|
|
$
|
596,273
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
Declared to Antero Midstream Holders
|
|
|
|
|
|
|
|
|
|
|
|
Limited
partners
|
|
68,231
|
|
|
88,045
|
|
|
247,132
|
|
|
320,915
|
Incentive
distribution rights
|
|
23,772
|
|
|
43,492
|
|
|
69,720
|
|
|
142,906
|
Total Aggregate
Distributions
|
$
|
92,003
|
|
$
|
131,537
|
|
$
|
316,852
|
|
$
|
463,821
|
|
|
|
|
|
|
|
|
|
|
|
|
DCF coverage
ratio
|
|
1.27x
|
|
|
1.27x
|
|
|
1.33x
|
|
|
1.29x
|
|
|
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)
|
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 — Antero
Midstream placed online the 240 MMcf/d East Mountain
compressor station in the Marcellus during the fourth quarter of 2018.
For the full year 2018, Antero Midstream increased its compression
capacity by 760 MMcf/d to a total of 2.5 Bcf/d in the Marcellus and Utica combined. Antero Midstream
connected 38 wells to its gathering system during the fourth
quarter of 2018 and 168 wells during the full year. Antero
Resources is currently operating five drilling rigs on Antero
Midstream dedicated acreage.
Water Handling and Treatment — Antero
Midstream's Marcellus and
Utica fresh water delivery systems
serviced 30 well completions during the fourth quarter of 2018, a
7% decrease from the prior year quarter. Antero
Resources is currently operating four completion crews on Antero
Midstream dedicated acreage.
Balance Sheet and Liquidity
As of December 31, 2018, Antero
Midstream had $990 million drawn on
its $2.0 billion bank credit
facility, resulting in approximately $1.0
billion of liquidity. Antero Midstream's total debt
and net debt to trailing twelve months Adjusted EBITDA was 2.3x as
of December 31, 2018. For a
reconciliation of net debt to total debt, the most comparable GAAP
measure, please read "Non-GAAP Financial Measures."
Commenting on the balance sheet and credit strength,
Michael Kennedy, CFO of Antero
Midstream said, "Antero Midstream's organic growth investments
continued to generate peer leading Distributable Cash Flow growth
and resulted in 1.3x DCF coverage for the fourth quarter and full
year 2018. In addition, Antero Midstream's strong balance sheet
with debt to trailing twelve months Adjusted EBITDA of 2.3x at
year-end 2018 positions it to deliver on its organic growth
investment opportunity set without the need for external equity
financing."
Capital Investments
Capital expenditures, excluding investments in the processing
and fractionation joint venture, were $129
million in the fourth quarter of 2018 as compared to
$143 million in the fourth quarter of
2017. Capital invested in gathering systems and related
facilities was $109 million and
capital invested in water handling and treatment assets was
$20 million. Investments in
unconsolidated affiliates for the Joint Venture were $45 million during the quarter.
AMGP Fourth Quarter 2018 Financial Results
AMGP's equity in earnings from Antero Midstream, which reflects
the cash distributions from Antero Midstream, was $43 million for the fourth quarter of 2018.
Net income for the quarter was $21
million. AMGP's cash distributions from Antero
Midstream were $41 million, net of
$2 million of total cash reserved for
and distributed to holders of Series B units of Antero IDR Holdings
LLC. General and administrative expenses were $3 million, including $3
million of special committee and legal advisory fees. The
provision and reserve for income taxes was $10 million, resulting in cash available for
distribution of $31 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
December 31, 2018
|
Cash distributions
from Antero Midstream Partners LP
|
|
$
|
43,492
|
Cash reserved for
distributions to unvested Series B units of IDR LLC
|
|
|
(710)
|
Cash distribution to
vested Series B units of IDR LLC
|
|
|
(1,419)
|
Cash distributions to
Antero Midstream GP LP
|
|
$
|
41,363
|
General and
administrative expenses
|
|
|
(3,184)
|
Interest expense,
net
|
|
|
(55)
|
Provision and reserve
for income taxes
|
|
|
(10,240)
|
Conflicts committee
legal and advisory fees included in G&A
expense(1)
|
|
|
2,753
|
Cash available for
distribution
|
|
$
|
30,637
|
|
|
|
|
DCF coverage
ratio
|
|
|
1.0x
|
|
|
|
|
Common shares
outstanding
|
|
|
186,236
|
|
|
|
|
Cash distribution
per common share
|
|
$
|
0.164
|
|
1.
|
Represents
non-recurring accrued legal and advisory fees associated with the
ongoing conflicts committee process as disclosed on February 26,
2018.
|
Conference Call
A joint conference call for Antero Midstream and AMGP is
scheduled on Thursday, February 14,
2019 at 10:00 am MT to discuss
the quarterly and full year 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 Wednesday, February
21, 2019 at 10:00 am MT at
1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the
passcode 10114473.
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
Wednesday, February 21, 2019 at
10:00 am MT. Information on
Antero Midstream's website and AMGP's website does not constitute a
portion of this press release.
