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7
ANTERO MIDSTREAM CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
8
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Accumulated amortization of customer relationships
()
()
Customer relationships
$
Year ending December 31, 2025
Year ending December 31, 2026
Year ending December 31, 2027
Year ending December 31, 2028
Thereafter
Total
$
million during each of the three months ended September 30, 2023 and 2024, and $ million and $ million during the nine months ended September 30, 2023 and9
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
The 2019 gathering and compression agreement included a growth incentive fee program whereby low pressure gathering fees were reduced from 2020 through 2023 to the extent Antero Resources achieved certain quarterly volumetric targets during such time. Antero Resources’ throughput gathered under the Marcellus gathering and compression agreement was not considered in low pressure gathering volume targets. For the three and nine months ended September 30, 2023, Antero Resources earned rebates of $ million and $ million, respectively, from the Company by achieving the first level volumetric target during each of the first three quarters of 2023. The growth incentive fee rebate program expired on December 31, 2023.
Under the gathering and compression agreements, the Company receives, where applicable, a low pressure gathering fee, a high pressure gathering fee and a compression fee, substantially all of which are subject to annual Consumer Price Index (“CPI”)-based adjustments (or, in the case of the 2019 gathering and compression agreement, the option in certain cases to elect a cost of service fee when such assets are placed in-service). In addition, under the 2019 gathering and compression agreement, the Company receives a reimbursement for certain variable costs, such as electricity and operating expenses.
10
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
The Company recognizes lease income from its minimum lease payments under its gathering and compression agreements on a straight-line basis. Additional variable operating lease income is earned when volumes in excess of the minimum commitments or fees are delivered under the contract. The Company recognizes variable lease income when low pressure volumes are delivered to a compressor station, compression volumes are delivered to a high pressure line and high pressure volumes are delivered to a processing plant or transmission pipeline, as applicable. Minimum volume commitments for each of the 2019 gathering and compression agreement and Marcellus gathering and compression agreement are aggregated such that each agreement has a single minimum volume commitment for the respective service each year. The Mountaineer gathering and compression agreement minimum compression and gathering fees are not subject to aggregation and are determined on a monthly basis for each compressor station and gathering line, respectively, subject to such agreement. The Company invoices the customer the month after each service is performed, and payment is due in the same month. The Company is not party to any leases that have not commenced.
Year ending December 31, 2025
Year ending December 31, 2026
Year ending December 31, 2027
Year ending December 31, 2028
Thereafter
Total
$
11
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
The Company satisfies its performance obligations and recognizes revenue when (i) the fresh water volumes have been delivered to the hydration unit of a specified well pad or (ii) other fluid handling services have been completed. The Company invoices the customer the month after water services are performed, and payment is due in the same month. For services contracted through third-party providers, the Company’s performance obligation is satisfied when the service to be performed by the third-party provider has been completed. The Company invoices the customer after the third-party provider billing is received, and payment is due in the same month.
Transaction Price Allocated to Remaining Performance Obligations
The Company’s water service agreement with Antero Resources has a term greater than one year. The Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under this contract, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.
The Company also performs water services for third-party customers and such contracts are short-term in nature with a contract term of one year or less. Accordingly, the Company is exempt from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of year or less.
Contract Balances
Under the Company’s water service contracts, the Company invoices customers after the performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s water service contracts do not give rise to contract assets or liabilities.
12
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
$
Gathering and Processing (1)
Gathering—low pressure fee rebate
()
—
()
—
Gathering and Processing (1)
Compression
Gathering and Processing (1)
Gathering—high pressure
Gathering and Processing (1)
Fresh water delivery
Water Handling
Other fluid handling
Water Handling
Amortization of customer relationships
()
()
()
()
Gathering and Processing
Amortization of customer relationships
()
()
()
()
Water Handling
Total
$
$
Type of contract
Per unit fixed fee
$
$
Gathering and Processing (1)
Gathering—low pressure fee rebate
()
—
()
—
Gathering and Processing (1)
Per unit fixed fee
Water Handling
Cost plus %
Water Handling
Cost of service fee
Water Handling
Amortization of customer relationships
()
()
()
()
Gathering and Processing
Amortization of customer relationships
()
()
()
()
Water Handling
Total
$
$
| (1) | Revenue related to the gathering and processing segment is classified as lease income related to the gathering and compression systems. |
The Company’s receivables from its contracts with customers and operating leases as of December 31, 2023 and September 30, 2024, were $ million and $ million, respectively.
13
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Gathering systems and facilities
- years (1)
Permanent buried pipelines and equipment
- years
Surface pipelines and equipment
- years
Heavy trucks and equipment
- years
Above ground storage tanks
- years
Other assets
- years
Construction-in-progress
n/a
Total property and equipment
Less accumulated depreciation
()
()
Property and equipment, net
$
| (1) | Gathering systems and facilities are recognized as a single-leased asset with residual value. |
(b) | Asset Acquisition |
On May 1, 2024, the Company acquired certain Marcellus gas gathering and compression assets from Summit for $ million in cash, before closing adjustments, with an effective date of April 1, 2024. The acquired assets include miles of high pressure gathering pipelines and compressor stations with MMcf/d of compression capacity. These assets were already interconnected to the Company’s low pressure and high pressure gas gathering systems at the time of acquisition and service Antero Resources’ production. Substantially all of the cash consideration for this asset acquisition was allocated to gathering systems and facilities, included in property and equipment, net in the condensed consolidated balance sheet.
% senior notes due 2026 (b)
—
% senior notes due 2027 (c)
% senior notes due 2028 (d)
% senior notes due 2029 (e)
% senior notes due 2032 (f)
—
Total principal
Unamortized debt premium
Unamortized debt issuance costs
()
()
Total long-term debt
$
14
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
The Credit Facility contains certain covenants including restrictions on indebtedness, and requirements with respect to leverage and interest coverage ratios. The Credit Facility permits distributions to the holders of the Borrower’s equity interests in accordance with the cash distribution policy, provided that no event of default exists or would be caused thereby, and only to the extent permitted by the Borrower’s organizational documents. The Borrower was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2023 and September 30, 2024, respectively.
The Credit Facility provides for borrowing under either the Adjusted Term Secured Overnight Financing Rate (“SOFR”) or the Base Rate (as each term is defined in the Credit Facility). Principal amounts borrowed are payable on the maturity date with such borrowings bearing interest that is payable with respect to (i) Base Rate loans, quarterly and (ii) SOFR Loans at the end of the applicable interest period if three months (or shorter, if applicable), or every three months if the applicable interest period is longer than three months. Interest is payable at a variable rate based on SOFR or the Base Rate, determined by election at the time of borrowing, plus an applicable interest margin rate under the Credit Facility. During any period that is not an Investment Grade Period (as defined in the New Credit Facility), the interest margin is determined with reference to the Borrower’s then-current leverage ratio subject to certain exceptions, which for SOFR loans range from % to %. Commitment fees on the unused portion of the New Credit Facility are due quarterly at rates ranging from % to % subject to certain exceptions based on the leverage ratio then in effect.
As of December 31, 2023, the Borrower had outstanding borrowings under the Prior Credit Facility of $ million with a weighted average interest rate of %. As of September 30, 2024, the Borrower had outstanding borrowings under the New Credit Facility of $ million with a weighted average interest rate of %. letters of credit were outstanding under the Credit Facility as of December 31, 2023 and September 30, 2024.
