Antero Midstream Corp 10-Q for FY2021 Q1

Antero Midstream Corp (AM)

10-Q 2021-04-28 For: 2021-03-31

Added on April 08, 2026

About this 10-Q

Antero Midstream Corp filed this 10-Q on April 28, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $224.12M; down 8.0% from $243.71M a year earlier
Net income: $83.44M; compared with a net loss of $392.93M a year earlier
Diluted EPS: $0.17; compared with -$0.81 a year earlier

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Delaware		61-1748605
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1615 Wynkoop Street Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)



Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	AM	New York Stock Exchange


Large Accelerated Filer ⌧		Accelerated Filer ◻

Non-accelerated Filer ◻		Smaller Reporting Company ☐
Emerging Growth Company ☐


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		2
PART I—FINANCIAL INFORMATION		4
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	35
PART II—OTHER INFORMATION		36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		39


			(Unaudited)
	December 31,		March 31,
	2020		2021
Assets
Current assets:
Cash and cash equivalents	$	640		261
Accounts receivable–Antero Resources		73,722		88,773
Accounts receivable–third party		839		227
Income tax receivable		17,251		940
Other current assets		1,479		966
Total current assets		93,931		91,167

Property and equipment, net		3,254,044		3,249,726
Investments in unconsolidated affiliates		722,478		712,069
Deferred tax asset		103,402		75,378
Customer relationships		1,427,447		1,409,779
Other assets, net		9,610		8,641
Total assets	$	5,610,912		5,546,760

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable–Antero Resources	$	3,862		2,927
Accounts payable–third party		9,495		14,898
Accrued liabilities		74,947		56,598
Other current liabilities		5,701		5,327
Total current liabilities		94,005		79,750
Long-term liabilities:
Long-term debt		3,091,626		3,103,428
Other		6,995		6,716
Total liabilities		3,192,626		3,189,894

Stockholders' Equity:
Preferred stock, $0.01 par value: 100,000 authorized as of both December 31, 2020 and March 31, 2021
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding as of both December 31, 2020 and March 31, 2021		—		—
Common stock, $0.01 par value; 2,000,000 authorized; 476,639 and 476,907 issued and outstanding as of December 31, 2020 and March 31, 2021, respectively		4,766		4,769
Additional paid-in capital		2,877,612		2,732,748
Accumulated deficit		(464,092)		(380,651)
Total stockholders' equity		2,418,286		2,356,866
Total liabilities and stockholders' equity	$	5,610,912		5,546,760


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
	2020		2021
Revenue:
Gathering and compression–Antero Resources	$	163,129		185,161
Water handling–Antero Resources		98,184		56,603
Water handling–third party		—		25
Amortization of customer relationships		(17,605)		(17,668)
Total revenue		243,708		224,121
Operating expenses:
Direct operating		48,728		39,314
General and administrative (including $3,338 and $4,012 of equity-based compensation in 2020 and 2021, respectively)		13,537		17,930
Facility idling		8,678		1,179
Impairment of goodwill		575,461		—
Impairment of property and equipment		89,083		1,379
Depreciation		27,343		26,850
Accretion of asset retirement obligations		42		119
Loss on asset sale		—		3,763
Total operating expenses		762,872		90,534
Operating income (loss)		(519,164)		133,587
Interest expense, net		(37,631)		(42,866)
Equity in earnings of unconsolidated affiliates		19,077		20,744
Income (loss) before income taxes		(537,718)		111,465
Provision for income tax benefit (expense)		144,785		(28,024)
Net income (loss) and comprehensive income (loss)	$	(392,933)		83,441

Net income (loss) per share–basic	$	(0.81)		0.17
Net income (loss) per share–diluted	$	(0.81)		0.17

Weighted average common shares outstanding:
Basic		483,103		476,850
Diluted		483,103		479,272