Investor Access to 2018 10-K
Pursuant to Section 203.01 of the New York Stock Exchange Listed
Company Manual, Antero Midstream and AMGP today announced that
their respective Annual Reports on Form 10-K (the "10-Ks") for the
fiscal year ended December 31, 2018,
were filed with the Securities and Exchange Commission on
February 13, 2019. A copy of Antero
Midstream's 10-K, which includes the Partnership's complete audited
financial statements, may be found on Antero Midstream's website,
www.anteromidstream.com, by selecting the "Investors" tab, then
"SEC Filings." A copy of AMGP's 10-K, which includes AMGP's
complete audited financial statements, may be found on AMGP's
website, www.anteromidstreamgp.com, by selecting the "Investors"
tab, then "SEC Filings." Antero Midstream unitholders may receive
hard copies of these documents free of charge by sending a written
request to Antero Midstream Partners LP, 1615 Wynkoop Street,
Denver, Colorado, 80202. AMGP's
shareholders may receive hard copies of these documents free of
charge by sending a written request to Antero Midstream GP LP, 1615
Wynkoop Street, Denver, Colorado,
80202.
Non-GAAP Financial Measures and Definitions
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, gain on sale
of assets, depreciation expense, impairment expense, accretion and
change in fair value of contingent acquisition consideration,
accretion of asset retirement obligations, 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 Partnership defines adjusted net income as net income plus
impairment expense and change in fair value of contingent
acquisition consideration. The Partnership believes that adjusted
net income is useful to investors in evaluating operational trends
of the Partnership and its performance relative to other
partnerships. 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 Partnership defines net debt as total debt less cash and
cash equivalents. Antero Midstream views net debt as an important
indicator in evaluating the Partnership's financial leverage.
The following table reconciles consolidated total debt to net
debt as used in this release (in thousands):
|
|
December
31,
|
|
|
2018
|
|
|
|
|
Bank credit
facility
|
|
$
|
990,000
|
5.375% AM senior
notes due 2024
|
|
|
650,000
|
Net unamortized debt
issuance costs
|
|
|
(7,853)
|
Total
debt
|
|
$
|
1,632,147
|
Cash and cash
equivalents
|
|
|
—
|
Net
debt
|
|
$
|
1,632,147
|
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. Without
limiting the generality of the foregoing, forward-looking
statements contained in this press release specifically include the
timing of consummation of the proposed simplification transaction,
if at all, and statements regarding the transaction.
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, the expected timing and likelihood of completion of the
proposed simplification transaction, including the ability to
obtain requisite unitholder and shareholder approval and the
satisfaction of the other conditions to the consummation of the
proposed transaction, risks that the proposed transaction may not
be consummated or the benefits contemplated therefrom may not be
realized, the cost savings, tax benefits and any other synergies
from the transaction may not be fully realized or may take longer
to realize than expected, 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, 2018.
No Offer or Solicitation
This communication includes a discussion of a proposed
business combination transaction between Antero Midstream and AMGP.
This communication is for informational purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval, in any
jurisdiction, pursuant to the transaction or otherwise, nor shall
there be any sale, issuance, exchange or transfer of the securities
referred to in this document in any jurisdiction in contravention
of applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Additional Information And Where To Find It
In connection with the transaction, AMGP has filed with the
U.S. Securities and Exchange Commission ("SEC") a registration
statement on Form S-4, that includes a joint proxy statement of
Antero Midstream and AMGP and a prospectus of AMGP. The transaction
will be submitted to Antero Midstream unitholders and AMGP
shareholders for their consideration. Antero Midstream and AMGP may
also file other documents with the SEC regarding the transaction.
The registration statement on Form S-4 became effective on
January 30, 2019, and the definitive
joint proxy statement/prospectus is being sent to the shareholders
of AMGP and unitholders of Antero Midstream of record as of
January 11, 2019. This document is
not a substitute for the registration statement and joint proxy
statement/prospectus that has been filed with the SEC or any other
documents that AMGP or Antero Midstream may file with the SEC or
send to shareholders of AMGP or unitholders of Antero Midstream in
connection with the transaction. INVESTORS AND SECURITY HOLDERS OF
ANTERO MIDSTREAM AND AMGP ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
TRANSACTION AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL
BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED
MATTERS.
Investors and security holders are able to obtain free copies
of the registration statement and the joint proxy
statement/prospectus and all other documents filed or that will be
filed with the SEC by AMGP or Antero Midstream through the website
maintained by the SEC at http://www.sec.gov. Copies of documents
filed with the SEC by Antero Midstream will be made available free
of charge on Antero Midstream's website at
http://investors.anteromidstream.com/investor-relations/AM, under
the heading "SEC Filings," or by directing a request to Investor
Relations, Antero Midstream Partners LP, 1615 Wynkoop Street,
Denver, Colorado 80202, Tel. No.
(303) 357-7310. Copies of documents filed with the SEC by AMGP will
be made available free of charge on AMGP's website at
http://investors.anteromidstreamgp.com/Investor-Relations/AMGP or
by directing a request to Investor Relations, Antero Midstream GP
LP, 1615 Wynkoop Street, Denver,
Colorado 80202, Tel. No. (303) 357-7310.