(b) | % Senior Notes Due 2026 |
On November 10, 2020, Antero Midstream Partners and its wholly owned subsidiary, Antero Midstream Finance Corp (“Finance Corp,” and together with Antero Midstream Partners, the “Issuers”) issued $ million in aggregate principal amount of % senior notes due May 15, 2026 (the “2026 Notes”) at par. The Issuers repurchased or otherwise fully redeemed all of the 2026 Notes during the first and second quarters of 2024, and the 2026 Notes were fully retired as of May 16, 2024. Interest on the 2026 Notes was payable on May 15 and November 15 of each year.
During the nine months ended September 30, 2024, the Issuers repurchased or otherwise fully redeemed $ million aggregate principal amount of its 2026 Notes at a weighted average premium of % of the principal amount thereof, plus accrued and unpaid interest, and recognized a loss on early debt extinguishment of $ million, which included the write-off of all unamortized debt issuance costs.
15
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
On February 25, 2019, the Issuers issued $ million in aggregate principal amount of % senior notes due March 1, 2027 (the “2027 Notes”) at par. The 2027 Notes were recorded at their fair value of $ million as of March 12, 2019, and the related premium of $ million will be amortized into interest expense over the life of the 2027 Notes. The 2027 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2027 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Antero Midstream Corporation, Antero Midstream Partners’ wholly owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries. Interest on the 2027 Notes is payable on March 1 and September 1 of each year. Antero Midstream Partners may redeem all or part of the 2027 Notes at any time at redemption prices ranging from % currently to % on or after March 1, 2025. If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2027 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2027 Notes at a price equal to % of the principal amount of the 2027 Notes, plus accrued and unpaid interest.
(d) | % Senior Notes Due 2028 |
On June 28, 2019, the Issuers issued $ million in aggregate principal amount of % senior notes due January 15, 2028 (the “2028 Notes”) at par. The 2028 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2028 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Antero Midstream Corporation, Antero Midstream Partners’ wholly owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries. Interest on the 2028 Notes is payable on January 15 and July 15 of each year. Antero Midstream Partners may redeem all or part of the 2028 Notes at any time at redemption prices ranging from % currently to % on or after January 15, 2026. If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2028 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2028 Notes at a price equal to % of the principal amount of the 2028 Notes, plus accrued and unpaid interest.
(e) | % Senior Notes Due 2029 |
On June 8, 2021, the Issuers issued $ million in aggregate principal amount of % senior notes due June 15, 2029 (the “2029 Notes”) at par. The 2029 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2029 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Antero Midstream Corporation, Antero Midstream Partners’ wholly owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries. Interest on the 2029 Notes is payable on June 15 and December 15 of each year. Antero Midstream Partners may redeem all or part of the 2029 Notes at any time at redemption prices ranging from % currently to % on or after June 15, 2026. If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2029 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2029 Notes at a price equal to % of the principal amount of the 2029 Notes, plus accrued and unpaid interest.
(f) | % Senior Notes Due 2032 |
On January 16, 2024, the Issuers issued $ million in aggregate principal amount of % senior notes due February 1, 2032 (the “2032 Notes”) at par. The 2032 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2032 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Antero Midstream Corporation, Antero Midstream Partners’ wholly owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries. Interest on the 2032 Notes is payable on February 1 and August 1 of each year. Antero Midstream Partners may redeem all or part of the 2032 Notes at any time on or after February 1, 2027 at redemption prices ranging from % on or after February 1, 2027 to % on or after February 1, 2029. In addition, prior to February 1, 2027, Antero Midstream Partners may redeem up to % of the aggregate principal amount of the 2032 Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of % of the principal amount of the 2032 Notes, plus accrued and unpaid interest. At any time prior to February 1, 2027, Antero Midstream Partners may also redeem the 2032 Notes, in whole or in part, at a price equal to % of the principal amount of the 2032 Notes plus a “make-whole” premium and accrued and unpaid interest. If Antero Midstream Partners undergoes a change of control followed by a rating decline, the
16
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(g) | Senior Notes Guarantors |
The Company and each of the Company’s wholly owned subsidiaries (except for the Issuers) has fully and unconditionally guaranteed the 2027 Notes, 2028 Notes, 2029 Notes and 2032 Notes (collectively the “Senior Notes”). In the event a guarantor is sold or disposed of (whether by merger, consolidation, the sale of a sufficient amount of its capital stock so that it no longer qualifies as a Restricted Subsidiary (as defined in the applicable indenture governing the series of Senior Notes) of the Issuer or the sale of all or substantially all of its assets) and whether or not the guarantor is the surviving entity in such transaction to a person that is not an Issuer or a Restricted Subsidiary of an Issuer, such guarantor will be released from its obligations under its guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the applicable Senior Notes.
In addition, a guarantor will be released from its obligations under the applicable indenture and its guarantee (i) upon the release or discharge of the guarantee of other indebtedness under a credit facility that resulted in the creation of such guarantee, except a release or discharge by or as a result of payment under such guarantee, (ii) if the Issuers designate such subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indenture governing the applicable Senior Notes or (iii) in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the applicable Senior Notes.
During the three and nine months ended September 30, 2023 and 2024, all of the Company’s assets and operations are attributable to the Issuers and its guarantors.
Operating expenses
Interest expense
Ad valorem taxes
Other
Total accrued liabilities
$
shares to shares, and extended the term of the plan from March 12, 2029 to June 5, 2034. The AM LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), dividend equivalents, other stock-based awards, cash awards and substitute awards. The terms and conditions of the awards granted are established by the compensation committee of the Board. As of September 30, 2024, a total of shares were available for future grant under the AM LTIP.17
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Performance share units
Equity awards issued to directors
Total expense
$
(b) | Restricted Stock Unit Awards |
A summary of the RSU awards activity is as follows:
$
Granted
Vested
()
Forfeited
()
Total awarded and unvested—September 30, 2024
$
As of September 30, 2024, unamortized equity-based compensation expense of $ million related to the unvested RSUs is expected to be recognized over a weighted average period of years.
(c) | Performance Share Unit Awards |
2024 Performance Share Unit Awards
In March 2024, the Company granted performance share unit awards (“PSUs”) to certain of its executive officers that vest based on the Company’s actual return on invested capital (“ROIC”) (as defined in the award agreement) over a period concluding on December 31, 2026 as compared to a targeted ROIC (“2024 ROIC PSUs”). The number of shares of the Company’s common stock that can be earned with respect to the 2024 ROIC PSUs ranges from to % of the target number of 2024 ROIC PSUs originally granted. The grant date fair value of these awards was based on the closing price of the Company’s common stock on the date of the grant, assuming target achievement of the performance condition. Expense related to the 2024 ROIC PSUs is recognized based on the number of shares of the Company’s common stock that are expected to be issued at the end of the measurement period, and such expense is reversed if the likelihood of achieving the performance condition decreases. The likelihood of achieving the performance conditions related to 2024 ROIC PSU awards was probable as of September 30, 2024.
