Antero Midstream Corp
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
AM$18.98-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-24.
0001558370-24-005600
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001558370-24-010481
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 73 current paragraphs.
35 unchanged; 15 reworded; 16 added; 0 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 14 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Asset Acquisition
Current report
On May 1, 2024, we acquired certain Marcellus gas gathering and compression assets from Summit for $70 million in cash, before closing adjustments, with an effective date of April 1, 2024. This acquisition was funded with our operating cash flow. The acquired assets include 48 miles of high pressure gathering pipelines and two compressor stations with 100 MMcf/d of compression capacity. These assets were already interconnected to our low pressure and high pressure gas gathering systems at the time of acquisition and service Antero Resources’ production. Currently, we do not expect to make any significant capital investments related to the acquired assets. See Note 6—Property and Equipment to the unaudited condensed consolidated financial statements for more information.
Current report
Credit Facility
Current report
On July 30, 2024, we entered into an amendment and restatement of our senior secured revolving credit facility with lender commitments of $1.25 billion, which matures on July 30, 2029 (subject to certain terms and conditions related to the outstanding balances to our 2027, 2028 and 2029 notes). See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.
Current report
Repurchase of Senior Notes
Current report
During the six months ended June 30, 2024, we repurchased or otherwise fully redeemed $550 million aggregate principal amount of our 2026 Notes at a weighted average premium of 101.975% of the principal amount thereof, plus accrued and unpaid interest. The 2026 Notes were retired as of May 16, 2024. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.
Current report
*Loss on asset sale.*Loss on asset sale of $6 million for the three months ended June 30, 2023 was primarily due to sales of miscellaneous equipment.
Current report
Loss on early extinguishment of debt. During the three months ended June 30, 2024, we repurchased or redeemed the remaining $548 million aggregate principal amount of our 2026 Notes at a weighted average premium of 101.974% of the principal amount thereof, plus accrued and unpaid interest, and recognized a loss on early debt extinguishment of $14 million. There was no loss on early extinguishment of debt for the three months ended June 30, 2023. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.
Current report
Income tax expense. Income tax expense remained relatively consistent for the three months ended June 30, 2023 and 2024 at $29 million and $28 million, respectively, which reflects effective tax rates of 25.1% and 24.8%, respectively.
Current report
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2024
Current report
Gathering and Processing
Current report
Water Handling
Current report
Direct operating expenses. Direct operating expenses remained consistent at $110 million for the six months ended June 30, 2023 and 2024, respectively. Gathering and processing direct operating expenses increased by 6%, from $49 million for the six months ended June 30, 2023 to $52 million for the six months ended June 30, 2024 primarily due to increased gathering and compression volumes between periods and our acquisition of two compressor stations and 48 miles of high pressure gathering lines during the second quarter of 2024. Water handling direct operating expenses decreased by 5%, from $61 million for the six months ended June 30, 2023 to $58 million for the six months ended June 30, 2024 primarily due to lower water handling and fresh water volumes between periods, partially offset by increased pipeline maintenance, repair and monitoring activities between periods, partially offset by decreased fresh water delivery volumes during the six months ended June 30, 2024.
Current report
*Loss on asset sale.*Loss on asset sale of $6 million for the six months ended June 30, 2023 was primarily due to sales of miscellaneous equipment.
Current report
Interest expense. Interest expense decreased by 4%, from $110 million for the six months ended June 30, 2023 to $105 million for the six months ended June 30, 2024 primarily due to lower Prior Credit Facility borrowings between periods and the repurchase and redemption of the remaining $550 million principal amount of the 2026 Notes during the six months ended June 30, 2024, partially offset by the issuance of $600 million principal amount of 2032 Notes during the six months ended June 30, 2024.
Current report
Loss on early extinguishment of debt. During the six months ended June 30, 2024, we repurchased or otherwise fully redeemed the $550 million aggregate principal amount of our 2026 Notes at a weighted average premium of 101.975% of the principal amount thereof, plus accrued and unpaid interest, and recognized a loss on early debt extinguishment of $14 million. There was no loss on early extinguishment of debt for the six months ended June 30, 2023. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.
Reworded paragraphs (15)
Previous wording
On February 13, 2024, our Board authorized a share repurchase program that allows us to repurchase up to $500 million of shares of our outstanding common stock. The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by us at our discretion and will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and applicable legal requirements. The exact number of shares to be repurchased by us is not guaranteed and the program may be suspended, modified or discontinued at any time without prior notice. The 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations enacted as part of the Inflation Reduction Act of 2022 applies to our share repurchase program. During the three months ended March 31, 2024, we did not repurchase any shares under this program.