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated Balance Sheets
|
December 31, 2017 and
2018
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
2017
|
|
2018
|
|
Assets
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
8,363
|
|
|
—
|
|
Accounts
receivable–Antero Resources
|
|
|
110,182
|
|
|
115,378
|
|
Accounts
receivable–third party
|
|
|
1,170
|
|
|
1,544
|
|
Other current
assets
|
|
|
670
|
|
|
21,513
|
|
Total current
assets
|
|
|
120,385
|
|
|
138,435
|
|
Property and
equipment, net
|
|
|
2,605,602
|
|
|
2,958,415
|
|
Investments in
unconsolidated affiliates
|
|
|
303,302
|
|
|
433,642
|
|
Other assets,
net
|
|
|
12,920
|
|
|
15,925
|
|
Total
assets
|
|
$
|
3,042,209
|
|
|
3,546,417
|
|
|
|
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–Antero Resources
|
|
$
|
6,459
|
|
|
4,141
|
|
Accounts payable–third
party
|
|
|
8,642
|
|
|
21,372
|
|
Accrued
liabilities
|
|
|
106,006
|
|
|
72,121
|
|
Asset retirement
obligations
|
|
|
—
|
|
|
1,817
|
|
Other current
liabilities
|
|
|
209
|
|
|
235
|
|
Total current
liabilities
|
|
|
121,316
|
|
|
99,686
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
1,196,000
|
|
|
1,632,147
|
|
Contingent acquisition
consideration
|
|
|
208,014
|
|
|
114,995
|
|
Asset retirement
obligations
|
|
|
—
|
|
|
5,791
|
|
Other
|
|
|
410
|
|
|
2,290
|
|
Total
liabilities
|
|
|
1,525,740
|
|
|
1,854,909
|
|
|
|
|
|
|
|
|
|
Partners'
capital:
|
|
|
|
|
|
|
|
Common
unitholders–public (88,059 and 88,452 units issued and outstanding
at December 31, 2017 and 2018 respectively)
|
|
|
1,708,379
|
|
|
1,792,011
|
|
Common
unitholder–Antero Resources (98,870 units issued and outstanding at
December 31, 2017 and 2018)
|
|
|
(215,682)
|
|
|
(143,995)
|
|
General
partner
|
|
|
23,772
|
|
|
43,492
|
|
Total partners'
capital
|
|
|
1,516,469
|
|
|
1,691,508
|
|
Total liabilities and
partners' capital
|
|
$
|
3,042,209
|
|
|
3,546,417
|
|
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated
Statements of Operations and Comprehensive Income
|
Three Months Ended
December 31, 2017 and 2018
|
(In thousands,
except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
105,527
|
|
|
161,051
|
|
Water handling and
treatment–Antero Resources
|
|
|
104,805
|
|
|
120,431
|
|
Water handling and
treatment–third party
|
|
|
—
|
|
|
269
|
|
Total
revenue
|
|
|
210,332
|
|
|
281,751
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
69,646
|
|
|
92,069
|
|
General and
administrative (including $6,847 and $4,467 of equity-based
compensation in 2017 and 2018, respectively)
|
|
|
15,250
|
|
|
16,662
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
—
|
|
Depreciation
|
|
|
30,958
|
|
|
22,692
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
3,804
|
|
|
(104,860)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
34
|
|
Total operating
expenses
|
|
|
143,089
|
|
|
26,597
|
|
Operating
income
|
|
|
67,243
|
|
|
255,154
|
|
Interest expense,
net
|
|
|
(10,395)
|
|
|
(18,993)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
7,307
|
|
|
12,448
|
|
Net income and
comprehensive income
|
|
|
64,155
|
|
|
248,609
|
|
Net income
attributable to incentive distribution rights
|
|
|
(23,772)
|
|
|
(43,492)
|
|
Limited partners'
interest in net income
|
|
$
|
40,383
|
|
|
205,117
|
|
|
|
|
|
|
|
|
|
Net income per
limited partner unit–basic
|
|
$
|
0.22
|
|
|
1.10
|
|
Net income per
limited partner unit–diluted
|
|
$
|
0.22
|
|
|
1.09
|
|
|
|
|
|
|
|
|
|
Weighted average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
186,788
|
|
|
187,194
|
|
Diluted
|
|
|
187,122
|
|
|
187,525
|
|
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated
Statements of Operations and Comprehensive Income
|
Years Ended
December 31, 2017 and 2018
|
(In thousands,
except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
396,202
|
|
|
520,566
|
|
Water handling and
treatment–Antero Resources
|
|
|
376,031
|
|
|
506,449
|
|
Gathering and
compression–third party
|
|
|
264
|
|
|
—
|
|
Water handling and
treatment–third party
|
|
|
—
|
|
|
924
|
|
Gain on sale of
assets–Antero Resources
|
|
|
—
|
|
|
583
|
|
Total
revenue
|
|
|
772,497
|
|
|
1,028,522
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
232,538
|
|
|
316,423
|
|
General and
administrative (including $27,283 and $21,073 of equity-based
compensation in 2017 and 2018, respectively)
|
|
|
58,812
|
|
|
61,629
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
5,771