Summary Information for Performance Share Unit Awards
A summary of the PSU awards activity is as follows:
$
Granted
Total awarded and unvested—September 30, 2024
$
As of September 30, 2024, unamortized equity-based compensation expense of $ million related to the unvested PSUs is expected to be recognized over a weighted average period of years.
18
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
$
$
*
*
Q1 2023
*
*
Q2 2023
*
*
Q3 2023
*
*
Total 2023
$
Q4 2023
$
$
*
*
Q1 2024
*
*
Q2 2024
*
*
Total 2024
$
* | Dividends are paid in accordance with the terms of the Series A Preferred Stock (as defined below) as discussed in Note 11—Equity and Net Income Per Common Share. |
On October 9, 2024, the Board announced the declaration of a cash dividend on the shares of the Company’s common stock of $ per share for the quarter ended September 30, 2024. The dividend is payable on to stockholders of record as of . The Company pays dividends (i) out of surplus or (ii) if there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, as provided under Delaware law.
The Board also declared a cash dividend of $ on the shares of Series A Preferred Stock of Antero Midstream that is payable on in accordance with the terms of the Series A Preferred Stock, which are discussed in Note 11—Equity and Net Income Per Common Share. As of September 30, 2024, there were dividends in the amount of $ accumulated in arrears on the Company’s Series A Preferred Stock.
shares of preferred stock on March 12, 2019, and issued shares of preferred stock designated as "% Series A Non-Voting Perpetual Preferred Stock" (the "Series A Preferred Stock"), to The Antero Foundation on that date. Dividends on the Series A Preferred Stock are cumulative from the date of original issue and payable in cash on the th day following the end of each fiscal quarter, or such other dates as the Board will approve, at a rate of % per annum on (i) the liquidation preference per share of Series A Preferred Stock (as described below) and (ii) the amount of accrued and unpaid dividends for any prior dividend period on such share of Series A Preferred Stock, if any. At any time following the date of issue, in the event of a change of control, or at any time on or after March 12, 2029, the Company may redeem the Series A Preferred Stock at a price equal to $ per share, plus any accrued and unpaid dividends, payable in cash; provided that if any shares of the Series A Preferred Stock are held by The Antero Foundation at the time of such redemption, the price for redemption of each share of Series A Preferred Stock will be the greater of (i) $ per share, plus any accrued but unpaid dividends, and (ii) the fair market value of the Series A Preferred Stock. On or after March 12, 2029, the holder of each share of Series A Preferred Stock (other than The Antero Foundation) may convert such shares, at any time and from time to time, at the option of the holder into a number of shares of the Company’s common stock equal to the conversion ratio in effect on the applicable conversion date, subject to certain limitations. The Series A Preferred Stock ranks19
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Add: Dilutive effect of RSUs
Add: Dilutive effect of PSUs
Add: Dilutive effect of Series A Preferred Stock
Diluted weighted average number of common shares outstanding
There were anti-dilutive securities outstanding during the three and nine months ended September 30, 2023 and 2024.
(c) | Net Income Per Common Share |
Net income per common share—basic for each period is computed by dividing the net income or loss attributable to the Company by the basic weighted average number of common shares outstanding during the period. Net income per common share—diluted for each period is computed after giving consideration to the potential dilution from outstanding equity-based awards, calculated using the treasury stock method. During periods in which the Company incurs a net loss, diluted weighted average common shares outstanding are equal to basic weighted average common shares outstanding because the effect of all equity-based awards is anti-dilutive.
Less preferred stock dividends
()
()
()
()
Net income available to common shareholders
$
Net income per common share–basic
$
Net income per common share–diluted
$
Weighted average common shares outstanding–basic
Weighted average common shares outstanding–diluted
20
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
—
—
2027 Notes
2028 Notes
2029 Notes
2032 Notes
—
—
Total
$
| (1) | Fair values are based on Level 2 market data inputs. |
| (2) | Carrying values are presented net of unamortized debt issuance costs and debt premium. |
(b) | Other Assets and Liabilities |
The carrying values of accounts receivable and accounts payable as of December 31, 2023 and September 30, 2024 approximated fair value because of their short-term nature. The carrying value of the amounts under the Credit Facility as of December 31, 2023 and September 30, 2024 approximated fair value because the variable interest rates are reflective of current market conditions.
% equity interest in the joint venture to develop processing and fractionation assets with MarkWest Energy Partners, L.P. (“MarkWest”), a wholly owned subsidiary of MPLX, LP (the “Joint Venture”). The Joint Venture was formed to develop processing and fractionation assets in Appalachia. MarkWest operates the Joint Venture assets, which consist of processing plants in West Virginia and a one-third interest in MarkWest fractionators in Ohio.The Company also has a % equity interest in a gathering system of Stonewall Gas Gathering LLC (“Stonewall”), which operates a -mile pipeline on which Antero Resources is an anchor shipper.
The Company’s net income includes its proportionate share of the net income of the Joint Venture and Stonewall. When the Company records its proportionate share of net income, it increases equity income in the unaudited condensed consolidated statements of operations and comprehensive income and the carrying value of that investment on its condensed consolidated balance sheet. When distributions on the Company’s proportionate share of net income are received, they are recorded as reductions to the carrying value of the investment on the unaudited condensed consolidated balance sheet and are classified as cash inflows from operating activities in accordance with the nature of the distribution approach under Financial Accounting Standards Board Accounting Standard Codification Topic 230, Statement of Cash Flows. The Company uses the equity method of accounting to account for its investments in the Joint Venture and Stonewall because it exercises significant influence, but not control, over the entities. The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as its ownership interest, representation on the applicable Board of Directors and participation in policy-making decisions of the Joint Venture and Stonewall.
21
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Additional investments
—
Equity in earnings of unconsolidated affiliates (1)
Distributions from unconsolidated affiliates
()
()
()
Balance as of September 30, 2024
$
| (1) | As adjusted for the amortization of the difference between the cost of the equity investments in Stonewall and the Joint Venture and the amount of the underlying equity in the net assets of the Joint Venture and Stonewall as of March 12, 2019. |
million, which represents the Company’s out-of-pocket costs associated with the Clearwater Facility project. In the alternative, Antero Treatment sought damages related to multiple breaches of the DBA, totaling $ million. Also at trial, Veolia sought monetary damages of $ million, including alleged delay and extra-contractual costs and a contract balance relating to an allegation that Antero Defendants improperly terminated the DBA.On January 3, 2023, the Court found that Antero Treatment had prevailed on its claims for breach of contract and fraud, and awarded $ million in damages to Antero Treatment, plus pre- and post-judgment interest and reasonable costs and attorneys’ fees. The Court also found in Antero Defendants’ favor on all of Veolia’s affirmative claims. On January 27, 2023, the Court entered judgment in favor of Antero Treatment in the amount of $ million in damages, which includes pre-judgment interest. On April 10, 2023, the Court issued an order identifying an error in its previously entered judgment, and on May 3, 2023, the Court entered an amended final judgment in favor of Antero Treatment in the amount of $ million in damages, which includes pre-judgment interest through April 30, 2023. Antero Treatment was also awarded costs and attorneys’ fees, the amount of which will be determined in separate proceedings. On May 26, 2023, Veolia filed a notice of appeal of the final judgment. On June 9, 2023, Antero Treatment filed a notice of cross-appeal. Oral argument at the Colorado Court of Appeals occurred on October 15, 2024; however, no decision by such Court has yet been issued.
