Antero Midstream Corp 10-Q for FY2023 Q1

Antero Midstream Corp (AM)

10-Q 2023-04-26 For: 2023-03-31

Added on April 08, 2026

About this 10-Q

Antero Midstream Corp filed this 10-Q on April 26, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $259.48M; up 18.8% from $218.49M a year earlier
Net income: $86.51M; up 8.1% from net income of $80.04M a year earlier
Diluted EPS: $0.18; up 5.9% from $0.17 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 ☐



		Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		1
PART I—FINANCIAL INFORMATION		3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	33
PART II—OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	35
SIGNATURES		36


			(Unaudited)
	December 31,		March 31,
	2022		2023
Assets
Current assets:
Accounts receivable–Antero Resources	$	86,152		95,359
Accounts receivable–third party		575		371
Income tax receivable		940		940
Other current assets		1,326		1,744
Total current assets		88,993		98,414

Property and equipment, net		3,751,431		3,749,220
Investments in unconsolidated affiliates		652,767		643,118
Customer relationships		1,286,103		1,268,435
Other assets, net		12,026		11,340
Total assets	$	5,791,320		5,770,527

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable–Antero Resources	$	5,436		4,776
Accounts payable–third party		22,865		21,012
Accrued liabilities		72,715		69,366
Other current liabilities		1,061		1,065
Total current liabilities		102,077		96,219
Long-term liabilities:
Long-term debt		3,361,282		3,331,320
Deferred income tax liability		131,215		162,885
Other		4,428		4,619
Total liabilities		3,599,002		3,595,043

Stockholders' equity:
Preferred stock, $0.01 par value: 100,000 authorized as of December 31, 2022 and March 31, 2023
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding as of December 31, 2022 and March 31, 2023		—		—
Common stock, $0.01 par value; 2,000,000 authorized; 478,497 and 478,645 issued and outstanding as of December 31, 2022 and March 31, 2023, respectively		4,785		4,786
Additional paid-in capital		2,104,740		2,084,191
Retained earnings		82,793		86,507
Total stockholders' equity		2,192,318		2,175,484
Total liabilities and stockholders' equity	$	5,791,320		5,770,527


☒	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,
	2022		2023
Revenue:
Gathering and compression–Antero Resources	$	182,443		199,576
Water handling–Antero Resources		53,321		77,295
Water handling–third party		395		272
Amortization of customer relationships		(17,668)		(17,668)
Total revenue		218,491		259,475
Operating expenses:
Direct operating		42,012		57,873
General and administrative (including $2,832 and $6,327 of equity-based compensation in 2022 and 2023, respectively)		17,931		17,347
Facility idling		1,148		574
Depreciation		28,300		35,196
Accretion of asset retirement obligations		64		44
Loss on settlement of asset retirement obligations		—		341
Gain on asset sale		(118)		(245)
Total operating expenses		89,337		111,130
Operating income		129,154		148,345
Other income (expense):
Interest expense, net		(44,279)		(54,624)
Equity in earnings of unconsolidated affiliates		23,232		24,456
Total other expense		(21,047)		(30,168)
Income before income taxes		108,107		118,177
Income tax expense		(28,067)		(31,670)
Net income and comprehensive income	$	80,040		86,507

Net income per share–basic	$	0.17		0.18
Net income per share–diluted	$	0.17		0.18

Weighted average common shares outstanding:
Basic		477,646		478,612
Diluted		480,173		481,459


									Retained
							Additional		Earnings
	Preferred		Common Stock				Paid-In		(Accumulated		Total
	Stock		Shares		Amount		Capital		Deficit)		Equity
Balance at December 31, 2021	$	—		477,495	$	4,775		2,414,398		(132,475)		2,286,698
Dividends to stockholders		—		—		—		(108,287)		—		(108,287)
Equity-based compensation		—		—		—		2,832		—		2,832
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		188		2		(1,331)		—		(1,329)
Net income and comprehensive income		—		—		—		—		80,040		80,040
Balance at March 31, 2022	$	—		477,683	$	4,777		2,307,612		(52,435)		2,259,954