|
|
Depreciation
|
|
|
119,562
|
|
|
130,013
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
13,476
|
|
|
(93,019)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
135
|
|
Total operating
expenses
|
|
|
447,819
|
|
|
420,952
|
|
Operating
income
|
|
|
324,678
|
|
|
607,570
|
|
Interest expense,
net
|
|
|
(37,557)
|
|
|
(61,906)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
20,194
|
|
|
40,280
|
|
Net income and
comprehensive income
|
|
|
307,315
|
|
|
585,944
|
|
Net income
attributable to incentive distribution rights
|
|
|
(69,720)
|
|
|
(142,906)
|
|
Limited partners'
interest in net income
|
|
$
|
237,595
|
|
|
443,038
|
|
|
|
|
|
|
|
|
|
Net income per
limited partner unit–basic
|
|
$
|
1.28
|
|
|
2.37
|
|
Net income per
limited partner unit–diluted
|
|
$
|
1.28
|
|
|
2.36
|
|
|
|
|
|
|
|
|
|
Weighted average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
185,630
|
|
|
187,048
|
|
Diluted
|
|
|
186,083
|
|
|
187,398
|
|
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated
Results of Segment Operations
|
Three Months
Ended December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
|
|
|
|
|
|
|
Gathering and
|
|
Handling
and
|
|
Consolidated
|
|
(in
thousands)
|
|
Processing
|
|
Treatment
|
|
Total
|
|
Three months ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
105,527
|
|
|
104,805
|
|
|
210,332
|
|
Total
revenues
|
|
|
105,527
|
|
|
104,805
|
|
|
210,332
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
10,655
|
|
|
58,991
|
|
|
69,646
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
5,365
|
|
|
3,038
|
|
|
8,403
|
|
Equity-based
compensation
|
|
|
4,793
|
|
|
2,054
|
|
|
6,847
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
—
|
|
|
23,431
|
|
Depreciation
|
|
|
22,599
|
|
|
8,359
|
|
|
30,958
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
—
|
|
|
3,804
|
|
|
3,804
|
|
Total
expenses
|
|
|
66,843
|
|
|
76,246
|
|
|
143,089
|
|
Operating
income
|
|
$
|
38,684
|
|
|
28,559
|
|
|
67,243
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment and
consolidated Adjusted EBITDA
|
|
$
|
99,582
|
|
|
42,776
|
|
|
142,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
161,051
|
|
|
120,431
|
|
|
281,482
|
|
Revenue–third-party
|
|
|
—
|
|
|
269
|
|
|
269
|
|
Total
revenues
|
|
|
161,051
|
|
|
120,700
|
|
|
281,751
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
13,153
|
|
|
78,916
|
|
|
92,069
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
9,029
|
|
|
3,166
|
|
|
12,195
|
|
Equity-based
compensation
|
|
|
3,440
|
|
|
1,027
|
|
|
4,467
|
|
Depreciation
|
|
|
9,748
|
|
|
12,944
|
|
|
22,692
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
—
|
|
|
(104,860)
|
|
|
(104,860)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
34
|
|
|
34
|
|
Total
expenses
|
|
|
35,370
|
|
|
(8,773)
|
|
|
26,597
|
|
Operating
income
|
|
$
|
125,681
|
|
|
129,473
|
|
|
255,154
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment and
consolidated Adjusted EBITDA
|
|
$
|
155,624
|
|
|
38,618
|
|
|
194,242
|
|
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated
Results of Segment Operations
|
Years Ended
December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
|
|
|
|
|
|
|
Gathering and
|
|
Handling
and
|
|
Consolidated
|
|
(in
thousands)
|
|
Processing
|
|
Treatment
|
|
Total
|
|
Year ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
396,202
|
|
|
376,031
|
|
|
772,233
|
|
Revenue–third-party
|
|
|
264
|
|
|
—
|
|
|
264
|
|
Total
revenues
|
|
|
396,466
|
|
|
376,031
|
|
|
772,497
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
39,251
|
|
|
193,287
|
|
|
232,538
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
20,607
|
|
|
10,922
|
|
|
31,529
|
|
Equity-based
compensation
|
|
|
19,730
|
|
|
7,553
|
|
|
27,283
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
—
|
|
|
23,431
|
|
Depreciation
|
|
|
86,372
|
|
|
33,190
|
|
|
119,562
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
—
|
|
|
13,476
|
|
|
13,476
|
|
Total
expenses
|
|
|
189,391
|
|
|
258,428
|
|
|
447,819
|
|
Operating
income
|
|
$
|
207,075
|
|
|
117,603
|
|
|
324,678
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment and
consolidated Adjusted EBITDA
|
|
$
|
356,803
|
|
|
171,822
|
|
|
528,625
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
520,566
|
|
|
506,449
|
|
|
1,027,015
|
|
Revenue–third-party
|
|
|
—
|
|
|
924
|
|
|
924
|
|
Gain on sale of
assets–Antero Resources
|
