Antero Midstream Corp 10-Q for FY2021 Q2

Antero Midstream Corp (AM)

10-Q 2021-07-28 For: 2021-06-30

Added on April 08, 2026

About this 10-Q

Antero Midstream Corp filed this 10-Q on July 28, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $232.79M; up 5.9% from $219.74M a year earlier
Net income: $80.22M; down 9.3% from net income of $88.44M a year earlier
Diluted EPS: $0.17; down 5.6% from $0.18 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	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41
PART II—OTHER INFORMATION		42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6.	Exhibits	44
SIGNATURES		45


			(Unaudited)
	December 31,		June 30,
	2020		2021
Assets
Current assets:
Cash and cash equivalents	$	640		678
Accounts receivable–Antero Resources		73,722		89,996
Accounts receivable–third party		839		466
Income tax receivable		17,251		940
Other current assets		1,479		358
Total current assets		93,931		92,438

Property and equipment, net		3,254,044		3,293,791
Investments in unconsolidated affiliates		722,478		707,518
Deferred tax asset		103,402		46,893
Customer relationships		1,427,447		1,392,111
Other assets, net		9,610		7,991
Total assets	$	5,610,912		5,540,742

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable–Antero Resources	$	3,862		4,238
Accounts payable–third party		9,495		24,785
Accrued liabilities		74,947		83,620
Other current liabilities		5,701		5,194
Total current liabilities		94,005		117,837
Long-term liabilities:
Long-term debt		3,091,626		3,087,734
Other		6,995		6,735
Total liabilities		3,192,626		3,212,306

Stockholders' Equity:
Preferred stock, $0.01 par value: 100,000 authorized as of both December 31, 2020 and June 30, 2021
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding as of both December 31, 2020 and June 30, 2021		—		—
Common stock, $0.01 par value; 2,000,000 authorized; 476,639 and 477,358 issued and outstanding as of December 31, 2020 and June 30, 2021, respectively		4,766		4,774
Additional paid-in capital		2,877,612		2,624,090
Accumulated deficit		(464,092)		(300,428)
Total stockholders' equity		2,418,286		2,328,436
Total liabilities and stockholders' equity	$	5,610,912		5,540,742


☒	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 June 30,
	2020		2021
Revenue:
Gathering and compression–Antero Resources	$	173,991		192,667
Water handling–Antero Resources		63,351		57,718
Water handling–third party		—		70
Amortization of customer relationships		(17,606)		(17,668)
Total revenue		219,736		232,787
Operating expenses:
Direct operating		42,067		39,555
General and administrative (including $2,697 and $3,059 of equity-based compensation in 2020 and 2021, respectively)		12,422		14,251
Facility idling		2,475		984
Depreciation		27,745		26,619
Accretion of asset retirement obligations		61		114
Loss (gain) on asset sale		240		(135)
Total operating expenses		85,010		81,388
Operating income		134,726		151,399
Other income (expense):
Interest expense, net		(35,311)		(43,505)
Equity in earnings of unconsolidated affiliates		20,947		21,515
Loss on early extinguishment of debt		—		(20,701)
Total other expense		(14,364)		(42,691)
Income before income taxes		120,362		108,708
Provision for income tax expense		(31,921)		(28,485)
Net income and comprehensive income	$	88,441		80,223

Net income per share–basic	$	0.19		0.17
Net income per share–diluted	$	0.18		0.17

Weighted average common shares outstanding:
Basic		476,836		477,290
Diluted		478,837		479,530