Current wording
On February 13, 2024, our Board authorized a share repurchase program that allows us to repurchase up to $500 million of shares of our outstanding common stock. The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by us at our discretion and will depend on a variety of factors, including the market price of our common stock, general market and economic conditions and applicable legal requirements. The exact number of shares to be repurchased by us is not guaranteed and the program may be suspended, modified or discontinued at any time without prior notice. The 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations enacted as part of the Inflation Reduction Act of 2022 applies to our share repurchase program. During the three and six months ended June 30, 2024, we did not repurchase any shares under this program.
Previous wording
Prices for natural gas decreased significantly while prices for NGLs and oil remained consistent during the three months ended March 31, 2024 as compared to the same period of 2023. While substantially all of our revenues are based on fixed-fee contracts that are not directly impacted by changes in commodity prices, commodity price changes do impact the revenues and cash flows of Antero Resources, and Antero Resources’ drilling and development plan does have a direct impact on our gathering, compression and water handling services, revenues and cash flows. In the current economic environment, we expect that commodity prices for some or all of the commodities produced by Antero Resources could remain volatile. However, due to Antero Resources’ improved liquidity and leverage position as compared to historical levels, we do not expect to experience significant variability in our throughput volumes resulting from volatile commodity prices.
Current wording
Prices for natural gas decreased significantly while prices for NGLs and oil increased during the six months ended June 30, 2024 as compared to the same period of 2023. While substantially all of our revenues are based on fixed-fee contracts that are not directly impacted by changes in commodity prices, commodity price changes do impact the revenues and cash flows of Antero Resources, and Antero Resources’ drilling and development plan does have a direct impact on our gathering, compression and water handling services, revenues and cash flows. In the current economic environment, we expect that commodity prices for some or all of the commodities produced by Antero Resources could remain volatile. However, due to Antero Resources’ improved liquidity and leverage position as compared to historical levels, we do not expect to experience significant variability in our throughput volumes resulting from volatile commodity prices.
Previous wording
The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through the first quarter of 2024. For example, the Consumer Price Index (“CPI”) for all urban consumers increased 5% from March 2022 to March 2023 and an additional 3% from March 2023 to March 2024 as compared to the Federal Reserve’s stated goal of 2%. In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis. Between March 2022 and March 2024, the Federal Reserve increased the federal funds interest rate by 5.25%. While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate. See “—Results of Operations” for additional information.
Current wording
The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through the second quarter of 2024. For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3% from June 2022 to June 2023 and an additional 3% from June 2023 to June 2024 as compared to the Federal Reserve’s stated goal of 2%. In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis. Between March 2022 and June 2024, the Federal Reserve increased the federal funds interest rate by 5.25%. While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate. See “—Results of Operations” for additional information.
Previous wording
Revenues. Total revenues increased by 8%, from $259 million for the three months ended March 31, 2023 to $279 million for the three months ended March 31, 2024. Total revenues included amortization of customer relationships of $18 million for each of the three months ended March 31, 2023 and 2024. Gathering and processing revenues increased by 15%, from $190 million for the three months ended March 31, 2023 to $218 million for the three months ended March 31, 2024. Water handling revenues decreased by 12%, from $69 million for the three months ended March 31, 2023 to $61 million for the three months ended March 31, 2024. These fluctuations primarily resulted from the following:
Current wording
Revenues. Total revenues increased by 4%, from $258 million for the three months ended June 30, 2023 to $270 million for the three months ended June 30, 2024. Total revenues included amortization of customer relationships of $18 million for the three months ended June 30, 2023 and 2024. Gathering and processing revenues increased by 9%, from $202 million for the three months ended June 30, 2023 to $220 million for the three months ended June 30, 2024. Water handling revenues decreased by 11%, from $56 million for the three months ended June 30, 2023 to $50 million for the three months ended June 30, 2024. These fluctuations primarily resulted from the following:
Previous wording
Direct operating expenses. Direct operating expenses decreased by 7%, from $58 million for the three months ended March 31, 2023 to $54 million for the three months ended March 31, 2024. Gathering and processing direct operating expenses increased by 8%, from $24 million for the three months ended March 31, 2023 to $26 million for the three months ended March 31, 2024 primarily due to increased low pressure, compression and high pressure volumes between periods. Water handling direct operating expenses decreased by 18%, from $34 million for the three months ended March 31, 2023 to $28 million for the three months ended March 31, 2024 primarily due to lower water trucking and fresh water volumes between periods.