|
|
583
|
|
|
—
|
|
|
583
|
|
Total
revenues
|
|
|
521,149
|
|
|
507,373
|
|
|
1,028,522
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
49,256
|
|
|
267,167
|
|
|
316,423
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
30,091
|
|
|
10,465
|
|
|
40,556
|
|
Equity-based
compensation
|
|
|
16,518
|
|
|
4,555
|
|
|
21,073
|
|
Impairment of property
and equipment
|
|
|
5,771
|
|
|
—
|
|
|
5,771
|
|
Depreciation
|
|
|
83,250
|
|
|
46,763
|
|
|
130,013
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
—
|
|
|
(93,019)
|
|
|
(93,019)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
135
|
|
|
135
|
|
Total
expenses
|
|
|
184,886
|
|
|
236,066
|
|
|
420,952
|
|
Operating
income
|
|
$
|
336,263
|
|
|
271,307
|
|
|
607,570
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment and
consolidated Adjusted EBITDA
|
|
$
|
487,634
|
|
|
229,741
|
|
|
717,375
|
|
ANTERO MIDSTREAM
PARTNERS LP
|
Selected Operating
Data
|
Three Months Ended
December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Amount of
Increase
|
|
Percentage
|
|
($ in thousands,
except realized fees)
|
|
2017
|
|
2018
|
|
or
Decrease
|
|
Change
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
210,332
|
|
|
281,482
|
|
|
71,150
|
|
34
|
%
|
|
Revenue–third-party
|
|
|
—
|
|
|
269
|
|
|
269
|
|
*
|
|
|
Total
revenue
|
|
|
210,332
|
|
|
281,751
|
|
|
71,419
|
|
34
|
%
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
69,646
|
|
|
92,069
|
|
|
22,423
|
|
32
|
%
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
8,403
|
|
|
12,195
|
|
|
3,792
|
|
45
|
%
|
|
Equity-based
compensation
|
|
|
6,847
|
|
|
4,467
|
|
|
(2,380)
|
|
(35)
|
%
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
—
|
|
|
(23,431)
|
|
*
|
|
|
Depreciation
|
|
|
30,958
|
|
|
22,692
|
|
|
(8,266)
|
|
(27)
|
%
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
3,804
|
|
|
(104,860)
|
|
|
(108,664)
|
|
*
|
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
34
|
|
|
34
|
|
*
|
|
|
Total operating
expenses
|
|
|
143,089
|
|
|
26,597
|
|
|
(116,492)
|
|
(81)
|
%
|
|
Operating
income
|
|
|
67,243
|
|
|
255,154
|
|
|
187,911
|
|
279
|
%
|
|
Interest
expense
|
|
|
(10,395)
|
|
|
(18,993)
|
|
|
(8,598)
|
|
83
|
%
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
7,307
|
|
|
12,448
|
|
|
5,141
|
|
70
|
%
|
|
Net income
|
|
$
|
64,155
|
|
|
248,609
|
|
|
184,454
|
|
288
|
%
|
|
Adjusted
EBITDA
|
|
$
|
142,358
|
|
|
194,242
|
|
|
51,884
|
|
36
|
%
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering–low pressure
(MMcf)
|
|
|
157,373
|
|
|
239,392
|
|
|
82,019
|
|
52
|
%
|
|
Gathering–high
pressure (MMcf)
|
|
|
169,464
|
|
|
236,332
|
|
|
66,868
|
|
39
|
%
|
|
Compression
(MMcf)
|
|
|
124,654
|
|
|
203,740
|
|
|
79,086
|
|
63
|
%
|
|
Fresh water delivery
(MBbl)
|
|
|
13,745
|
|
|
12,514
|
|
|
(1,231)
|
|
(9)
|
%
|
|
Treated water
(MBbl)
|
|
|
—
|
|
|
782
|
|
|
782
|
|
*
|
|
|
Other fluid handling
(MBbl)
|
|
|
4,227
|
|
|
5,406
|
|
|
1,179
|
|
28
|
%
|
|
Wells serviced by
fresh water delivery
|
|
|
32
|
|
|
30
|
|
|
(2)
|
|
(6)
|
%
|
|
Gathering–low pressure
(MMcf/d)
|
|
|
1,711
|
|
|
2,602
|
|
|
891
|
|
52
|
%
|
|
Gathering–high
pressure (MMcf/d)
|
|
|
1,842
|
|
|
2,569
|
|
|
727
|
|
39
|
%
|
|
Compression
(MMcf/d)
|
|
|
1,355
|
|
|
2,215
|
|
|
860
|
|
63
|
%
|
|
Fresh water delivery
(MBbl/d)
|
|
|
149
|
|
|
136
|
|
|
(13)
|
|
(9)
|
%
|
|
Treated water
(MBbl/d)
|
|
|
—
|
|
|
9
|
|
|
9
|
|
*
|
|
|
Other fluid handling
(MBbl/d)
|
|
|
46
|
|
|
59
|
|
|
13
|
|
28
|
%
|
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering–low
pressure fee ($/Mcf)
|
|
$
|
0.32
|
|
|
0.32
|
|
|
—
|
|
—
|
%
|
|
Average gathering–high
pressure fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.19
|
|
|
—
|
|
—
|
%
|
|
Average compression
fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.19
|
|
|
—
|
|
—
|
%
|
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.71
|
|
|
3.78
|
|
|
—
|
|
—
|
%
|
|
Average treated water
fee ($/Bbl)
|
|
$
|
—
|
|
|
4.64
|
|
|
4.64
|
|
*
|
|
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing–Joint
Venture (MMcf)
|
|
|
39,124
|
|
|
73,260
|
|
|
34,136
|
|
87
|
%
|
|
Fractionation–Joint
Venture (MBbl)
|
|
|
837
|
|
|
1,718
|
|
|
881
|
|
105
|
%
|
|
Processing–Joint
Venture (MMcf/d)
|
|
|
425
|
|
|
796
|
|
|
371
|
|
87
|
%
|
|
Fractionation–Joint
Venture (MBbl/d)
|
|
|
9
|
|
|
19
|
|
|
10
|
|
111
|
%
|
|
_________________________
|
* Not meaningful or
applicable.
