UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended SeptemberJune 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-38048
Altus Midstream Company
(Exact name of registrant as specified in its charter)
Delaware81-4675947
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Post Oak Central, 2000 Post Oak Boulevard, Suite 100,, Houston,, Texas77056-4400
(Address of principal executive offices) (Zip Code)
(713) (713) 296-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par valueALTMNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of registrant’s Class A common stock, par value $0.0001 per share issued and outstanding as of OctoberJuly 31, 202020213,746,460
Number of shares of registrant’s Class C common stock, par value $0.0001 per share issued and outstanding as of OctoberJuly 31, 2020202112,500,000




TABLE OF CONTENTS
 
Item PageItemPage
PART I — FINANCIAL INFORMATION PART I — FINANCIAL INFORMATION
 
1.
FINANCIAL STATEMENTS
1
1.
1
 
STATEMENT OF CONSOLIDATED OPERATIONS
1
1
 
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
2
2
 
CONSOLIDATED BALANCE SHEET
3
3
 
STATEMENT OF CONSOLIDATED CASH FLOWS
4
4
 
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
5
5
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
7
 
2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
23
2.
25
 
3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
36
3.
39
 
4.
CONTROLS AND PROCEDURES
37
4.
40
 
PART II — OTHER INFORMATION PART II — OTHER INFORMATION
 
1.
LEGAL PROCEEDINGS
38
1.
41
 
1A.
RISK FACTORS
38
1A.
41
 
6.
EXHIBITS
39
6.
41
 


i


FORWARD-LOOKING STATEMENTS AND RISK
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Company’s examination of historical operating trends, production and growth forecasts of Apache Corporation’s Alpine High field development and other data in the Company’s possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, its assumptions about:
•the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically the coronavirus disease 2019 (COVID-19) pandemic)pandemic and any related variants) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;
•the availability and effectiveness of any vaccine programs or other therapeutics related to the treatment of COVID-19;
•the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;
•pipeline and gathering system capacity and availability;
•production rates, throughput volumes, reserve levels, and development success of dedicated oil and gas fields;
•economic and competitive conditions;
•the availability of capital;
•cash flow and the timing of expenditures;
•capital expenditures and other contractual obligations;
•weather conditions;
•inflation rates;
•the availability of goods and services;
•legislative, regulatory, or policy changes;
•terrorism or cyberattacks;
•occurrence of property acquisitions or divestitures;
•the integration of acquisitions;
•a decline in oil, natural gas, and NGL production, and the impact of general economic conditions on the demand for oil, natural gas, and NGLs;
•the impact of environmental, health and safety, and other governmental regulations and of current or pending legislation;
•environmental risks;
•the effects of competition;
•the retention of key members of senior management and key technical personnel;
ii

•increases in interest rates;

ii

•the effectiveness of the Company’s business strategy;
•changes in technology;
•market-related risks, such as general credit, liquidity, and interest-rate risks;
•the timing, amount, and terms of the Company’s future issuances of equity and debt securities;
•other factors disclosed under Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in the Company’s most recently filed Annual Report on Form 10-K;
•other risks and uncertainties disclosed in the Company’s third-quarter 2020second-quarter 2021 earnings release;
•other factors disclosed under Part II, Item 1A-Risk1A—Risk Factors in the Company’s of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020;10-Q; and
•
•other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; and
any other factors disclosed in the other filings that the Company makes with the Securities and Exchange Commission (SEC).
Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all of them.such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company assumes no dutydisclaims any obligation to update or revise its forward-looking statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.



iii


GLOSSARY OF TERMS

The following are abbreviations and definitions of certain terms used in this Quarterly Report on Form 10-Q and certain terms which are commonly used in the exploration, production and midstream sectors of the oil and natural gas industry:
•
•Bbl. One stock tank barrel of 42 United States (U.S.) gallons liquid volume used herein in reference to crude oil, condensate or NGLs.
•Bbl/d. One Bbl per day.
•Bcf. One billion cubic feet of natural gas.
•Bcf/d. One Bcf per day.
•Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.
•Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
•Formation. A layer of rock which has distinct characteristics that differs from nearby rock.
•MBbl. One thousand barrels of crude oil, condensate or NGLs.
•MBbl/d. One MBbl per day.
•Mcf. One thousand cubic feet of natural gas.
•Mcf/d. One Mcf per day.
•MMBbl. One million barrels of crude oil, condensate or NGLs.
•MMBtu. One million British thermal units.
•MMcf. One million cubic feet of natural gas.
•MMcf/d. One MMcf per day.
• One stock tank barrel of 42 United States (U.S.) gallons liquid volume used herein in reference to crude oil, condensate or NGLs.
•
Bbl/d. One Bbl per day.
•
Bcf. One billion cubic feet of natural gas.
•
Bcf/d. One Bcf per day.
•
Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.
•
Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
•
Formation. A layer of rock which has distinct characteristics that differs from nearby rock.
•
MBbl. One thousand barrels of crude oil, condensate or NGLs.
•
MBbl/d. One MBbl per day.
•
Mcf. One thousand cubic feet of natural gas.
•
Mcf/d. One Mcf per day.
•
MMBbl. One million barrels of crude oil, condensate or NGLs.
•
MMBtu. One million British thermal units.
•
MMcf. One million cubic feet of natural gas.
•
MMcf/d. One MMcf per day.
•
NGLs. Natural gas liquids. Hydrocarbons found in natural gas, which may be extracted as liquefied petroleum gas and natural gasoline.

