Greetings. Welcome to the Antero Midstream 2Q 2025 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to Justin Agnew, Vice President of Finance. Thank you. You may begin.

Good morning, and thank you for joining us for Antero Midstream's Second Quarter Investor Conference Call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I would also like to direct you to the homepage of our website at www.anteromidstream.com where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may also contain certain non-GAAP financial numbers. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Joining me on the call today are Paul Rady, Chairman, CEO and President of Antero Resources and Antero Midstream; Brendan Krueger, CFO of Antero Midstream; and Michael Kennedy, CFO of Antero Resources and Director of Antero Midstream. With that, I'll turn the call over to Paul.

Thanks, Justin. Good morning, everyone. In my comments, I will discuss the progress on our 2025 capital projects and an update on our capital reuse savings. Brendan will then provide a recap of our second quarter results and increased 2025 guidance. Let me start on Slide #3, titled '2025 Capital projects on track'. As depicted on this page, during the second quarter, we invested $45 million in gathering, compression, water and the Stonewall joint venture projects. This brings our year-to-date capital investment to $82 million or 45% of our updated 2025 capital budget at the midpoint of guidance. These projects included the completion of Torrey's Peak compressor stations and significant progress on the water system expansion to the southern portion of the Marcellus. The capital invested in the back half of the year will be weighted towards the third quarter as we take advantage of better weather conditions for construction. Importantly, the remaining capital will be focused on low-pressure gathering and water connects that set up the 2026 development plan. Before turning the call over to Brendan, I also want to provide an update on our compression reuse program on Slide #4, titled 'exceeding expectations on reuse savings'. To date, we have realized over $50 million of savings through our reuse program, including $30 million at the Torrey's Peak compressor station. After a successful proof of concept on three compressor stations, we’re now increasing the future reuse savings estimates. As you can see on the left side of the page, our five-year savings estimate from 2026 through 2030 has increased from $60 million to over $85 million. This brings the cumulative savings already achieved plus the forecasted savings to over $135 million. To put it in perspective, these savings approximate the cost of building two brand-new 160 million cubic feet per day compressor stations. With that, let me turn it over to Brendan.

Thanks, Paul. I will start with our second quarter financial results on Slide 5. During the second quarter, we generated $284 million of EBITDA, which was an 11% increase year-over-year. This was driven primarily by an increase in gathering and processing volumes, both of which set new company records. This EBITDA growth, combined with declining capital year-over-year, resulted in free cash flow after dividends of $82 million, which was almost a 90% increase compared to last year. We utilized this free cash flow for share repurchases and for debt reduction, which drove our leverage down to 2.8x as of June 30. Now let's move on to Slide #6, titled 'increased 2025 guidance'. This slide illustrates the components that resulted in the $25 million increase in our free cash flow guidance. At the midpoint, we are increasing our adjusted EBITDA guidance by $10 million driven by outperformance in our gathering and compression throughput. In addition, we are lowering our capital budget range, bringing the top end of the guidance down from $200 million to $190 million, a $5 million reduction at the midpoint. Our debt reduction efforts have also resulted in $5 million lower interest expense. Lastly, with the recently passed budget reconciliation bill, we are reducing our cash income taxes from a range of $0 to $10 million to $0. This is driven by a combination of reinstating bonus depreciation and interest deduction limitation improvements. Looking ahead, we do not expect to be a material cash taxpayer through at least 2028. I will finish my comments on Slide 7, titled 'uniquely positioned for LNG and Northeast demand growth'. Antero Midstream plays a critical role investing in first-mile infrastructure, connecting low-cost production to LNG facilities along the Gulf Coast. While most midstream companies can connect producers to local Appalachian markets, Antero Midstream is uniquely positioned in the fact that it connects its investment-grade producer to premium-priced LNG markets, while still maintaining significant optionality to connect into local markets, should the demand growth warrant. As you can see on the snapshot on the right-hand side of the page, additional projects in Appalachia continue to get announced, and we expect project announcements to accelerate given the regulatory support, specifically in West Virginia for data center development. In the future, if there is a structural change in Northeast demand or production tied to direct sales, Antero Resources has over ten years of dry gas locations that are substantially held by production and dedicated to Antero Midstream that can supply that growing opportunity set. Importantly, with over twenty years of liquids-rich and dry gas inventory and an investment-grade balance sheet, Antero is one of the few companies that can be relied on to actually supply long-term agreements. In summary, we continue to execute on our organic growth plan, consistently delivering predictable earnings and peer-leading capital efficiency. These attributes allow us to pay an attractive dividend, reduce absolute debt and make opportunistic share repurchases, all of which continue to drive value for our shareholders. With that, operator, we are ready to take questions.

Our first questions come from the line of John Mackay with Goldman Sachs.

I wanted to follow up on some of your comments made during the AR call. You keep mentioning in-basin demand opportunities and expressing a desire for those to align with NYMEX pricing and to approach growth with discipline. Could you elaborate on how Antero Midstream fits into this? Are there specific opportunities for Antero Midstream beyond just handling the additional volumes from Antero Resources?

Yes. I think it's a great question, John. I think for Antero Midstream, we look at the opportunities, similar to Antero Resources in the sense Antero Resources could be a supplier, Antero Midstream could build the infrastructure as needed. Obviously, we've got a large footprint with our current gathering and compression system in West Virginia and in Ohio. And so there are certainly opportunities where Antero Midstream could be the one building the spur, have sort of take-or-pay contracts on those arrangements as well. So we're looking at all of those items as potential solutions as it relates to this growing demand in the Northeast.