22
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
Gathering and Processing
The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in West Virginia and Ohio. The gathering and processing segment also includes equity in earnings from the Company’s investments in the Joint Venture and Stonewall.
Water Handling
The Company’s water handling segment includes independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional waterways. Portions of these water handling systems are also utilized to transport flowback and produced water. The water handling systems consist of permanent buried pipelines, surface pipelines and water storage facilities, as well as pumping stations, blending facilities and impoundments to transport water throughout the systems used to deliver water for well completions.
(b) | Reportable Segments Financial Information |
—
Revenue–third-party
—
—
Amortization of customer relationships
()
()
—
()
Total revenues
—
Operating expenses:
Direct operating
—
General and administrative
Facility idling
—
—
Depreciation
—
Accretion of asset retirement obligations
—
—
Loss on asset sale
—
—
Total operating expenses
Operating income
$
()
Equity in earnings of unconsolidated affiliates
$
—
—
Additions to property and equipment
$
—
| (1) | Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis. |
23
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
—
Revenue–third-party
—
—
Amortization of customer relationships
()
()
—
()
Total revenues
—
Operating expenses:
Direct operating
—
General and administrative
Facility idling
—
—
Depreciation
—
Impairment of property and equipment
—
—
Accretion of asset retirement obligations
—
—
Gain on asset sale
—
()
—
()
Total operating expenses
Operating income (loss)
$
()
()
Equity in earnings of unconsolidated affiliates
$
—
—
Additions to property and equipment
$
—
| (1) | Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis. |
| | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2023 | | ||||||||||
| | Gathering and | | Water | | | | Consolidated | | ||||
(in thousands) |
| Processing |
| Handling |
| Unallocated (1) | | Total | | ||||
Revenues: | | | | | | | | | | | | | |
Revenue–Antero Resources | | $ |
| | |
| | | — | | |
| |
Revenue–third-party | | | — | | |
| | | — | | |
| |
Amortization of customer relationships | | | () | | | () | | | — | | | () | |
Total revenues | | |
| | |
| | | — | | |
| |
Operating expenses: | | | | | | | | | | | | | |
Direct operating | | |
| | |
| | | — | | |
| |
General and administrative | | |
| | |
| | |
| | |
| |
Facility idling | | | — | | |
| | | — | | |
| |
Depreciation | | |
| | |
| | | — | | |
| |
Accretion of asset retirement obligations | | | — | | |
| | | — | | |
| |
Loss on settlement of asset retirement obligations | | | — | | |
| | | — | | |
| |
Loss (gain) on asset sale | | |
| | | () | | | — | | |
| |
Total operating expenses | | |
| | |
| | |
| | |
| |
Operating income | | $ |
| | |
| | | () | | |
| |
| | | | | | | | | | | | | |
Equity in earnings of unconsolidated affiliates | | $ |
| | | — | | | — | | |
| |
Additions to property and equipment | | $ |
| | |
| | | — | | |
| |
| (1) | Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis. |
24
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
—
Revenue–third-party
—
—
Amortization of customer relationships
()
()
—
()
Total revenues
—
Operating expenses:
Direct operating
—
General and administrative
Facility idling
—
—
Depreciation
—
Impairment of property and equipment
—
—
Accretion of asset retirement obligations
—
—
Loss on asset sale
—
—
Total operating expenses
Operating income
$
()
Equity in earnings of unconsolidated affiliates
$
—
—
Additions to property and equipment
$
—
| (1) | Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis. |
The summarized total assets of the Company’s reportable segments are as follows:
| | | | | | | | | | | | | |
| | | | | | | | | | (Unaudited) | | ||
| | | | | | | | December 31, |
| September 30, | | ||
(in thousands) | | | | | | | | 2023 | | 2024 | | ||
Gathering and Processing | | | | | | | | $ |
| | |
| |
Water Handling | | | | | | | | |
| | |
| |
Unallocated (1) | | | | | | | | |
| | |
| |
Total assets | | | | | | | | $ |
| | |
| |
| (1) | Certain assets that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis. |
25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The information provided below supplements, but does not form part of, our unaudited condensed consolidated financial statements. This discussion contains forward-looking statements that are based on the views and beliefs of our management, as well as assumptions and estimates made by our management. Actual results could differ materially from such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact our future operating performance or financial condition, see “Item 1A. Risk Factors” and the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. In this section, references to “Antero Midstream,” “AM,” the “Company,” “we,” “us,” and “our” refer to Antero Midstream Corporation and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.
Overview
We are a growth-oriented midstream energy company formed to own, operate and develop midstream energy assets to primarily service Antero Resources’ production and completion activity. We believe that our strategically located assets and our relationship with Antero Resources have allowed us to become a leading midstream energy company serving the Appalachian Basin and present opportunities to expand our midstream services to other operators in the Appalachian Basin. Our assets consist of gathering pipelines, compressor stations and interests in processing and fractionation plants that collect and process production from Antero Resources’ wells in the Appalachian Basin in West Virginia and Ohio. Our assets also include two independent water handling systems that deliver water from the Ohio River and several regional waterways. These water handling systems consist of permanent buried pipelines, surface pipelines and water storage facilities, as well as pumping stations, blending facilities and impoundments. Portions of these water handling systems are also utilized to transport flowback and produced water. These services are provided by us directly or through third-parties with which we contract.
Asset Acquisition
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.
Financing Highlights
Credit Facility
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.
Senior Notes
Issuance of 2032 Senior Notes
On January 16, 2024, we issued $600 million of 2032 Notes at par. The 2032 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2032 Notes rank pari passu to our other outstanding senior notes and are guaranteed on a full and unconditional and joint and several senior unsecured basis by our wholly owned subsidiaries and certain of our future restricted subsidiaries. The net proceeds from this offering were used to repay outstanding borrowings on the Credit Facility. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.
26
Repurchase of 2026 Senior Notes
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.
Share Repurchase Program
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.
Market Conditions and Business Trends
Commodity Markets
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.
Economic Indicators
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.
The economy also continues to be impacted by global events. These events have often caused global supply chain disruptions with additional pressure due to trade sanctions on Russia and other global trade restrictions, among others. However, neither our nor Antero Resources’ supply chain has experienced any significant interruptions due to such events.
Inflationary pressures and supply chain disruptions could result in further increases to our operating and capital costs that are not fixed. However, our gathering and compression and water agreements provide for annual CPI-based adjustments that mitigate a portion of such inflationary pressures.
These economic variables are beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.
27
Results of Operations
We have two reportable segments: (i) gathering and processing and (ii) water handling. The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in the Appalachian Basin, as well as equity in earnings from our investments in the Joint Venture and Stonewall. The Joint Venture and Stonewall provide processing and fractionation services and high-pressure gas gathering services, respectively, in the Appalachian Basin. The water handling segment includes (i) two independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional waterways, and (ii) other fluid handling services, which include high rate transfer, wastewater transportation, disposal and blending.
Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2024
The operating results of our reportable segments are as follows:
| | | | | | | | | | | | | |
| | Three Months Ended September 30, 2023 | | ||||||||||
| | Gathering and | | Water | | | | Consolidated | | ||||
(in thousands) |
| Processing |
| Handling |
| Unallocated (1) |
| Total | | ||||
Revenues: | | | | | | | | | | | | | |
Revenue–Antero Resources | | $ | 226,992 | | | 66,132 | | | — | | | 293,124 | |
Revenue–third-party | | | — | | | 383 | | | — | | | 383 | |
Gathering—low pressure fee rebate | | | (12,000) | | | — | | | — | | | (12,000) | |
Amortization of customer relationships | | | (9,271) | | | (8,397) | | | — | | | (17,668) | |
Total revenues | | | 205,721 | | | 58,118 | | | — | | | 263,839 | |
Operating expenses: | | | | | | | | | | | | | |
Direct operating | | | 23,547 | | | 28,367 | | | — | | | 51,914 | |
General and administrative (excluding equity-based compensation) | | | 5,797 | | | 2,383 | | | 1,104 | | | 9,284 | |
Equity-based compensation | | | 6,443 | | | 1,656 | | | 250 | | | 8,349 | |
Facility idling | | | — | | | 722 | | | — | | | 722 | |
Depreciation | | | 17,710 | | | 13,035 | | | — | | | 30,745 | |
Accretion of asset retirement obligations | | | — | | | 45 | | | — | | | 45 | |
Loss on asset sale | | | 467 | | | — | | | — | | | 467 | |
Total operating expenses | | | 53,964 | | | 46,208 | | | 1,354 | | | 101,526 | |
Operating income | | | 151,757 | | | 11,910 | | | (1,354) | | | 162,313 | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense, net | | | — | | | — | | | (55,233) | | | (55,233) | |
Equity in earnings of unconsolidated affiliates | | | 27,397 | | | — | | | — | | | 27,397 | |
Total other income (expense) | | | 27,397 | | | — | | | (55,233) | | | (27,836) | |
Income before income taxes | | | 179,154 | | | 11,910 | | | (56,587) | | | 134,477 | |
Income tax expense | | | — | | | — | | | (36,657) | | | (36,657) | |
Net income and comprehensive income | | $ | 179,154 | | | 11,910 | | | (93,244) | | | 97,820 | |
| (1) | Corporate expenses that are not directly attributable to either the gathering and processing or water handling segments. |
28
| | | | | | | | | | | | | |
| | Three Months Ended September 30, 2024 | | ||||||||||
| | Gathering and | | Water | | | | Consolidated | | ||||
(in thousands) |
| Processing |
| Handling |
| Unallocated (1) |
| Total | | ||||
Revenues: | | | | | | | | | | | | | |
Revenue–Antero Resources | | $ | 234,847 | | | 52,294 | | | — | | | 287,141 | |
Revenue–third-party | | | — | | | 397 | | | — | | | 397 | |
Amortization of customer relationships | | | (9,271) | | | (8,397) | | | — | | | (17,668) | |
Total revenues | | | 225,576 | | | 44,294 | | | — | | | 269,870 | |
Operating expenses: | | | | | | | | | | | | | |
Direct operating | | | 24,516 | | | 27,208 | | | — | | | 51,724 | |
General and administrative (excluding equity-based compensation) | | | 7,495 | | | 2,203 | | | 1,229 | | | 10,927 | |
Equity-based compensation | | | 9,591 | | | 2,105 | | | 249 | | | 11,945 | |
Facility idling | | | — | | | 405 | | | — | | | 405 | |
Depreciation | | | 18,632 | | | 13,902 | | | — | | | 32,534 | |
Impairment of property and equipment | | | 332 | | | — | | | — | | | 332 | |
Accretion of asset retirement obligations | | | — | | | 49 | | | — | | | 49 | |
Gain on asset sale | | | — | | | (473) | | | — | | | (473) | |
Total operating expenses | | | 60,566 | | | 45,399 | | | 1,478 | | | 107,443 | |
Operating income (loss) | | | 165,010 | | | (1,105) | | | (1,478) | | | 162,427 | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense, net | | | — | | | — | | | (51,812) | | | (51,812) | |
Equity in earnings of unconsolidated affiliates | | | 27,668 | | | — | | | — | | | 27,668 | |
Loss on early extinguishment of debt | | | — | | | — | | | (341) | | | (341) | |
Total other income (expense) | | | 27,668 | | | — | | | (52,153) | | | (24,485) | |
Income (loss) before income taxes | | | 192,678 | | | (1,105) | | | (53,631) | | | 137,942 | |
Income tax expense | | | — | | | — | | | (38,202) | | | (38,202) | |
Net income (loss) and comprehensive income (loss) | | $ | 192,678 | | | (1,105) | | | (91,833) | | | 99,740 | |
| (1) | Corporate expenses that are not directly attributable to either the gathering and processing or water handling segments. |
29
The operating data for Antero Midstream is as follows:
| | | | | | | | | | | | | | |
| | | | | | | | Amount of | | | | | | |
| | Three Months Ended September 30, | | Increase | | Percentage | | |||||||
|
| 2023 |
| 2024 |
| or Decrease |
| Change | | |||||
Operating Data: | | | | | | | | | | | | | | |
Gathering—low pressure (MMcf) | | | 305,676 | | | 301,468 | | | (4,208) | | | (1) | % | |
Compression (MMcf) | | | 300,967 | | | 300,790 | | | (177) | | | * | | |
Gathering—high pressure (MMcf) | | | 269,986 | | | 280,189 | | | 10,203 | | | 4 | % | |
Fresh water delivery (MBbl) | | | 9,750 | | | 6,514 | | | (3,236) | | | (33) | % | |
Other fluid handling (MBbl) | | | 4,961 | | | 4,751 | | | (210) | | | (4) | % | |
Wells serviced by fresh water delivery | | | 15 | | | 9 | | | (6) | | | (40) | % | |
Gathering—low pressure (MMcf/d) | | | 3,323 | | | 3,277 | | | (46) | | | (1) | % | |
Compression (MMcf/d) | | | 3,271 | | | 3,269 | | | (2) | | | * | | |
Gathering—high pressure (MMcf/d) | | | 2,935 | | | 3,046 | | | 111 | | | 4 | % | |
Fresh water delivery (MBbl/d) | | | 106 | | | 71 | | | (35) | | | (33) | % | |
Other fluid handling (MBbl/d) | | | 54 | | | 52 | | | (2) | | | (4) | % | |
Average Realized Fees(1): | | | | | | | | | | | | | | |
Average gathering—low pressure fee ($/Mcf) | | $ | 0.35 | | | 0.36 | | | 0.01 | | | 3 | % | |
Average compression fee ($/Mcf) | | $ | 0.21 | | | 0.21 | | | — | | | * | | |
Average gathering—high pressure fee ($/Mcf) | | $ | 0.21 | | | 0.23 | | | 0.02 | | | 10 | % | |
Average fresh water delivery fee ($/Bbl) | | $ | 4.20 | | | 4.31 | | | 0.11 | | | 3 | % | |
Joint Venture Operating Data: | | | | | | | | | | | | | | |
Processing—Joint Venture (MMcf) | | | 148,672 | | | 149,039 | | | 367 | | | * | | |
Fractionation—Joint Venture (MBbl) | | | 3,680 | | | 3,680 | | | — | | | * | | |
Processing—Joint Venture (MMcf/d) | | | 1,616 | | | 1,620 | | | 4 | | | * | | |
Fractionation—Joint Venture (MBbl/d) | | | 40 | | | 40 | | | — | | | * | | |
| * | Not meaningful or applicable. |
| (1) | The average realized fees for the three months ended September 30, 2024 include annual CPI-based adjustments of approximately 1.6%. |
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:
Gathering and Processing
| ● | Low pressure gathering revenue increased $13 million period over period primarily due to lower growth incentive fee rebates of $12 million due to the expiration of the program on December 31, 2023 and increased low pressure gathering rates as a result of annual CPI-based adjustments, partially offset by decreased throughput volumes of 4 Bcf, or 46 MMcf/d. Low pressure gathering volumes decreased between periods primarily due to natural production decline, partially offset by 67 additional wells being connected to our system since September 30, 2023. |
| ● | Compression revenue increased $1 million period over period primarily due to increased compression rates as a result of annual CPI-based adjustments. Compression volumes remained consistent between periods primarily due to 67 additional wells being connected to our system since September 30, 2023 and two compressor stations that were acquired during the second quarter of 2024, fully offset by natural production decline between periods. |
| ● | High pressure gathering revenue increased $6 million period over period primarily due to our acquisition of 48 miles of high pressure gathering lines during the second quarter of 2024 and increased high pressure gathering rates as a result of an annual CPI-based adjustment. |
30
Water Handling
| ● | Fresh water delivery revenue decreased $13 million period over period primarily due to decreased fresh water delivery volumes of 3 MMBbl, or 35 MBbl/d, partially offset by a 1.6% increase to the fresh water delivery rate for our long-term contract with Antero Resources as a result of the annual CPI-based adjustment. Fresh water delivery volumes decreased between periods primarily due to fewer wells serviced by our fresh water delivery system as a result of the timing of well completions by Antero Resources. |
| ● | Other fluid handling services revenue decreased $1 million period over period primarily due to lower other fluid handling volumes of 0.2 MMBbl, or 2 MBbl/d, between periods. |
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.