Balance at December 31, 2022	$	—		478,497	$	4,785		2,104,740		82,793		2,192,318
Dividends to stockholders		—		—		—		(25,709)		(82,793)		(108,502)
Equity-based compensation		—		—		—		6,327		—		6,327
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		148		1		(1,167)		—		(1,166)
Net income and comprehensive income		—		—		—		—		86,507		86,507
Balance at March 31, 2023	$	—		478,645	$	4,786		2,084,191		86,507		2,175,484


Customer relationships as of December 31, 2022		1,286,103
Amortization of customer relationships		(17,668)
Customer relationships as of March 31, 2023	$	1,268,435


Remainder of year ending December 31, 2023	$	53,004
Year ending December 31, 2024		70,672
Year ending December 31, 2025		70,672
Year ending December 31, 2026		70,672
Year ending December 31, 2027		70,672
Thereafter		932,743
Total	$	1,268,435


Remainder of year ending December 31, 2023	$	232,582
Year ending December 31, 2024		316,492
Year ending December 31, 2025		298,143
Year ending December 31, 2026		284,327
Year ending December 31, 2027		224,150
Thereafter		382,434
Total	$	1,738,128


	Three Months Ended March 31,
(in thousands)	2022		2023		Reportable Segment
Type of service
Gathering—low pressure	$	89,437		99,637	Gathering and Processing ⁽¹⁾
Gathering—low pressure fee rebate		(12,000)		(12,000)	Gathering and Processing ⁽¹⁾
Compression		51,612		58,390	Gathering and Processing ⁽¹⁾
Gathering—high pressure		53,394		53,549	Gathering and Processing ⁽¹⁾
Fresh water delivery		32,044		46,826	Water Handling
Other fluid handling		21,672		30,741	Water Handling
Amortization of customer relationships		(9,271)		(9,271)	Gathering and Processing
Amortization of customer relationships		(8,397)		(8,397)	Water Handling
Total	$	218,491		259,475

Type of contract
Per Unit Fixed Fee	$	194,443		211,576	Gathering and Processing ⁽¹⁾
Gathering—low pressure fee rebate		(12,000)		(12,000)	Gathering and Processing ⁽¹⁾
Per Unit Fixed Fee		32,439		47,099	Water Handling
Cost plus 3%		15,638		24,445	Water Handling
Cost of service fee		5,639		6,023	Water Handling
Amortization of customer relationships		(9,271)		(9,271)	Gathering and Processing
Amortization of customer relationships		(8,397)		(8,397)	Water Handling
Total	$	218,491		259,475


				(Unaudited)
	Estimated	December 31,		March 31,
(in thousands)	Useful Lives	2022		2023
Land	n/a	$	31,668		31,668
Gathering systems and facilities	40-50 years ⁽¹⁾		3,281,872		3,299,456
Permanent buried pipelines and equipment	7-20 years		601,347		629,253
Surface pipelines and equipment	1-7 years		66,726		71,179
Heavy trucks and equipment	3-5 years		5,157		5,157
Above ground storage tanks	5-10 years		2,953		5,130
Construction-in-progress	n/a		158,977		139,564
Total property and equipment			4,148,700		4,181,407
Less accumulated depreciation			(397,269)		(432,187)
Property and equipment, net		$	3,751,431		3,749,220


		Weighted Average
	Number	Grant Date
	of Units	Fair Value
Total AM LTIP RSUs awarded and unvested—December 31, 2022	4,877,258	$	9.79
Granted	3,094,153		10.59
Vested	(235,049)		7.62
Forfeited	(70,385)		10.18
Total AM LTIP RSUs awarded and unvested—March 31, 2023	7,665,977	$	10.17