Current wording
Direct operating expenses. Direct operating expenses increased by 7%, from $53 million for the three months ended June 30, 2023 to $56 million for the three months ended June 30, 2024. Gathering and processing direct operating expenses increased by 4%, from $25 million for the three months ended June 30, 2023 to $26 million for the three months ended June 30, 2024 primarily due to our acquisition of two compressor stations and 48 miles of high pressure gathering lines during the second quarter of 2024 and increased gathering volumes between periods. Water handling direct operating expenses increased by 10%, from $28 million for the three months ended June 30, 2023 to $30 million for the three months ended June 30, 2024 primarily due to increased pipeline maintenance, repair and monitoring activities and increased other fluid handling volumes between periods, partially offset by decreased fresh water delivery volumes during the three months ended June 30, 2024.
Previous wording
*Equity-based compensation expenses.*Equity-based compensation expenses increased from $6 million for the three months ended March 31, 2023 to $9 million for the three months ended March 31, 2024 primarily due to annual awards granted during the first quarter of 2024. Our equity awards vest over three or four year service periods. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for additional information.
Current wording
*Equity-based compensation expenses.*Equity-based compensation expenses increased from $8 million for the three months ended June 30, 2023 to $12 million for the three months ended June 30, 2024 primarily due to annual equity-based awards granted during the first quarter of 2024. Our equity-based awards vest over three or four year service periods. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for additional information.
Previous wording
Depreciation expense. Depreciation expense increased by 5%, from $35 million for the three months ended March 31, 2023 to $37 million for the three months ended March 31, 2024. This increase was primarily due to $1 million related to assets placed in service between periods and $1 million of higher expense related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations between periods.
Current wording
Depreciation expense. Depreciation expense increased by 7%, from $35 million for the three months ended June 30, 2023 to $38 million for the three months ended June 30, 2024. This increase was primarily due to $2 million related to assets placed in service or acquired between periods and $1 million of higher expense related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations during the three months ended June 30, 2024.
Previous wording
Interest expense. Interest expense decreased by 2%, from $55 million for the three months ended March 31, 2023 to $53 million for the three months ended March 31, 2024 primarily due to the payoff of our Credit Facility between periods, partially offset by the issuance of $600 million principal amount of 2032 Notes and increased interest rates on our Credit Facility borrowings during the three months ended March 31, 2024 due to higher benchmark rates.
Current wording
Interest expense. Interest expense decreased by 6%, from $55 million for the three months ended June 30, 2023 to $52 million for the three months ended June 30, 2024 primarily due to lower Prior Credit Facility borrowings between periods and the repurchase and redemption of the remaining $548 million principal amount of the 2026 Notes during the second quarter of 2024, partially offset by the issuance of $600 million principal amount of 2032 Notes during the first quarter of 2024.
Previous wording
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by 13%, from $24 million for the three months ended March 31, 2023 to $28 million for the three months ended March 31, 2024 primarily due to increased processing and fractionation volumes and higher processing and fractionation fees as a result ofannual CPI-based adjustments between periods.
Current wording
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by 6%, from $26 million for the three months ended June 30, 2023 to $28 million for the three months ended June 30, 2024 primarily due to higher processing and fractionation fees as a result ofannual CPI-based adjustments and increased fractionation volumes between periods.
Previous wording
*General and administrative (excluding equity-based compensation) expenses.*General and administrative expenses (excluding equity-based compensation expense) remained relatively consistent at $11 million and $12 million for the three months ended March 31, 2023 and 2024, respectively.
Current wording
*General and administrative (excluding equity-based compensation) expenses.*General and administrative expenses (excluding equity-based compensation expense) remained relatively consistent at $21 million and $22 million for the six months ended June 30, 2023 and 2024, respectively.
Previous wording
Income tax expense. Income tax expense increased by 15%, from $32 million for the three months ended March 31, 2023 to $36 million for the three months ended March 31, 2024, which reflects effective tax rates of 26.8% and 26.0%, respectively. This income tax expense increase was primarily due to higher pre-tax income between periods.
Current wording
Income tax expense. Income tax expense increased by 7%, from $61 million for the six months ended June 30, 2023 to $65 million for the six months ended June 30, 2024, which reflects effective tax rates of 25.9% and 25.5%, respectively. The increase in income tax expense between periods is primarily due to higher income before income taxes during the six months ended June 30, 2024.