|
ANTERO MIDSTREAM
PARTNERS LP
|
Selected Operating
Data
|
Years Ended
December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Amount of
Increase
|
|
Percentage
|
|
($ in thousands,
except realized fees)
|
|
2017
|
|
2018
|
|
or
Decrease
|
|
Change
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
772,233
|
|
|
1,027,015
|
|
|
254,782
|
|
33
|
%
|
|
Revenue–third-party
|
|
|
264
|
|
|
924
|
|
|
660
|
|
250
|
%
|
|
Gain on sale of
assets–Antero Resources
|
|
|
—
|
|
|
583
|
|
|
583
|
|
*
|
|
|
Total
revenue
|
|
|
772,497
|
|
|
1,028,522
|
|
|
256,025
|
|
33
|
%
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
232,538
|
|
|
316,423
|
|
|
83,885
|
|
36
|
%
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
31,529
|
|
|
40,556
|
|
|
9,027
|
|
29
|
%
|
|
Equity-based
compensation
|
|
|
27,283
|
|
|
21,073
|
|
|
(6,210)
|
|
(23)
|
%
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
5,771
|
|
|
(17,660)
|
|
(75)
|
%
|
|
Depreciation
|
|
|
119,562
|
|
|
130,013
|
|
|
10,451
|
|
9
|
%
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
13,476
|
|
|
(93,019)
|
|
|
(106,495)
|
|
*
|
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
135
|
|
|
135
|
|
*
|
|
|
Total operating
expenses
|
|
|
447,819
|
|
|
420,952
|
|
|
(26,867)
|
|
(6)
|
%
|
|
Operating
income
|
|
|
324,678
|
|
|
607,570
|
|
|
282,892
|
|
87
|
%
|
|
Interest
expense
|
|
|
(37,557)
|
|
|
(61,906)
|
|
|
(24,349)
|
|
65
|
%
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
20,194
|
|
|
40,280
|
|
|
20,086
|
|
99
|
%
|
|
Net income
|
|
$
|
307,315
|
|
|
585,944
|
|
|
278,629
|
|
91
|
%
|
|
Adjusted
EBITDA(1)
|
|
$
|
528,625
|
|
|
717,375
|
|
|
188,750
|
|
36
|
%
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering–low pressure
(MMcf)
|
|
|
605,719
|
|
|
784,079
|
|
|
178,360
|
|
29
|
%
|
|
Gathering–high
pressure (MMcf)
|
|
|
646,054
|
|
|
770,910
|
|
|
124,856
|
|
19
|
%
|
|
Compression
(MMcf)
|
|
|
436,695
|
|
|
634,303
|
|
|
197,608
|
|
45
|
%
|
|
Fresh water delivery
(MBbl)
|
|
|
55,892
|
|
|
71,180
|
|
|
15,288
|
|
27
|
%
|
|
Treated water
(MBbl)
|
|
|
—
|
|
|
2,544
|
|
|
2,544
|
|
*
|
|
|
Other fluid handling
(MBbl)
|
|
|
14,549
|
|
|
18,848
|
|
|
4,299
|
|
30
|
%
|
|
Wells serviced by
fresh water delivery
|
|
|
142
|
|
|
162
|
|
|
20
|
|
14
|
%
|
|
Gathering–low pressure
(MMcf/d)
|
|
|
1,660
|
|
|
2,148
|
|
|
488
|
|
29
|
%
|
|
Gathering–high
pressure (MMcf/d)
|
|
|
1,770
|
|
|
2,112
|
|
|
342
|
|
19
|
%
|
|
Compression
(MMcf/d)
|
|
|
1,196
|
|
|
1,738
|
|
|
542
|
|
45
|
%
|
|
Fresh water delivery
(MBbl/d)
|
|
|
153
|
|
|
195
|
|
|
42
|
|
27
|
%
|
|
Treated water
(MBbl/d)
|
|
|
—
|
|
|
7
|
|
|
7
|
|
*
|
|
|
Other fluid handling
(MBbl/d)
|
|
|
40
|
|
|
52
|
|
|
12
|
|
30
|
%
|
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering–low
pressure fee ($/Mcf)
|
|
$
|
0.32
|
|
|
0.32
|
|
|
—
|
|
—
|
%
|
|
Average gathering–high
pressure fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.19
|
|
|
—
|
|
—
|
%
|
|
Average compression
fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.19
|
|
|
—
|
|
—
|
%
|
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.71
|
|
|
3.78
|
|
|
0.07
|
|
2
|
%
|
|
Average treated water
fee ($/Bbl)
|
|
$
|
—
|
|
|
4.72
|
|
|
4.72
|
|
*
|
|
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing–Joint
Venture (MMcf)
|
|
|
97,276
|
|
|
227,113
|
|
|
129,837
|
|
133
|
%
|
|
Fractionation–Joint
Venture (MBbl)
|
|
|
1,861
|
|
|
4,784
|
|
|
2,923
|
|
157
|
%
|
|
Processing–Joint
Venture (MMcf/d)
|
|
|
267
|
|
|
622
|
|
|
355
|
|
133
|
%
|
|
Fractionation–Joint
Venture (MBbl/d)
|
|
|
5
|
|
|
13
|
|
|
8
|
|
160
|
%
|
|
________________________
|
* Not meaningful or
applicable.