	Three Months Ended March 31,
	2022		2023
Cash flows provided by (used in) operating activities:
Net income	$	80,040		86,507
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		28,300		35,196
Accretion of asset retirement obligations		64		44
Deferred income tax expense		28,067		31,670
Equity-based compensation		2,832		6,327
Equity in earnings of unconsolidated affiliates		(23,232)		(24,456)
Distributions from unconsolidated affiliates		31,130		34,105
Amortization of customer relationships		17,668		17,668
Amortization of deferred financing costs		1,410		1,474
Settlement of asset retirement obligations		(455)		(158)
Loss on settlement of asset retirement obligations		—		341
Gain on asset sale		(118)		(245)
Changes in assets and liabilities:
Accounts receivable–Antero Resources		3,054		(9,207)
Accounts receivable–third party		460		431
Other current assets		118		(520)
Accounts payable–Antero Resources		230		(660)
Accounts payable–third party		13,762		2,061
Accrued liabilities		1,334		2,141
Net cash provided by operating activities		184,664		182,719
Cash flows provided by (used in) investing activities:
Additions to gathering systems and facilities		(70,734)		(29,197)
Additions to water handling systems		(13,533)		(13,760)
Acquisition of gathering systems and facilities		—		(263)
Cash received in asset sales		121		1,071
Change in other assets		—		(2)
Net cash used in investing activities		(84,146)		(42,151)
Cash flows provided by (used in) financing activities:
Dividends to common stockholders		(108,149)		(108,364)
Dividends to preferred stockholders		(138)		(138)
Payments of deferred financing costs		(302)		—
Borrowings (repayments) on bank credit facilities, net		9,400		(30,900)
Employee tax withholding for settlement of equity compensation awards		(1,329)		(1,166)
Net cash used in financing activities		(100,518)		(140,568)
Net increase in cash and cash equivalents		—		—


					Dividends
Period	Record Date	Dividend Date	Dividends		per Share
Q4 2021	January 26, 2022	February 9, 2022	$	108,149	$	0.2250
*	February 14, 2022	February 14, 2022		138		*
Q1 2022	April 27, 2022	May 11, 2022		109,296		0.2250
*	May 16, 2022	May 16, 2022		137		*
Q2 2022	July 27, 2022	August 10, 2022		107,675		0.2250
*	August 15, 2022	August 15, 2022		138		*
Q3 2022	October 26, 2022	November 9, 2022		107,705		0.2250
*	November 14, 2022	November 14, 2022		137		*
	Total 2022		$	433,375

Q4 2022	January 25, 2023	February 8, 2023	$	108,364	$	0.2250
*	February 14, 2023	February 14, 2023		138		*
	Total 2023		$	108,502


	Three Months Ended March 31,
(in thousands, except per share amounts)	2022		2023
Net income	$	80,040		86,507
Less preferred stock dividends		(138)		(138)
Net income available to common shareholders	$	79,902		86,369

Net income per share–basic	$	0.17		0.18
Net income per share–diluted	$	0.17		0.18

Weighted average common shares outstanding–basic		477,646		478,612
Weighted average common shares outstanding–diluted		480,173		481,459


					(Unaudited)
	December 31, 2022				March 31, 2023
(in thousands)	Fair Value ⁽¹⁾		Carrying Value ⁽²⁾		Fair Value ⁽¹⁾		Carrying Value ⁽²⁾
2026 Notes	$	556,985		545,416		559,735		545,712
2027 Notes		612,365		646,610		632,905		646,780
2028 Notes		601,575		644,776		621,530		645,004
2029 Notes		685,650		742,480		704,100		742,724
Total	$	2,456,575		2,579,282		2,518,270		2,580,220


					Total Investment
					in Unconsolidated
(in thousands)	Joint Venture		Stonewall		Affiliates
Balance as of December 31, 2022	$	526,652		126,115		652,767
Equity in earnings of unconsolidated affiliates ⁽¹⁾		22,630		1,826		24,456
Distributions from unconsolidated affiliates		(27,010)		(7,095)		(34,105)
Balance as of March 31, 2023	$	522,272		120,846		643,118


	Three Months Ended March 31, 2022
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	182,443		53,321		—		235,764
Revenue–third-party		—		395		—		395
Amortization of customer relationships		(9,271)		(8,397)		—		(17,668)
Total revenues		173,172		45,319		—		218,491
Operating expenses:
Direct operating		17,182		24,830		—		42,012
General and administrative		9,701		6,741		1,489		17,931
Facility idling		—		1,148		—		1,148
Depreciation		15,807		12,493		—		28,300
Accretion of asset retirement obligations		—		64		—		64
Gain on asset sale		(31)		(87)		—		(118)
Total operating expenses		42,659		45,189		1,489		89,337
Operating income	$	130,513		130		(1,489)		129,154