Previous wording
The following table summarizes our cash flows for the three months ended March 31, 2023 and 2024:
Current wording
The following table summarizes our cash flows for the six months ended June 30, 2023 and 2024:
Previous wording
Operating activities. Net cash provided by operating activities was $183 million and $211 million for the three months ended March 31, 2023 and 2024, respectively. The increase in cash flows provided by operations between periods was primarily the result of higher revenues in the gathering and processing segment, lower direct operating expenses and changes in working capital, partially offset by lower revenues in the water handling segment.
Current wording
Operating activities. Net cash provided by operating activities was $368 million and $426 million for the six months ended June 30, 2023 and 2024, respectively. The increase in cash flows provided by operations between periods was primarily due to higher gathering and processing revenues, changes in working capital and higher distributions from our equity method investments during the six months ended June 30, 2024, partially offset by lower water handling revenues between periods.
Previous wording
Investing activities. Net cash flows used in investing activities was $42 million and $37 million for the three months ended March 31, 2023 and 2024, respectively. The decrease in cash flows used in investing activities between periods was primarily due to decreased capital spending for our water handling systems of $6 million primarily as a result of fewer capital projects between periods.
Current wording
Investing activities. Net cash flows used in investing activities was $84 million and $148 million for the six months ended June 30, 2023 and 2024, respectively. The increase in cash flows used in investing activities between periods was primarily due to our acquisition of gathering and compression assets during the second quarter of 2024 of $70 million, before closing adjustments, partially offset by decreased capital spending for our water handling systems of $9 million primarily as a result of fewer capital projects between periods.
Previous wording
Financing activities. Net cash used in financing activities was $141 million and $147 million for the three months ended March 31, 2023 and 2024, respectively. The increase in cash flows used in financing activities between periods was primarily due to higher net repayments on our Credit Facility of $599 million, deferred financing costs payments for the 2032 Notes of $7 million and repurchases of the 2026 Notes of $2 million, partially offset by the 2032 Notes issuance proceeds of $600 million.
Current wording
Financing activities. Net cash used in financing activities was $284 million and $278 million for the six months ended June 30, 2023 and 2024, respectively. The decrease in cash flows used in financing activities between periods was primarily due to the issuance of the 2032 Notes of $600 million, partially offset by our repurchases and redemption of the 2026 Notes of $561 million, higher net repayments on our Prior Credit Facility of $18 million, deferred financing costs payments for the 2032 Notes of $7 million and higher tax withholdings for the settlement of equity-based compensation awards of $6 million between periods.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
*General and administrative (excluding equity-based compensation) expenses.*General and administrative expenses (excluding equity-based compensation expense) remained consistent at $10 million for the three months ended June 30, 2023 and 2024, respectively.
Current report — wording carried from elsewhere
The operating results of our reportable segments are as follows:
Current report — wording carried from elsewhere
The operating data for Antero Midstream is as follows:
Current report — wording carried from elsewhere
Revenues. Total revenues increased by 6%, from $518 million for the six months ended June 30, 2023 to $549 million for the six months ended June 30, 2024. Total revenues included amortization of customer relationships of $35 million for each of the six months ended June 30, 2023 and 2024. Gathering and processing revenues increased by 12%, from $392 million for the six months ended June 30, 2023 to $438 million for the six months ended June 30, 2024. Water handling revenues decreased by 12%, from $126 million for the six months ended June 30, 2023 to $111 million for the six months ended June 30, 2024. These fluctuations primarily resulted from the following:
Current report — wording carried from elsewhere
*Equity-based compensation expenses.*Equity-based compensation expenses increased from $15 million for the six months ended June 30, 2023 to $21 million for the six months ended June 30, 2024 primarily due to annual equity-based awards granted during the first quarter of 2024. Our equity-based awards vest over three or four year service periods. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for additional information.
Current report — wording carried from elsewhere
Depreciation expense. Depreciation expense increased by 6%, from $70 million for the six months ended June 30, 2023 to $75 million for the six months ended June 30, 2024. This increase was primarily due to $3 million related to assets placed in service or acquired between periods and $2 million of higher expense related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations during the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by 9%, from $50 million for the six months ended June 30, 2023 to $55 million for the six months ended June 30, 2024 primarily due to increased processing and fractionation volumes and higher processing and fractionation fees as a result ofannual CPI-based adjustments between periods.