Antero Midstream Corp

Previous wording

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 wording

During the nine months ended September 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.

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 and six months ended June 30, 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 nine months ended September 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 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.

Current wording

Benchmark prices for natural gas decreased significantly, while benchmark prices for oil remained consistent and benchmark prices for NGLs increased during the nine months ended September 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 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.

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 third quarter of 2024. For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3.7% from September 2022 to September 2023 and an additional 2.4% from September 2023 to September 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 July 2023, the Federal Reserve increased the federal funds interest rate by 5.25%. During the three months ended September 30, 2024, inflation rates began to approach the Federal Reserve’s stated goal of 2%, and the Federal Reserve decreased the federal funds rate by 0.5% in September 2024. 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 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:

Current wording

Revenues. Total revenues increased by 2%, from $264 million for the three months ended September 30, 2023 to $270 million for the three months ended September 30, 2024. Total revenues included amortization of customer relationships of $18 million for the three months ended September 30, 2023 and 2024. Gathering and processing revenues increased by 10%, from $206 million for the three months ended September 30, 2023 to $226 million for the three months ended September 30, 2024. Water handling revenues decreased by 24%, from $58 million for the three months ended September 30, 2023 to $44 million for the three months ended September 30, 2024. These fluctuations primarily resulted from the following:

Previous 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.

Current wording

Direct operating expenses. Direct operating expenses remained consistent at $52 million for the three months ended September 30, 2023 and 2024. Gathering and processing direct operating expenses increased by 4%, from $24 million for the three months ended September 30, 2023 to $25 million for the three months ended September 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. Water handling direct operating expenses decreased by 4%, from $28 million for the three months ended September 30, 2023 to $27 million for the three months ended September 30, 2024 primarily due to decreased fresh water delivery volumes during the three months ended September 30, 2024, partially offset by increased pipeline maintenance, repair and monitoring activities between periods.

Previous wording

*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 wording

*General and administrative (excluding equity-based compensation) expenses.*General and administrative expenses (excluding equity-based compensation expense) increased by 18% from $9 million for the three months ended September 30, 2023 to $11 million for the three months ended September 30, 2024 primarily due to higher costs allocated to us from Antero Resources.

Previous 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.

Current wording

Interest expense. Interest expense decreased by 6%, from $55 million for the three months ended September 30, 2023 to $52 million for the three months ended September 30, 2024 primarily due to lower Credit Facility borrowings between periods and lower interest expense on our Senior Notes due to the repurchase and redemption of the $550 million principal amount of the 2026 Notes during the first and second quarters 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 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.

Current wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates remained relatively consistent at $27 million and $28 million for the three months ended September 30, 2023 and 2024, respectively.

Previous wording

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 wording

Income tax expense. Income tax expense remained relatively consistent for the three months ended September 30, 2023 and 2024 at $37 million and $38 million, respectively, which reflects effective tax rates of 27.3% and 27.7%, respectively.

Previous wording

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2024

Current wording

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2024

Previous wording

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 wording

Revenues. Total revenues increased by 5%, from $782 million for the nine months ended September 30, 2023 to $819 million for the nine months ended September 30, 2024. Total revenues included amortization of customer relationships of $53 million for each of the nine months ended September 30, 2023 and 2024. Gathering and processing revenues increased by 11%, from $598 million for the nine months ended September 30, 2023 to $664 million for the nine months ended September 30, 2024. Water handling revenues decreased by 16%, from $184 million for the nine months ended September 30, 2023 to $155 million for the nine months ended September 30, 2024. These fluctuations primarily resulted from the following:

Previous wording

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 wording

Direct operating expenses. Direct operating expenses remained consistent at $162 million for the nine months ended September 30, 2023 and 2024. Gathering and processing direct operating expenses increased by 6%, from $73 million for the nine months ended September 30, 2023 to $77 million for the nine months ended September 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 $89 million for the nine months ended September 30, 2023 to $85 million for the nine months ended September 30, 2024 primarily due to lower fresh water volumes and decreased wastewater handling costs between periods, partially offset by increased pipeline maintenance, repair and monitoring activities.

Previous wording

*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 wording

*Equity-based compensation expenses.*Equity-based compensation expenses increased from $23 million for the nine months ended September 30, 2023 to $33 million for the nine months ended September 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 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 wording

Depreciation expense. Depreciation expense increased by 6%, from $101 million for the nine months ended September 30, 2023 to $107 million for the nine months ended September 30, 2024. This increase was primarily due to $3 million related to assets placed in service, $2 million of higher expense related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations during the nine months ended September 30, 2024 and $1 million for our assets acquired during the second quarter of 2024.

Previous wording

*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 wording

*Loss on asset sale.*Loss on asset sale of $6 million and $1 million for the nine months ended September 30, 2023 and 2024, respectively, was primarily due to sales of miscellaneous equipment.

Previous wording

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 wording

Interest expense. Interest expense decreased by 5%, from $165 million for the nine months ended September 30, 2023 to $157 million for the nine months ended September 30, 2024 primarily due to lower Credit Facility borrowings between periods and lower interest expense on our Senior Notes due to the repurchase and redemption of the remaining $550 million principal amount of the 2026 Notes during the nine months ended September 30, 2024, partially offset by the issuance of $600 million principal amount of 2032 Notes during the nine months ended September 30, 2024.

Previous wording

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.

Current wording

Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by 6%, from $78 million for the nine months ended September 30, 2023 to $83 million for the nine months ended September 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.

Previous wording

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.

Current wording

Loss on early extinguishment of debt. During the nine months ended September 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 nine months ended September 30, 2023. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

Previous 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.

Current wording

Income tax expense. Income tax expense increased by 6%, from $97 million for the nine months ended September 30, 2023 to $103 million for the nine months ended September 30, 2024, which reflects effective tax rates of 26.4% and 26.3%, respectively. The increase in income tax expense between periods is primarily due to higher income before income taxes during the nine months ended September 30, 2024.

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2023 and 2024:

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2023 and 2024:

Previous 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.

Current wording

Operating activities. Net cash provided by operating activities was $571 million and $611 million for the nine months ended September 30, 2023 and 2024, respectively. The increase in cash flows provided by operations between periods was primarily due to higher gathering and processing revenues and increased distributions from our equity method investments during the nine months ended September 30, 2024, partially offset by lower water handling revenues and changes in working capital between periods.

Previous 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.

Current wording

Investing activities. Net cash flows used in investing activities was $130 million and $203 million for the nine months ended September 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, and increased capital spending for our gathering and processing systems of $20 million as a result of increased compression station and high pressure line capital projects between periods, partially offset by decreased capital spending for our water handling systems of $16 million primarily as a result of fewer capital projects between periods.

Previous 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.

Current wording

Financing activities. Net cash used in financing activities was $441 million and $408 million for the nine months ended September 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 and lower net repayments on our Credit Facility of $15 million, partially offset by our repurchases and redemption of the 2026 Notes of $561 million, deferred financing costs payments on our 2032 Senior Notes and New Credit Facility of $13 million and higher tax withholdings for the settlement of equity-based compensation awards of $6 million between periods.