Effective February 14, 2019, each of the Altus Midstream Entities’ (as defined herein) names were changed to replace “Alpine High” in each name with “Altus Midstream.”

References to “Altus”“Altus,” “ALTM,” and the “Company” includemean Altus Midstream Company and its consolidated subsidiaries, unless otherwise specifically stated. References to “Apache” mean Apache Corporation and its consolidated subsidiaries. All references to the Company’s Class A common stock, $0.0001 par value (Class A Common Stock), and Class C common stock, $0.0001 par value (Class C Common Stock), reflect such share amounts as retrospectively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.



iv


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2021
2020(1)
2021
2020(1)
(In thousands, except per share data)
REVENUES:
Midstream services revenue — affiliate (Note 2)$32,467 $31,616 $63,996 $72,383 
Product sales — third parties
3,126 0 5,743 0 
Total revenues35,593 31,616 69,739 72,383 
COSTS AND EXPENSES:
Costs of product sales3,351 0 5,344 0 
Operations and maintenance(2)
7,340 9,508 14,742 20,099 
General and administrative(3)
3,475 2,988 6,930 7,166 
Depreciation and accretion4,009 4,062 8,009 7,976 
Impairments0 0 441 0 
Taxes other than income3,812 3,347 7,620 6,790 
Total costs and expenses21,987 19,905 43,086 42,031 
OPERATING INCOME13,606 11,711 26,653 30,352 
Unrealized derivative instrument gain (loss)31,006 (10,585)14,477 (72,569)
Interest income1 2 2 9 
Income from equity method interests, net28,466 15,712 50,154 31,554 
Warrants valuation adjustment222 (417)(442)1,460 
Other3,155 (97)10,699 (274)
Total other income (loss)62,850 4,615 74,890 (39,820)
Financing costs, net of capitalized interest2,615 292 5,213 565 
NET INCOME (LOSS) BEFORE INCOME TAXES73,841 16,034 96,330 (10,033)
Current income tax benefit0 0 0 (696)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS73,841 16,034 96,330 (9,337)
Net income attributable to Preferred Unit limited partners24,004 18,764 43,496 37,026 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS49,837 (2,730)52,834 (46,363)
Net income (loss) attributable to Apache limited partner38,174 (1,779)40,991 (37,331)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$11,663 $(951)$11,843 $(9,032)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS, PER SHARE
Basic$3.11 $(0.25)$3.16 $(2.41)
Diluted$1.31 $(0.25)$2.50 $(2.85)
WEIGHTED AVERAGE SHARES
Basic3,7463,7463,7463,746
Diluted32,5883,74620,08816,246
  Three Months Ended September 30, Nine Months Ended September 30,
  2020 2019 2020 2019
         
  (In thousands, except per share data)
REVENUES:        
Midstream services revenue — affiliate (Note 2) $38,869
 $34,009
 $111,252
 $91,994
Product sales — third parties
 1,303
 0
 1,900
 0
Total revenues 40,172
 34,009
 113,152
 91,994
COSTS AND EXPENSES:        
Costs of product sales 1,177
 0
 1,693
 0
Operations and maintenance(1)
 8,960
 13,063
 29,059
 43,466
General and administrative(2)
 2,936
 3,242
 10,102
 8,314
Depreciation and accretion 4,008
 11,710
 11,984

28,468
Impairments 0
 9,338
 0
 9,338
Taxes other than income 4,143
 3,239
 10,933
 9,702
Total costs and expenses 21,224
 40,592
 63,771
 99,288
OPERATING INCOME (LOSS) 18,948
 (6,583) 49,381
 (7,294)
OTHER INCOME (LOSS):        
Unrealized derivative instrument loss (3,533) (3,769) (76,102) (3,769)
Interest income 0
 617
 9