That's fair. Regarding capital allocation, I believe the first two quarters of the year indicated that the buyback might constitute about 50% of what we consider excess free cash flow, although it has been trending below that during this period. It appears to have increased in July, but could you elaborate on how you prioritize allocating funds to the buyback versus managing the balance sheet? Is the 50% figure still a reasonable estimate?

Yes. I mean I think we think about that 50% in probably longer-term numbers. So when we're giving those comments, it's over a full year period, not kind of quarter-to-quarter here. In the first quarter, we had some working capital headwinds. So we did not pay as much debt down in that first quarter. And then you saw in the second quarter, we did pay a substantial amount of debt down. And then, as you hit on in July, we certainly stepped up on the buyback there. So I would say it really does ebb and flow, and we try to be opportunistic in those share repurchases and can be more aggressive at times where we see more value in the shares. I think for Antero Midstream, we continue to see a lot of value in the share buyback. And we also see the value of paying down debt accruing to the equity as well. I think we're the lowest levered midstream name in the space, and we think that debt paydown does accrue to the equity still as we look at that today. So we'll continue to look at both opportunities, and it will change quarter-to-quarter.

Our next questions come from the line of Jeremy Tonet with JPMorgan.

Just wanted to dig in maybe a little bit more, if you could, with regards to in-basin demand opportunities, and there's been some announcements recently at the Pennsylvania Energy and Innovation Summit. I think there's also been some announcements out of Meta with the new Albany facility. And I was just wondering, related to these recent developments, I guess, do you see opportunities emerging specific to Antero Midstream here over time?

Yes, I believe we touched on this in response to the first question. West Virginia is where we have a strong asset base for Antero Midstream. Recently, West Virginia passed a microgrid bill that allows a provider to skip certain regulatory steps if they supply 70% of the power to a data center, which presents significant advantages. As I mentioned earlier, Antero Midstream has two main roles in this context. First, if Antero Resources increases production to meet this specific demand, Antero Midstream benefits from water, low pressure, compression, and high-pressure fees. Secondly, if Antero Midstream engages in building infrastructure for supply, they would earn a fee potentially from a third party for that development. We're having numerous discussions about this and have a dedicated internal team, but there is no set timeline for any announcements as we are approaching this cautiously. If an opportunity aligns with our company's goals, we will share it, but for now, there are no plans for the medium to near term.

Got it. Understood. Maybe just pivoting here to the Clearwater facility lawsuit. I don't know if there's any color you could shed on timeline at this point from a legal proceeding standpoint.

No, unfortunately not. I think nothing's changed from what we put in our disclosure. They appealed to the Colorado Supreme Court and just waiting on the Colorado Supreme Court to come out with any sort of decision in terms of whether they take it or not, but no change from that standpoint.

Our next questions come from the line of Ned Baramov with Wells Fargo. Understood. Maybe just pivoting here to the Clearwater facility lawsuit. I don't know if there's any color you could shed on timeline at this point from a legal proceeding standpoint. No, unfortunately not. I think nothing's changed from what we put in our disclosure. They appealed to the Colorado Supreme Court and just waiting on the Colorado Supreme Court to come out with any sort of decision in terms of whether they take it or not, but no change from that standpoint.

Processing volumes ticked up well above capacity in the second quarter. And given Antero Resources' development plan assumes a higher mix of liquids-rich wells going into the fourth quarter, I would imagine utilization will increase even further from here. Could you maybe talk about the threshold above nameplate that would potentially trigger a decision to add another processing plant at the joint venture? It seems that running 5% to 10% above nameplate is not really a trigger, but just curious at what utilization levels you would have to make that decision?

Yes. I think there's still some room there. You can typically run these about 10% over nameplate. So at the 16% related to the joint venture, you'd be 160 over nameplate. So you've got another 80 or 90 still above that. So no imminent needs to increase processing capacity. And I think as was talked about on the Antero Resources call, there's also pads that get layered in over the next couple of years that are leaner as well. So you'd expect that to stay in that similar ballpark as you look forward here.

Understood. And then a quick question on cash taxes. The earnings press release indicated an expected reversal of cash taxes paid year-to-date in the second half of the year. Could you maybe talk about your cash tax expectations longer term? When do you think Antero Midstream will be a full cash taxpayer?

Yes. As we look out at least over the five years, we're not expecting to be a full cash taxpayer. And I think as I mentioned in prepared remarks, do not expect to be a material cash taxpayer through at least 2028, and then we'll see after that. But the bill overall was favorable for Antero Midstream in the sense it reduced at least next five years by about $150 million in terms of deferred taxes. So a nice benefit of getting that bill passed.

Our next questions come from the line of Wade Suki with Capital One.

I was just wondering if you might be able to speak to sort of inorganic opportunities, what you're seeing in the asset market out there? Any color you could give would be great.

Yes, that's a good question. We have completed some acquisitions in recent years, and we will continue to explore similar opportunities related to our existing asset base. There is nothing specific to discuss at the moment, but we are always on the lookout for such opportunities.

Thank you. This now concludes our question-and-answer session. I would now like to turn the floor back over to Justin Agnew for any closing comments.

Thanks, operator, and thanks to everybody for joining today's conference call. Please feel free to reach out with any follow-up questions.

Thank you. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.