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.
Equity-based compensation expenses. Equity-based compensation expenses increased from $8 million for the three months ended September 30, 2023 to $12 million for the three 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.
Depreciation expense. Depreciation expense remained relatively consistent at $31 million and $33 million for the three months ended September 30, 2023 and 2024, respectively.
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.
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.
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.
31
Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2024
The operating results of our reportable segments are as follows:
| | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2023 | | ||||||||||
| | Gathering and | | Water | | | | Consolidated | | ||||
(in thousands) |
| Processing |
| Handling |
| Unallocated (1) |
| Total | | ||||
Revenues: | | | | | | | | | | | | | |
Revenue–Antero Resources | | $ | 661,636 | | | 208,040 | | | — | | | 869,676 | |
Revenue–third-party | | | — | | | 929 | | | — | | | 929 | |
Gathering—low pressure fee rebate | | | (36,000) | | | — | | | — | | | (36,000) | |
Amortization of customer relationships | | | (27,814) | | | (25,190) | | | — | | | (53,004) | |
Total revenues | | | 597,822 | | | 183,779 | | | — | | | 781,601 | |
Operating expenses: | | | | | | | | | | | | | |
Direct operating | | | 72,819 | | | 89,563 | | | — | | | 162,382 | |
General and administrative (excluding equity-based compensation) | | | 16,695 | | | 9,709 | | | 3,563 | | | 29,967 | |
Equity-based compensation | | | 17,095 | | | 5,399 | | | 681 | | | 23,175 | |
Facility idling | | | — | | | 1,933 | | | — | | | 1,933 | |
Depreciation | | | 61,969 | | | 39,205 | | | — | | | 101,174 | |
Accretion of asset retirement obligations | | | — | | | 133 | | | — | | | 133 | |
Loss on settlement of asset retirement obligations | | | — | | | 620 | | | — | | | 620 | |
Loss (gain) on asset sale | | | 6,039 | | | (3) | | | — | | | 6,036 | |
Total operating expenses | | | 174,617 | | | 146,559 | | | 4,244 | | | 325,420 | |
Operating income | | | 423,205 | | | 37,220 | | | (4,244) | | | 456,181 | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense, net | | | — | | | — | | | (165,245) | | | (165,245) | |
Equity in earnings of unconsolidated affiliates | | | 77,825 | | | — | | | — | | | 77,825 | |
Total other income (expense) | | | 77,825 | | | — | | | (165,245) | | | (87,420) | |
Income before income taxes | | | 501,030 | | | 37,220 | | | (169,489) | | | 368,761 | |
Income tax expense | | | — | | | — | | | (97,422) | | | (97,422) | |
Net income and comprehensive income | | $ | 501,030 | | | 37,220 | | | (266,911) | | | 271,339 | |
| (1) | Corporate expenses that are not directly attributable to either the gathering and processing or water handling segments. |
32
| | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2024 | | ||||||||||
| | Gathering and | | Water | | | | Consolidated | | ||||
(in thousands) |
| Processing |
| Handling |
| Unallocated (1) |
| Total | | ||||
Revenues: | | | | | | | | | | | | | |
Revenue–Antero Resources | | $ | 691,433 | | | 178,805 | | | — | | | 870,238 | |
Revenue–third-party | | | — | | | 1,482 | | | — | | | 1,482 | |
Amortization of customer relationships | | | (27,814) | | | (25,190) | | | — | | | (53,004) | |
Total revenues | | | 663,619 | | | 155,097 | | | — | | | 818,716 | |
Operating expenses: | | | | | | | | | | | | | |
Direct operating | | | 76,849 | | | 85,202 | | | — | | | 162,051 | |
General and administrative (excluding equity-based compensation) | | | 21,840 | | | 6,742 | | | 3,859 | | | 32,441 | |
Equity-based compensation | | | 26,341 | | | 5,782 | | | 748 | | | 32,871 | |
Facility idling | | | — | | | 1,339 | | | — | | | 1,339 | |
Depreciation | | | 65,661 | | | 41,544 | | | — | | | 107,205 | |
Impairment of property and equipment | | | 332 | | | — | | | — | | | 332 | |
Accretion of asset retirement obligations | | | — | | | 140 | | | — | | | 140 | |
Loss on asset sale | | | — | | | 906 | | | — | | | 906 | |
Total operating expenses | | | 191,023 | | | 141,655 | | | 4,607 | | | 337,285 | |
Operating income | | | 472,596 | | | 13,442 | | | (4,607) | | | 481,431 | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense, net | | | — | | | — | | | (157,306) | | | (157,306) | |
Equity in earnings of unconsolidated affiliates | | | 82,795 | | | — | | | — | | | 82,795 | |
Loss on early extinguishment of debt | | | — | | | — | | | (14,091) | | | (14,091) | |
Total other income (expense) | | | 82,795 | | | — | | | (171,397) | | | (88,602) | |
Income before income taxes | | | 555,391 | | | 13,442 | | | (176,004) | | | 392,829 | |
Income tax expense | | | — | | | — | | | (103,126) | | | (103,126) | |
Net income and comprehensive income | | $ | 555,391 | | | 13,442 | | | (279,130) | | | 289,703 | |
| (1) | Corporate expenses that are not directly attributable to either the gathering and processing or water handling segments. |
33
The operating data for Antero Midstream is as follows:
| | | | | | | | | | | | | | |
| | | | | | | | Amount of | | | | | | |
| | Nine Months Ended September 30, | | Increase | | Percentage | | |||||||
|
| 2023 |
| 2024 |
| or Decrease |
| Change | | |||||
Operating Data: | | | | | | | | | | | | | | |
Gathering—low pressure (MMcf) | | | 891,805 | | | 898,386 | | | 6,581 | | | 1 | % | |
Compression (MMcf) | | | 879,130 | | | 892,853 | | | 13,723 | | | 2 | % | |
Gathering—high pressure (MMcf) | | | 788,005 | | | 822,558 | | | 34,553 | | | 4 | % | |
Fresh water delivery (MBbl) | | | 30,445 | | | 24,150 | | | (6,295) | | | (21) | % | |
Other fluid handling (MBbl) | | | 14,879 | | | 14,956 | | | 77 | | | 1 | % | |
Wells serviced by fresh water delivery | | | 61 | | | 45 | | | (16) | | | (26) | % | |
Gathering—low pressure (MMcf/d) | | | 3,267 | | | 3,279 | | | 12 | | | * | | |
Compression (MMcf/d) | | | 3,220 | | | 3,259 | | | 39 | | | 1 | % | |
Gathering—high pressure (MMcf/d) | | | 2,886 | | | 3,002 | | | 116 | | | 4 | % | |
Fresh water delivery (MBbl/d) | | | 112 | | | 88 | | | (24) | | | (21) | % | |
Other fluid handling (MBbl/d) | | | 55 | | | 55 | | | — | | | * | | |
Average Realized Fees(1): | | | | | | | | | | | | | | |
Average gathering—low pressure fee ($/Mcf) | | $ | 0.35 | | | 0.36 | | | 0.01 | | | 3 | % | |
Average compression fee ($/Mcf) | | $ | 0.21 | | | 0.21 | | | — | | | * | | |
Average gathering—high pressure fee ($/Mcf) | | $ | 0.21 | | | 0.22 | | | 0.01 | | | 5 | % | |