							Additional
	Preferred		Common Stock				Paid-In		Accumulated		Total
	Stock		Shares		Amount		Capital		Deficit		Equity
Balance at December 31, 2019	$	—		484,042	$	4,840		3,480,139		(341,565)		3,143,414
Dividends to stockholders		—		—		—		(149,014)		—		(149,014)
Equity-based compensation		—		—		—		3,338		—		3,338
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		43		—		(26)		—		(26)
Repurchases and retirement of common stock		—		(4,700)		(46)		(15,778)		—		(15,824)
Net loss and comprehensive loss		—		—		—		—		(392,933)		(392,933)
Balance at March 31, 2020	$	—		479,385	$	4,794		3,318,659		(734,498)		2,588,955

Balance at December 31, 2020	$	—		476,639	$	4,766		2,877,612		(464,092)		2,418,286
Dividends to stockholders		—		—		—		(147,332)		—		(147,332)
Equity-based compensation		—		—		—		4,012		—		4,012
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		268		3		(1,544)		—		(1,541)
Net income and comprehensive income		—		—		—		—		83,441		83,441
Balance at March 31, 2021	$	—		476,907	$	4,769		2,732,748		(380,651)		2,356,866


Customer relationships as of December 31, 2020	$	1,427,447
Amortization of customer relationships		(17,668)
Customer relationships as of March 31, 2021	$	1,409,779


Remainder of year ending December 31, 2021	$	53,004
Year ending December 31, 2022		70,672
Year ending December 31, 2023		70,672
Year ending December 31, 2024		70,672
Year ending December 31, 2025		70,672
Thereafter		1,074,087
Total	$	1,409,779


Remainder of year ending December 31, 2021	$	170,459
Year ending December 31, 2022		249,029
Year ending December 31, 2023		249,029
Year ending December 31, 2024		249,712
Year ending December 31, 2025		235,940
Thereafter		558,290
Total	$	1,712,459


	Three Months Ended March 31,
(in thousands)	2020		2021		Reportable segment
Revenue from contracts with customers
Type of service
Gathering—low pressure	$	81,148		86,306	Gathering and Processing ⁽¹⁾
Gathering—low pressure rebate		(12,000)		—	Gathering and Processing ⁽¹⁾
Gathering—high pressure		48,913		50,718	Gathering and Processing ⁽¹⁾
Compression		45,068		48,137	Gathering and Processing ⁽¹⁾
Fresh water delivery		65,818		37,358	Water Handling
Other fluid handling		32,366		19,270	Water Handling
Amortization of customer relationships		(9,238)		(9,271)	Gathering and Processing
Amortization of customer relationships		(8,367)		(8,397)	Water Handling
Total	$	243,708		224,121

Type of contract
Per Unit Fixed Fee	$	175,129		185,161	Gathering and Processing ⁽¹⁾
Gathering—low pressure rebate		(12,000)		—	Gathering and Processing ⁽¹⁾
Per Unit Fixed Fee		65,818		37,358	Water Handling
Cost plus 3%		30,945		15,350	Water Handling
Cost of service fee		1,421		3,920	Water Handling
Amortization of customer relationships		(9,238)		(9,271)	Gathering and Processing
Amortization of customer relationships		(8,367)		(8,397)	Water Handling
Total	$	243,708		224,121


				(Unaudited)
	Estimated	December 31,		March 31,
(in thousands)	useful lives	2020		2021
Land	n/a	$	23,582		23,272
Gathering systems and facilities	40-50 years ⁽¹⁾		2,643,927		2,653,975
Permanent buried pipelines and equipment	7-20 years		545,419		551,983
Surface pipelines and equipment	1-7 years		50,916		51,743
Heavy trucks and equipment	3-5 years		5,919		5,919
Above ground storage tanks	5-10 years		2,483		2,483
Construction-in-progress	n/a		139,506		144,909
Total property and equipment			3,411,752		3,434,284
Less accumulated depreciation			(157,708)		(184,558)
Property and equipment, net		$	3,254,044		3,249,726