|
ANTERO MIDSTREAM
PARTNERS LP
|
Consolidated
Statements of Cash Flows
|
Years Ended
December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Cash flows provided
by operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
307,315
|
|
|
585,944
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
119,562
|
|
|
130,013
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
13,476
|
|
|
(93,019)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
135
|
|
Impairment of property
and equipment
|
|
|
23,431
|
|
|
5,771
|
|
Equity-based
compensation
|
|
|
27,283
|
|
|
21,073
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(20,194)
|
|
|
(40,280)
|
|
Distributions from
unconsolidated affiliates
|
|
|
20,195
|
|
|
46,415
|
|
Amortization of
deferred financing costs
|
|
|
2,888
|
|
|
2,879
|
|
Gain on sale of
assets–Antero Resources
|
|
|
—
|
|
|
(583)
|
|
Gain on sale of
assets–third-party
|
|
|
—
|
|
|
—
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
|
(41,043)
|
|
|
(10,196)
|
|
Accounts
receivable–third party
|
|
|
70
|
|
|
648
|
|
Prepaid
expenses
|
|
|
(141)
|
|
|
(153)
|
|
Accounts
payable–Antero Resources
|
|
|
3,266
|
|
|
(1,804)
|
|
Accounts payable–third
party
|
|
|
3,003
|
|
|
7,670
|
|
Accrued
liabilities
|
|
|
16,685
|
|
|
3,047
|
|
Net cash provided by
operating activities
|
|
|
475,796
|
|
|
657,560
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Additions to gathering
systems and facilities
|
|
|
(346,217)
|
|
|
(446,270)
|
|
Additions to water
handling and treatment systems
|
|
|
(195,162)
|
|
|
(88,674)
|
|
Investments in
unconsolidated affiliates
|
|
|
(235,004)
|
|
|
(136,475)
|
|
Proceeds from sale of
assets–Antero Resources
|
|
|
—
|
|
|
4,470
|
|
Proceeds from sale of
assets–third party
|
|
|
—
|
|
|
1,680
|
|
Change in other
assets
|
|
|
(3,435)
|
|
|
(3,591)
|
|
Change in other
liabilities
|
|
|
—
|
|
|
2,273
|
|
Net cash used in
investing activities
|
|
|
(779,818)
|
|
|
(666,587)
|
|
Cash flows provided
by financing activities:
|
|
|
|
|
|
|
|
Distributions to
unitholders
|
|
|
(283,950)
|
|
|
(426,452)
|
|
Issuance of senior
notes
|
|
|
—
|
|
|
—
|
|
Borrowings on bank
credit facilities, net
|
|
|
345,000
|
|
|
435,000
|
|
Issuance of common
units, net of offering costs
|
|
|
248,956
|
|
|
—
|
|
Payments of deferred
financing costs
|
|
|
(5,520)
|
|
|
(2,169)
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(5,945)
|
|
|
(5,529)
|
|
Other
|
|
|
(198)
|
|
|
(186)
|
|
Net cash provided by
financing activities
|
|
|
298,343
|
|
|
664
|
|
Net (decrease) in cash
and cash equivalents
|
|
|
(5,679)
|
|
|
(8,363)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
14,042
|
|
|
8,363
|
|
Cash and cash
equivalents, end of period
|
|
$
|
8,363
|
|
|
—
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
46,666
|
|
|
62,844
|
|
Increase (decrease) in
accrued capital expenditures and accounts payable for property and
equipment
|
|
$
|
16,338
|
|
|
(32,563)
|
|
ANTERO
MIDSTREAM GP LP
|
Consolidated Balance Sheets
|
December 31, 2017 and
2018
|
(In thousands, except number of shares
and units)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2017
|
|
2018
|
|
Assets
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
5,987
|
|
|
2,822
|
|
Prepaid expenses and
other current assets
|
|
|
—
|
|
|
87
|
|
Total current
assets
|
|
|
5,987
|
|
|
2,909
|
|
Investment in Antero
Midstream Partners LP
|
|
|
23,772
|
|
|
43,492
|
|
Deferred tax
asset
|
|
|
—
|
|
|
1,304
|
|
Total
assets
|
|
$
|
29,759
|
|
|
47,705
|
|
|
|
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–affiliate
|
|
|
57
|
|
|
731
|
|
Accounts payable and
accrued liabilities
|
|
|
236
|
|
|
435
|
|
Taxes
payable
|
|
|
13,858
|
|
|
15,678
|
|
Total current
liabilities
|
|
|
14,151
|
|
|
16,844
|
|
Partners'
capital:
|
|
|
|
|
|
|
|
Common
shareholders–public (186,181,975 shares and 186,219,438 shares
issued and outstanding at December 31, 2017 and 2018,
respectively)
|
|
|
(19,866)
|
|
|
(41,969)
|
|
IDR LLC Series B units
(32,875 and 65,745 units vested at December 31, 2017 and 2018,
respectively)
|
|
|
35,474
|
|
|
72,830
|
|
Total partners'
capital
|
|
|
15,608
|
|
|
30,861
|
|
Total liabilities and