Equity in earnings of unconsolidated affiliates	$	23,232		—		—		23,232
Additions to property and equipment	$	70,734		13,533		—		84,267


	Three Months Ended March 31, 2023
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	199,576		77,295		—		276,871
Revenue–third-party		—		272		—		272
Amortization of customer relationships		(9,271)		(8,397)		—		(17,668)
Total revenues		190,305		69,170		—		259,475
Operating expenses:
Direct operating		24,118		33,755		—		57,873
General and administrative		10,180		6,208		959		17,347
Facility idling		—		574		—		574
Depreciation		22,063		13,133		—		35,196
Accretion of asset retirement obligations		—		44		—		44
Loss on settlement of asset retirement obligations		—		341		—		341
Gain on asset sale		(242)		(3)		—		(245)
Total operating expenses		56,119		54,052		959		111,130
Operating income	$	134,186		15,118		(959)		148,345

Equity in earnings of unconsolidated affiliates	$	24,456		—		—		24,456
Additions to property and equipment, net	$	29,197		13,760		—		42,957


	Low Pressure Gathering	Quarterly Fee
	Volume Growth Incentive	Reduction
	Targets (MMcf/d)	(in millions)
Calendar Year 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
	2022		2023		or Decrease		Change
Operating Data:
Gathering—low pressure (MMcf)		263,727		285,423		21,696		8	%
Compression (MMcf)		253,474		282,362		28,888		11	%
Gathering—high pressure (MMcf)		259,042		252,129		(6,913)		(3)	%
Fresh water delivery (MBbl)		7,874		11,110		3,236		41	%
Other fluid handling (MBbl)		4,203		4,965		762		18	%
Wells serviced by fresh water delivery		21		23		2		10	%
Gathering—low pressure (MMcf/d)		2,930		3,171		241		8	%
Compression (MMcf/d)		2,816		3,137		321		11	%
Gathering—high pressure (MMcf/d)		2,878		2,801		(77)		(3)	%
Fresh water delivery (MBbl/d)		87		123		36		41	%
Other fluid handling (MBbl/d)		47		55		8		17	%
Average Realized Fees:
Average gathering—low pressure fee ($/Mcf)	$	0.34		0.35		0.01		3	%
Average compression fee ($/Mcf)	$	0.21		0.21		—		*
Average gathering—high pressure fee ($/Mcf)	$	0.21		0.21		—		*
Average fresh water delivery fee ($/Bbl)	$	4.07		4.21		0.14		3	%
Joint Venture Operating Data:
Processing—Joint Venture (MMcf)		136,242		135,741		(501)		*
Fractionation—Joint Venture (MBbl)		3,077		3,222		145		5	%
Processing—Joint Venture (MMcf/d)		1,514		1,508		(6)		*
Fractionation—Joint Venture (MBbl/d)		34		36		2		6	%


					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, 2023 – January 31, 2023	79,455	$	11.21	—	$	149,767,409
February 1, 2023 – February 28, 2023	25,654		10.74	—		N/A
March 1, 2023 – March 31, 2023	—		—	—		N/A
Total	105,109	$	11.10	—	$	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		Amended and Restated Bylaws of Antero Midstream Corporation, dated February 14, 2023 (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 15, 2023).
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).
10.1*	†	Form of Stock Award Grant Notice and Stock Award Agreement (Form for Non-Employee Directors) under the Antero Midstream Corporation Long-Term Incentive Plan.
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, 2023, 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).



ANTERO MIDSTREAM CORPORATION

By:	/s/ BRENDAN E. KRUEGER
	Brendan E. Krueger
	Chief Financial Officer, Vice President -Finance and Treasurer

Date:	April 26, 2023

Participant:	[_________________]
Date of Grant:	[_________________]
Total Number of Shares of Stock:	[______] Shares


Date: April 26, 2023

/s/ Paul M. Rady
Paul M. Rady
President and Chief Executive Officer