		Weighted
		Average
	Number	Grant Date
	of Units	Fair Value
Total AM LTIP RSUs awarded and unvested—December 31, 2020	3,314,955	$	8.09
Granted	—		—
Vested	(429,593)		7.46
Forfeited	(39,414)		7.27
Total AM LTIP RSUs awarded and unvested—March 31, 2021	2,845,948	$	8.20


					Dividends
Period	Record Date	Dividend Date	Dividends		per Share
Q4 2019	January 31, 2020	February 12, 2020	$	148,876	$	0.3075
*	February 14, 2020	February 14, 2020		138		*
Q1 2020	April 30, 2020	May 12, 2020		147,519		0.3075
*	May 15, 2020	May 15, 2020		137		*
Q2 2020	July 30, 2020	August 12, 2020		146,664		0.3075
*	August 14, 2020	August 14, 2020		138		*
Q3 2020	October 29, 2020	November 12, 2020		146,581		0.3075
*	November 16, 2020	November 16, 2020		137		*
	Total 2020		$	590,190

Q4 2020	February 3, 2021	February 11, 2021	$	147,194	$	0.3075
*	February 16, 2021	February 16, 2021		138		*
	Total 2021		$	147,332


	Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2021
Net income (loss)	$	(392,933)		83,441
Less preferred stock dividends		(138)		(138)
Net income (loss) available to common shareholders	$	(393,071)		83,303

Net income (loss) per share–basic	$	(0.81)		0.17
Net income (loss) per share–diluted	$	(0.81)		0.17

Weighted average common shares outstanding–basic		483,103		476,850
Weighted average common shares outstanding–diluted		483,103		479,272


					(Unaudited)
	December 31, 2020				March 31, 2021
(in thousands)	Fair Value ⁽¹⁾		Carrying Value ⁽²⁾		Fair Value ⁽¹⁾		Carrying Value ⁽²⁾
2024 Notes	$	633,750		646,391		656,435		646,606
2026 Notes		569,250		543,267		591,525		543,511
2027 Notes		637,000		645,390		650,130		645,530
2028 Notes		624,000		643,078		647,725		643,281
Total	$	2,464,000		2,478,126		2,545,815		2,478,928


					Total Investment
			MarkWest		in Unconsolidated
(in thousands)	Stonewall			Joint Venture	Affiliates
Balance at December 31, 2020	$	137,632		584,846		722,478
Additional investments		—		757		757
Equity in earnings of unconsolidated affiliates		1,443		19,301		20,744
Distributions from unconsolidated affiliates		(4,815)		(27,095)		(31,910)
Balance at March 31, 2021	$	134,260		577,809		712,069


	Three Months Ended March 31, 2020
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	163,129		98,184		—		261,313
Amortization of customer relationships		(9,238)		(8,367)		—		(17,605)
Total revenues		153,891		89,817		—		243,708

Operating expenses:
Direct operating		13,391		35,337		—		48,728
General and administrative (excluding equity-based compensation)		5,044		2,905		2,250		10,199
Equity-based compensation		2,533		555		250		3,338
Facility idling		—		8,678		—		8,678
Impairment of goodwill		575,461		—		—		575,461
Impairment of property and equipment		—		89,083		—		89,083
Depreciation		13,050		14,293		—		27,343
Accretion of asset retirement obligations		—		42		—		42
Total operating expenses		609,479		150,893		2,500		762,872
Operating loss	$	(455,588)		(61,076)		(2,500)		(519,164)

Equity in earnings of unconsolidated affiliates	$	19,077		—		—		19,077
Total assets	$	4,347,932		1,184,095		249,332		5,781,359
Additions to property and equipment	$	54,659		13,324		—		67,983


	Three Months Ended March 31, 2021
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	185,161		56,603		—		241,764
Revenue–third-party		—		25		—		25
Amortization of customer relationships		(9,271)		(8,397)		—		(17,668)
Total revenues		175,890		48,231		—		224,121