partners' capital
|
|
$
|
29,759
|
|
|
47,705
|
|
ANTERO MIDSTREAM
GP LP
|
Consolidated
Statements of Operations and Comprehensive Income
|
Three Months
Ended December 31, 2017 and 2018
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Equity in earnings of
Antero Midstream Partners LP
|
|
$
|
23,772
|
|
|
43,492
|
|
Total
income
|
|
|
23,772
|
|
|
43,492
|
|
General and
administrative expense
|
|
|
279
|
|
|
3,183
|
|
Equity-based
compensation
|
|
|
8,662
|
|
|
8,792
|
|
Total operating
expenses
|
|
|
8,941
|
|
|
11,975
|
|
Operating
income
|
|
|
14,831
|
|
|
31,517
|
|
Interest expense,
net
|
|
|
—
|
|
|
(54)
|
|
Income before income
taxes
|
|
|
14,831
|
|
|
31,463
|
|
Provision for income
taxes
|
|
|
(8,924)
|
|
|
(10,075)
|
|
Net income and
comprehensive income
|
|
|
5,907
|
|
|
21,388
|
|
Net income
attributable to vested Series B units
|
|
|
(784)
|
|
|
(3,719)
|
|
Net income
attributable to common shareholders
|
|
$
|
5,123
|
|
|
17,669
|
|
|
|
|
|
|
|
|
|
Net income per common
share–basic
|
|
$
|
0.03
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding–basic and diluted
|
|
|
186,181
|
|
|
186,218
|
|
ANTERO MIDSTREAM
GP LP
|
Consolidated
Statements of Operations and Comprehensive Income
|
Years Ended
December 31, 2017 and 2018
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Years ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Equity in earnings of
Antero Midstream Partners LP
|
|
$
|
69,720
|
|
|
142,906
|
|
Total
income
|
|
|
69,720
|
|
|
142,906
|
|
General and
administrative expense
|
|
|
6,201
|
|
|
8,740
|
|
Equity-based
compensation
|
|
|
34,933
|
|
|
35,111
|
|
Total operating
expenses
|
|
|
41,134
|
|
|
43,851
|
|
Operating
income
|
|
|
28,586
|
|
|
99,055
|
|
Interest expense,
net
|
|
|
—
|
|
|
(136)
|
|
Income before income
taxes
|
|
|
28,586
|
|
|
98,919
|
|
Provision for income
taxes
|
|
|
(26,261)
|
|
|
(32,311)
|
|
Net income and
comprehensive income
|
|
|
2,325
|
|
|
66,608
|
|
Net income
attributable to vested Series B units
|
|
|
(784)
|
|
|
(5,236)
|
|
Pre-IPO net income
attributed to parent
|
|
|
4,939
|
|
|
—
|
|
Net income
attributable to common shareholders
|
|
$
|
6,480
|
|
|
61,372
|
|
|
|
|
|
|
|
|
|
Net income per common
share–basic and diluted
|
|
$
|
0.03
|
|
|
0.33
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding–basic and diluted
|
|
|
186,176
|
|
|
186,203
|
|
ANTERO MIDSTREAM
GP LP
|
Consolidated
Statements of Cash Flows
|
Years Ended
December 31, 2017 and 2018
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
|
2017
|
|
2018
|
|
Cash flows provided
by operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,325
|
|
|
66,608
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Equity in earnings of
Antero Midstream Partners LP
|
|
|
(69,720)
|
|
|
(142,906)
|
|
Distributions received
from Antero Midstream Partners LP
|
|
|
53,491
|
|
|
123,186
|
|
Amortization of
deferred financing costs
|
|
|
—
|
|
|
148
|
|
Equity-based
compensation
|
|
|
34,933
|
|
|
35,111
|
|
Deferred income
taxes
|
|
|
—
|
|
|
(1,304)
|
|
Changes in current
assets and liabilities:
|
|
|
|
|
|
|
|
Prepaid expenses and
other current assets
|
|
|
—
|
|
|
(5)
|
|
Accounts
payable–affiliate
|
|
|
57
|
|
|
674
|
|
Accounts payable and
accrued liabilities
|
|
|
(190)
|
|
|
199
|
|
Taxes
payable
|
|
|
7,184
|
|
|
1,820
|
|
Net cash provided by
operating activities
|
|
|
28,080
|
|
|
83,531
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
—
|
|
|
—
|
|
Cash flows used in
financing activities
|
|
|
|
|
|
|
|
Distributions to
Antero Resources Investment LLC
|
|
|
(15,691)
|
|
|
—
|
|
Distributions to
shareholders
|
|
|
(16,011)
|
|
|
(84,166)
|
|
Distributions to
Series B unitholders
|
|
|
—
|
|
|
(2,300)
|
|
Payments of deferred
financing costs
|
|
|
—
|
|
|
(230)
|
|
Net cash used in
financing activities
|
|
|
(31,702)
|
|
|
(86,696)
|
|
Net increase
(decrease) in cash
|
|
|
(3,622)
|
|
|
(3,165)
|
|
Cash, beginning of
period
|
|
|
9,609
|
|
|
5,987
|
|
Cash, end of
period
|
|
$
|
5,987
|
|
|
2,822
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for taxes
|
|
$
|
(19,077)
|
|
$
|
(31,795)
|
|
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