	Six Months Ended June 30,
	2020		2021
Revenue:
Gathering and compression–Antero Resources	$	337,120		377,828
Water handling–Antero Resources		161,535		114,321
Water handling–third party		—		95
Amortization of customer relationships		(35,211)		(35,336)
Total revenue		463,444		456,908
Operating expenses:
Direct operating		90,795		78,869
General and administrative (including $6,035 and $7,071 of equity-based compensation in 2020 and 2021, respectively)		25,959		32,181
Facility idling		11,153		2,163
Impairment of goodwill		575,461		—
Impairment of property and equipment		89,083		1,379
Depreciation		55,088		53,469
Accretion of asset retirement obligations		103		233
Loss on asset sale		240		3,628
Total operating expenses		847,882		171,922
Operating income (loss)		(384,438)		284,986
Other income (expense):
Interest expense, net		(72,942)		(86,371)
Equity in earnings of unconsolidated affiliates		40,024		42,259
Loss on early extinguishment of debt		—		(20,701)
Total other expense		(32,918)		(64,813)
Income (loss) before income taxes		(417,356)		220,173
Provision for income tax benefit (expense)		112,864		(56,509)
Net income (loss) and comprehensive income (loss)	$	(304,492)		163,664

Net income (loss) per share–basic	$	(0.63)		0.34
Net income (loss) per share–diluted	$	(0.63)		0.34

Weighted average common shares outstanding:
Basic		479,969		477,071
Diluted		479,969		479,382


							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
Dividends to stockholders		—		—		—		(147,656)		—		(147,656)
Equity-based compensation		—		—		—		2,697		—		2,697
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		311		4		(370)		—		(366)
Repurchases and retirement of common stock		—		(3,210)		(33)		(8,856)		—		(8,889)
Net income and comprehensive income		—		—		—		—		88,441		88,441
Balance at June 30, 2020	$	—		476,486	$	4,765		3,164,474		(646,057)		2,523,182

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
Dividends to stockholders		—		—		—		(108,936)		—		(108,936)
Equity-based compensation		—		—		—		3,059		—		3,059
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes		—		451		5		(2,781)		—		(2,776)
Net income and comprehensive income		—		—		—		—		80,223		80,223
Balance at June 30, 2021	$	—		477,358	$	4,774		2,624,090		(300,428)		2,328,436


Customer relationships as of December 31, 2020	$	1,427,447
Amortization of customer relationships		(35,336)
Customer relationships as of June 30, 2021	$	1,392,111


Remainder of year ending December 31, 2021	$	35,336
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	$	1,392,111


Remainder of year ending December 31, 2021	$	94,838
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	$	1,636,838


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2020		2021		2020		2021		Reportable Segment
Revenue from contracts with customers
Type of service
Gathering—low pressure	$	85,791		91,761		166,939		178,067	Gathering and Processing ⁽¹⁾
Gathering—low pressure rebate		(12,000)		—		(24,000)		—	Gathering and Processing ⁽¹⁾
Gathering—high pressure		51,577		51,535		100,490		102,253	Gathering and Processing ⁽¹⁾
Compression		48,623		49,371		93,691		97,508	Gathering and Processing ⁽¹⁾
Fresh water delivery		36,900		37,751		102,718		75,109	Water Handling
Other fluid handling		26,451		20,037		58,817		39,307	Water Handling
Amortization of customer relationships		(9,239)		(9,271)		(18,477)		(18,542)	Gathering and Processing
Amortization of customer relationships		(8,367)		(8,397)		(16,734)		(16,794)	Water Handling
Total	$	219,736		232,787		463,444		456,908

Type of contract
Per Unit Fixed Fee	$	185,991		192,667		361,120		377,828	Gathering and Processing ⁽¹⁾
Gathering—low pressure rebate		(12,000)		—		(24,000)		—	Gathering and Processing ⁽¹⁾
Per Unit Fixed Fee		36,900		37,751		102,718		75,109	Water Handling
Cost plus 3%		23,742		16,425		54,687		31,775	Water Handling
Cost of service fee		2,709		3,612		4,130		7,532	Water Handling
Amortization of customer relationships		(9,239)		(9,271)		(18,477)		(18,542)	Gathering and Processing
Amortization of customer relationships		(8,367)		(8,397)		(16,734)		(16,794)	Water Handling
Total	$	219,736		232,787		463,444		456,908