Operating expenses:
Direct operating		17,236		22,078		—		39,314
General and administrative (excluding equity-based compensation)		5,924		6,620		1,374		13,918
Equity-based compensation		2,725		1,060		227		4,012
Facility idling		—		1,179		—		1,179
Impairment of property and equipment		1,218		161		—		1,379
Depreciation		14,713		12,137		—		26,850
Accretion of asset retirement obligations		—		119		—		119
Loss on asset sale		3,763		—		—		3,763
Total operating expenses		45,579		43,354		1,601		90,534
Operating income	$	130,311		4,877		(1,601)		133,587

Equity in earnings of unconsolidated affiliates	$	20,744		—		—		20,744
Total assets	$	4,347,966		1,122,312		76,482		5,546,760
Additions to property and equipment, net	$	15,059		13,330		—		28,389


	Low Pressure Gathering	Quarterly Fee
	Volume Growth Incentive	Reduction
	Targets (MMcf/d)	(in millions)
Calendar Years 2021-2023
Threshold 1	>2,900 and <3,150	$12.0
Threshold 2	>3,150 and <3,400	$15.5
Threshold 3	>3,400	$19.0


	Three Months Ended				Amount of
	March 31,				Increase		Percentage
	2020		2021		or Decrease		Change
Operating Data:
Gathering—low pressure (MMcf)		247,223		256,802		9,579		4	%
Gathering—high pressure (MMcf)		245,446		253,091		7,645		3	%
Compression (MMcf)		228,967		243,562		14,595		6	%
Fresh water delivery (MBbl)		16,620		9,400		(7,220)		(43)	%
Other fluid handling (MBbl)		5,600		3,951		(1,649)		(29)	%
Wells serviced by fresh water delivery		43		24		(19)		(44)	%
Gathering—low pressure (MMcf/d)		2,717		2,853		136		5	%
Gathering—high pressure (MMcf/d)		2,697		2,812		115		4	%
Compression (MMcf/d)		2,516		2,706		190		8	%
Fresh water delivery (MBbl/d)		183		104		(79)		(43)	%
Other fluid handling (MBbl/d)		61		44		(17)		(28)	%
Average realized fees:
Average gathering—low pressure fee ($/Mcf)	$	0.33		0.34		0.01		3	%
Average gathering—high pressure fee ($/Mcf)	$	0.20		0.20		—		*
Average compression fee ($/Mcf)	$	0.20		0.20		—		*
Average fresh water delivery fee ($/Bbl)	$	3.96		3.97		0.01		—	%
Joint Venture Operating Data:
Processing—Joint Venture (MMcf)		120,514		128,538		8,024		7	%
Fractionation—Joint Venture (MBbl)		2,984		3,431		447		15	%
Processing—Joint Venture (MMcf/d)		1,324		1,428		104		8	%
Fractionation—Joint Venture (MBbl/d)		33		38		5		15	%


					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 ⁽²⁾	Under the Plan
January 1, 2021 – January 31, 2021	189,776	$	8.12	—	$	149,767,409
February 1, 2021 – February 28, 2021	—		—	—		N/A
March 1, 2021 – March 31, 2021	—		—	—		N/A
Total	189,776	$	8.12	—	$	149,767,409


Exhibit Number		Description of Exhibit
3.1		Certificate of Conversion of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
3.2		Certificate of Incorporation of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
3.3		Bylaws of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
3.4		Certificate of Designations of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
22.1		List of Guarantor and Issuer Subsidiaries (incorporated by reference to Exhibit 22.1 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 17, 2021).
31.1	*	Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2	*	Certification of the Company’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1	*	Certification of the Company’s Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2	*	Certification of the Company’s Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
101	*	The following financial information from this Quarterly Report on Form 10-Q of Antero Midstream Corporation for the quarter ended March 31, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (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).



ANTERO MIDSTREAM CORPORATION

By:	/s/ Michael N. Kennedy
	MICHAEL N. KENNEDY
	Chief Financial Officer

Date:	April 28, 2021