Average fresh water delivery fee ($/Bbl) | | $ | 4.21 | | | 4.30 | | | 0.09 | | | 2 | % | |
Joint Venture Operating Data: | | | | | | | | | | | | | | |
Processing—Joint Venture (MMcf) | | | 430,058 | | | 439,317 | | | 9,259 | | | 2 | % | |
Fractionation—Joint Venture (MBbl) | | | 10,455 | | | 10,960 | | | 505 | | | 5 | % | |
Processing—Joint Venture (MMcf/d) | | | 1,575 | | | 1,603 | | | 28 | | | 2 | % | |
Fractionation—Joint Venture (MBbl/d) | | | 38 | | | 40 | | | 2 | | | 5 | % | |
| * | Not meaningful or applicable. |
| (1) | The average realized fees for the nine months ended September 30, 2024 include annual CPI-based adjustments of approximately 1.6%. |
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:
Gathering and Processing
| ● | Low pressure gathering revenue increased $45 million period over period primarily due to lower growth incentive fee rebates of $36 million due to the expiration of the program on December 31, 2023, increased throughput volumes of 7 Bcf, or 12 MMcf/d, and increased low pressure gathering rates as a result of annual CPI-based adjustments. Low pressure gathering volumes increased between periods primarily due to 67 additional wells being connected to our system since September 30, 2023. |
| ● | Compression revenue increased $6 million period over period primarily due to increased throughput volumes of 14 Bcf, or 39 MMcf/d, and increased compression rates as a result of annual CPI-based adjustments. Compression volumes increased between periods primarily due to 67 additional wells being connected to our system since September 30, 2023 and two compressor stations that were acquired during the second quarter of 2024. |
| ● | High pressure gathering revenue increased $15 million period over period primarily due to increased throughput volumes of 35 Bcf, or 116 MMcf/d and increased high pressure gathering rates as a result of an annual CPI-based adjustment. The high pressure gathering volumes increased period over period primarily due to 67 additional wells being connected to our system since September 30, 2023 and our acquisition of 48 miles of high pressure gathering lines during the second quarter of 2024. |
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Water Handling
| ● | Fresh water delivery revenue decreased $24 million period over period primarily due to decreased fresh water delivery volumes of 6 MMBbl, or 24 MBbl/d, partially offset by a 1.6% increase to the fresh water delivery rate for our long-term contract with Antero Resources as a result of the annual CPI-based adjustment. Fresh water delivery volumes decreased between periods primarily due to fewer wells serviced by our fresh water delivery system as a result of the timing of well completions by Antero Resources. |
| ● | Other fluid handling services revenue decreased $5 million period over period primarily due to decreased water trucking volumes, which are billed at cost plus 3%, and lower high rate transfer services during the nine months ended September 30, 2024, partially offset by higher blending cost of service fees between periods. |
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.
General and administrative (excluding equity-based compensation) expenses. General and administrative expenses (excluding equity-based compensation expense) increased by 8%, from $30 million for the nine months ended September 30, 2023 to $32 million for the nine months ended September 30, 2024 primarily due to higher costs allocated to us from Antero Resources.
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.
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.
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.
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.
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 of annual CPI-based adjustments between periods.
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.
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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.
Capital Resources and Liquidity
Sources and Uses of Cash
Capital resources and liquidity are provided by operating cash flows and available borrowings under our Credit Facility and capital market transactions. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements. We expect that the combination of these capital resources will be adequate to meet our working capital requirements, capital expenditures program and expected quarterly cash dividends for at least the next 12 months.
Our Board declared a cash dividend on the shares of our common stock of $0.2250 per share for the quarter ended September 30, 2024. The dividend is payable on November 6, 2024 to stockholders of record as of October 23, 2024. Our Board also declared a cash dividend of $137,500 on the shares of Series A Preferred Stock that is payable on November 14, 2024 in accordance with their terms as discussed in Note 11—Equity and Net Income Per Common Share. As of September 30, 2024, there were dividends in the amount of $68,750 accumulated in arrears on our Series A Preferred Stock.
We expect our future cash requirements relating to working capital, capital expenditures, acquisitions and quarterly cash dividends to our stockholders will be funded from cash flows internally generated from our operations or borrowings under the Credit Facility.
As of September 30, 2024, we did not have any off-balance sheet arrangements.
Cash Flows
The following table summarizes our cash flows for the nine months ended September 30, 2023 and 2024:
| | | | | | | |
| | Nine Months Ended September 30, | | ||||
(in thousands) |
| 2023 |
| 2024 | | ||
Net cash provided by operating activities | | $ | 570,742 | | | 611,303 | |
Net cash used in investing activities | | | (129,508) | | | (203,076) | |
Net cash used in financing activities | | | (441,234) | | | (408,293) | |
Net decrease in cash and cash equivalents | | $ | — | | | (66) | |
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.
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.
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.
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2024 Capital Investment
On February 14, 2024, we announced a capital budget with a range of $150 million to $170 million. This capital budget supports Antero Resources’ maintenance capital program for 2024. Our capital budget may be adjusted as business conditions warrant. Additionally, we monitor our existing assets and look for opportunities to reuse or otherwise repurpose assets in an effort to optimize our capital efficiency.