				(Unaudited)
	Estimated	December 31,		June 30,
(in thousands)	Useful Lives	2020		2021
Land	n/a	$	23,582		23,369
Gathering systems and facilities	40-50 years ⁽¹⁾		2,643,927		2,672,545
Permanent buried pipelines and equipment	7-20 years		545,419		565,472
Surface pipelines and equipment	1-7 years		50,916		52,569
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		182,611
Total property and equipment			3,411,752		3,504,968
Less accumulated depreciation			(157,708)		(211,177)
Property and equipment, net		$	3,254,044		3,293,791


		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	1,788,937		8.71
Vested	(1,129,501)		9.11
Forfeited	(200,473)		7.20
Total AM LTIP RSUs awarded and unvested—June 30, 2021	3,773,918	$	8.13


					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		*
Q1 2021	April 28, 2021	May 12, 2021		108,799		0.2250
*	May 17, 2021	May 17, 2021		137		*
	Total 2021		$	256,268


					(Unaudited)
	December 31, 2020				June 30, 2021
(in thousands)	Fair Value ⁽¹⁾		Carrying Value ⁽²⁾		Fair Value ⁽¹⁾		Carrying Value ⁽²⁾
2024 Notes	$	633,750		646,391		—		—
2026 Notes		569,250		543,267		614,680		543,766
2027 Notes		637,000		645,390		674,375		645,675
2028 Notes		624,000		643,078		681,655		643,484
2029 Notes		—		—		781,875		741,109
Total	$	2,464,000		2,478,126		2,752,585		2,574,034


					Total Investment
			MarkWest		in Unconsolidated
(in thousands)	Stonewall			Joint Venture	Affiliates
Balance at December 31, 2020	$	137,632		584,846		722,478
Additional investments		—		966		966
Equity in earnings of unconsolidated affiliates		3,168		39,091		42,259
Distributions from unconsolidated affiliates		(7,095)		(51,090)		(58,185)
Balance at June 30, 2021	$	133,705		573,813		707,518


	Three Months Ended June 30, 2020
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	173,991		63,351		—		237,342
Amortization of customer relationships		(9,239)		(8,367)		—		(17,606)
Total revenues		164,752		54,984		—		219,736
Operating expenses:
Direct operating		14,059		28,008		—		42,067
General and administrative		7,706		3,125		1,591		12,422
Facility idling		—		2,475		—		2,475
Depreciation		14,406		13,339		—		27,745
Accretion of asset retirement obligations		—		61		—		61
Loss on asset sale		—		240		—		240
Total operating expenses		36,171		47,248		1,591		85,010
Operating income	$	128,581		7,736		(1,591)		134,726

Equity in earnings of unconsolidated affiliates	$	20,947		—		—		20,947
Total assets	$	4,387,102		1,149,355		178,598		5,715,055
Additions to property and equipment	$	49,278		6,153		—		55,431


	Three Months Ended June 30, 2021
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	192,667		57,718		—		250,385
Revenue–third-party		—		70		—		70
Amortization of customer relationships		(9,271)		(8,397)		—		(17,668)
Total revenues		183,396		49,391		—		232,787
Operating expenses:
Direct operating		17,012		22,543		—		39,555
General and administrative		8,734		4,873		644		14,251
Facility idling		—		984		—		984
Depreciation		14,404		12,215		—		26,619
Accretion of asset retirement obligations		—		114		—		114
Gain on asset sale		(135)		—		—		(135)
Total operating expenses		40,015		40,729		644		81,388
Operating income	$	143,381		8,662		(644)		151,399

Equity in earnings of unconsolidated affiliates	$	21,515		—		—		21,515
Total assets	$	4,380,817		1,111,733		48,192		5,540,742
Additions to property and equipment, net	$	36,599		9,377		—		45,976