Our capital expenditures were as follows:
| | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
(in thousands) | | 2023 | | 2024 | | 2023 | | 2024 | | ||||
Gathering systems and facilities | | $ | 42,579 | | | 49,365 | | | 98,303 | | | 115,279 | |
Water handling systems | | | 14,692 | | | 6,007 | | | 40,893 | | | 21,141 | |
Investments in unconsolidated affiliates | | | — | | | 893 | | | 262 | | | 893 | |
Total capital expenditures | | $ | 57,271 | | | 56,265 | | | 139,458 | | | 137,313 | |
Debt Agreements
See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements and to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K for information on our debt agreements.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. Any new accounting policies or updates to existing accounting policies as a result of recently adopted accounting standards have been included in Note 2—Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. Accounting estimates and assumptions are considered to be critical if there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported amounts in our unaudited condensed consolidated financial statements that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our unaudited condensed consolidated financial statements. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Form 10-K for information on our critical accounting estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in commodity prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.
Commodity Price Risk
Our gathering and compression and water services agreements with Antero Resources provide for fixed-fee and cost of service fee structures, and we intend to continue to pursue additional fixed-fee or cost of service fee opportunities with Antero Resources and third parties in order to avoid direct commodity price exposure. However, to the extent that our future contractual arrangements with Antero Resources or third parties do not provide for fixed-fee or cost of service fee structures, we may become subject to commodity price risk. We are subject to commodity price risks to the extent that they impact Antero Resources’ development program and production and therefore our gathering, compression, and water handling volumes. We cannot predict to what extent our business would be impacted by lower commodity prices and any resulting impact on Antero Resources’ operations.
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Interest Rate Risk
Our primary exposure to interest rate risk results from outstanding borrowings under the Credit Facility, which has a floating interest rate. We do not currently, but may in the future, hedge the interest on portions of our borrowings under the Credit Facility from time-to-time in order to manage risks associated with floating interest rates. As of September 30, 2024, we had $540 million of borrowings and no letters of credit outstanding under the New Credit Facility. A 1.0% increase in the Credit Facility interest rate would have resulted in an estimated $3 million increase in interest expense for the nine months ended September 30, 2024.
Credit Risk
We are dependent on Antero Resources as our primary customer, and we expect to derive substantially all of our revenues from Antero Resources for the foreseeable future. As a result, any event, whether in our area of operations or otherwise, that adversely affects Antero Resources’ production, drilling schedule, financial condition, leverage, market reputation, liquidity, results of operations or cash flows may adversely affect our revenues and operating results.
Further, we are subject to the risk of non-payment or non-performance by Antero Resources, including with respect to our gathering and compression and water handling services agreements. We cannot predict the extent to which Antero Resources’ business would be impacted if conditions in the energy industry were to deteriorate, nor can we estimate the impact such conditions would have on Antero Resources’ ability to execute its drilling and development program or to perform under our agreements. Any material non-payment or non-performance by Antero Resources could adversely affect our revenues and operating results and our ability to return capital to stockholders.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024 at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Our operations are subject to a variety of risks and disputes normally incident to our business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business.
We maintain insurance policies with insurers in amounts and with coverage and deductibles that we, with the advice of our insurance advisors and brokers, believe are reasonable and prudent. We cannot, however, assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices.
See Note 14—Contingencies to the unaudited condensed consolidated financial statements for additional information.
Item 1A. Risk Factors.
We are subject to certain risks and hazards due to the nature of the business activities we conduct. For a discussion of these risks, see “Item 1A. Risk Factors” in the 2023 Form 10-K. There have been no material changes to the risks described in such report. We may experience additional risks and uncertainties not currently known to us. Furthermore, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
The following table sets forth our common stock share purchase activity for each period presented:
| | | | | | | | | | | |
| | | | | | | | | Approximate | | |
| | | | | | Total Number of | | Dollar Value of | | ||
| | Total Number | | Average Price | | Shares Purchased | | Shares that May | | ||
| | of Shares | | Paid per | | as Part of Publicly | | Yet be Purchased | | ||
Period | | Purchased (1) | | Share | | Announced Plans | | Under the Plan (2) | | ||
July 1, 2024 – July 31, 2024 | | 25,018 | | $ | 14.62 | | — | | $ | 500,000,000 | |
August 1, 2024 – August 31, 2024 | | — | | | — | | — | | | 500,000,000 | |
September 1, 2024 – September 30, 2024 | | — | | | — | | — | | | 500,000,000 | |
Total | | 25,018 | | $ | 14.62 | | — | | | | |
| (1) | The total number of shares purchased represents shares of our common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of equity-based awards held by our employees. |
| (2) | In February 2024, the Board authorized a $500 million share repurchase program. During the three months ended September 30, 2024, we did not make any repurchases under this program. |
. .
On October 30, 2024, the Company announced that the Board, upon the recommendation of its Nominating & Governance Committee, appointed Jeffrey S. Muñoz to the Board as a Class II director. Mr. Muñoz was also appointed to serve on the Board’s Audit Committee, Environmental, Social and Governance (ESG) Committee and Nominating & Governance Committee. The Board determined that Mr. Muñoz meets the independence requirements under the rules of the New York Stock Exchange and the Company’s independence standards, and that there are no transactions between the Company and Mr. Muñoz that would require disclosure under Item 404(a) of Regulation S-K. There are no understandings or arrangements between Mr. Muñoz and any other person pursuant to which Mr. Muñoz was selected to serve as a director of the Board. In addition, the Board determined that Mr. Muñoz qualifies as an “audit committee financial expert” as defined by the SEC.
Mr. Muñoz will receive the standard non-employee director compensation for serving on the Board and committees of the Board. The specific terms of such compensation are described further in the Company’s annual proxy statement that was filed with the SEC on April 25, 2024.
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In connection with his appointment, the Company entered into an Indemnification Agreement with Mr. Muñoz pursuant to which the Company agreed to indemnify Mr. Muñoz to the fullest extent permitted under Delaware law against liability that may arise by reason of his service to the Company and to advance his expenses incurred as a result of any proceeding against him to which he could be indemnified.
The foregoing description is qualified in its entirety by reference to the full text of such Indemnification Agreement, the form of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 12, 2019 and incorporated in this Item 5 by reference.
Item 6. Exhibits
| ||
Exhibit Number | | Description of Exhibit |
3.1 | | |
3.2 | | |
3.3 | | |
3.4 | | |
3.5 | | |
4.1 | | |
4.2 | | |
10.1 | | |
31.1 | * | |
31.2 | * | |
32.1 | * | |
32.2 | * | |
101 | * | The following financial information from this Quarterly Report on Form 10-Q of Antero Midstream Corporation for the quarter ended September 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text. |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
The exhibits marked with the asterisk symbol (*) are filed or furnished with this Quarterly Report on Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| |
| |
ANTERO MIDSTREAM CORPORATION | |
| |
By: | /s/ BRENDAN E. KRUEGER |
| Brendan E. Krueger |
| Chief Financial Officer, Vice President – Finance and Treasurer |
| |
Date: | October 30, 2024 |
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