	Six Months Ended June 30, 2020
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	337,120		161,535		—		498,655
Amortization of customer relationships		(18,477)		(16,734)		—		(35,211)
Total revenues		318,643		144,801		—		463,444
Operating expenses:
Direct operating		27,450		63,345		—		90,795
General and administrative		15,283		6,585		4,091		25,959
Facility idling		—		11,153		—		11,153
Impairment of goodwill		575,461		—		—		575,461
Impairment of property and equipment		—		89,083		—		89,083
Depreciation		27,456		27,632		—		55,088
Accretion of asset retirement obligations		—		103		—		103
Loss on asset sale		—		240		—		240
Total operating expenses		645,650		198,141		4,091		847,882
Operating loss	$	(327,007)		(53,340)		(4,091)		(384,438)

Equity in earnings of unconsolidated affiliates	$	40,024		—		—		40,024
Total assets	$	4,387,102		1,149,355		178,598		5,715,055
Additions to property and equipment	$	103,937		19,477		—		123,414


	Six Months Ended June 30, 2021
	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Revenues:
Revenue–Antero Resources	$	377,828		114,321		—		492,149
Revenue–third-party		—		95		—		95
Amortization of customer relationships		(18,542)		(16,794)		—		(35,336)
Total revenues		359,286		97,622		—		456,908
Operating expenses:
Direct operating		34,248		44,621		—		78,869
General and administrative		17,383		12,553		2,245		32,181
Facility idling		—		2,163		—		2,163
Impairment of property and equipment		1,218		161		—		1,379
Depreciation		29,117		24,352		—		53,469
Accretion of asset retirement obligations		—		233		—		233
Loss on asset sale		3,628		—		—		3,628
Total operating expenses		85,594		84,083		2,245		171,922
Operating income	$	273,692		13,539		(2,245)		284,986

Equity in earnings of unconsolidated affiliates	$	42,259		—		—		42,259
Total assets	$	4,380,817		1,111,733		48,192		5,540,742
Additions to property and equipment, net	$	51,658		22,707		—		74,365


	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
	June 30,				Increase		Percentage
	2020		2021		or Decrease		Change
Operating Data:
Gathering—low pressure (MMcf)		261,039		263,640		2,601		1	%
Gathering—high pressure (MMcf)		258,380		257,193		(1,187)		*
Compression (MMcf)		246,790		249,681		2,891		1	%
Fresh water delivery (MBbl)		9,318		9,499		181		2	%
Other fluid handling (MBbl)		5,433		4,381		(1,052)		(19)	%
Wells serviced by fresh water delivery		22		17		(5)		(23)	%
Gathering—low pressure (MMcf/d)		2,869		2,897		28		1	%
Gathering—high pressure (MMcf/d)		2,839		2,826		(13)		*
Compression (MMcf/d)		2,712		2,744		32		1	%
Fresh water delivery (MBbl/d)		102		104		2		2	%
Other fluid handling (MBbl/d)		60		48		(12)		(20)	%
Average Realized Fees:
Average gathering—low pressure fee ($/Mcf) ⁽¹⁾	$	0.33		0.33		—		*
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)		127,791		131,912		4,121		3	%
Fractionation—Joint Venture (MBbl)		3,014		3,417		403		13	%
Processing—Joint Venture (MMcf/d)		1,404		1,450		46		3	%
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
April 1, 2021 – April 30, 2021	276,378	$	8.71	—		149,767,409
May 1, 2021 – May 31, 2021	—		—	—		N/A
June 1, 2021 – June 30, 2021	—		—	—		N/A
Total	276,378	$	8.71	—	$	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).
4.1		Indenture, dated June 8, 2021, by and among Antero Midstream Partners LP, Antero Midstream Finance Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on June 8, 2021).
4.2		Form of 5.375% Senior Note due 2029 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on June 8, 2021).
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 June 30, 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/ Brendan E. Krueger
	BRENDAN E. KRUEGER
	Chief Financial Officer, Treasurer and Vice President of Finance

Date:	July 28, 2021