3,584
Income from equity method interests, net 14,320
 1,564
 47,541

536
Other 0
 0
 (355) (17)
Total other income (loss) 10,787
 (1,588) (28,907) 334
Financing costs, net of capitalized interest 413
 522
 978

1,508
NET INCOME (LOSS) BEFORE INCOME TAXES 29,322
 (8,693) 19,496
 (8,468)
Current income tax benefit 0
 0
 (696) 0
Deferred income tax benefit 0
 (505) 0

(510)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 29,322
 (8,188) 20,192

(7,958)
Net income attributable to Preferred Unit limited partners 19,332
 17,480
 56,358
 21,623
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS 9,990
 (25,668) (36,166) (29,581)
Net income (loss) attributable to Apache limited partner 7,687
 (20,804) (28,361) (23,524)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS $2,303
 $(4,864) $(7,805) $(6,057)
         
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS, PER SHARE(3)
        
Basic $0.61
 $(1.30) $(2.08) $(1.62)
Diluted $0.30
 $(1.48) $(2.23) $(1.72)
WEIGHTED AVERAGE SHARES(3)
        
Basic 3,746
 3,746
 3,746
 3,746
Diluted 97,355
 16,246
 16,246
 16,246
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Includes amounts of $1.5 million and $1.3 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $2.3 million and $2.8 million for the six months ended June 30, 2021 and 2020, respectively. Refer to Note 2—Transactions with Affiliates.
(3)Includes amounts of $2.3 million and $1.6 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $4.6 million and $3.6 million associated with related parties for the six months ended June 30, 2021 and 2020, respectively. Refer to Note 2—Transactions with Affiliates.

(1)
Includes amounts of $1.2 million and $2.2 million associated with related parties for the three months ended September 30, 2020 and 2019, respectively, and $4.0 million and $7.1 million for the nine months ended September 30, 2020 and 2019, respectively. Refer to Note 2—Transactions with Affiliates.
(2)
Includes amounts of $1.6 million and $2.1 million associated with related parties for the three months ended September 30, 2020 and 2019, respectively, and $5.1 million and $4.7 million for the nine months ended September 30, 2020 and 2019, respectively. Refer to Note 2—Transactions with Affiliates.
(3)
Share and per share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.

The accompanying notes to consolidated financial statements are an integral part of this statement.

1

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021
2020(1)
2021
2020(1)
(In thousands)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS$73,841 $16,034 $96,330 $(9,337)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income (loss)0 390 630 (794)
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS73,841 16,424 96,960 (10,131)
Comprehensive income attributable to Preferred Unit limited partners24,004 18,764 43,496 37,026 
Comprehensive income (loss) attributable to Apache limited partner38,174 (1,479)41,476 (37,942)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$11,663 $(861)$11,988 $(9,215)
  Three Months Ended September 30, Nine Months Ended September 30,
  2020 2019 2020 2019
         
  (In thousands)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS $29,322
 $(8,188) $20,192
 $(7,958)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:        
Share of equity method interests other comprehensive income (loss) 681
 (591) (113) (1,634)
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 30,003
 (8,779) 20,079
 (9,592)
Comprehensive income attributable to Preferred Unit limited partners 19,332
 17,480
 56,358
 21,623
Comprehensive income (loss) attributable to Apache limited partner 8,211
 (21,282) (28,448) (24,845)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS $2,460
 $(4,977) $(7,831) $(6,370)
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.













































The accompanying notes to consolidated financial statements are an integral part of this statement.

2

ALTUS MIDSTREAM COMPANY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,December 31,
 2021
2020(1)
(In thousands, except per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$75,092 $24,188 
Accounts receivable1,956 1,033 
Accounts receivable from Apache Corporation (Note 1)797 446 
Revenue receivables (Note 3)10,964 11,378 
Inventories3,440 3,597 
Prepaid assets and other5,957 2,127 
98,206 42,769 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment209,650 208,870 
Less: Accumulated depreciation and accretion(18,858)(13,034)
190,792 195,836 
OTHER ASSETS:
Equity method interests1,554,385 1,555,182 
Deferred charges and other10,271 5,843 
1,564,656 1,561,025 
Total assets$1,853,654 $1,799,630 
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY
CURRENT LIABILITIES:
Distributions payable to Preferred Unit limited partners$11,562 $0 
Dividends payable0 5,620 
Distributions payable to Apache Corporation0 18,750 
Other current liabilities (Note 6)13,582 5,613 
25,144 29,983 
LONG-TERM DEBT657,000 624,000 
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Asset retirement obligation66,157 64,062 
Embedded derivative124,532 139,009 
Other noncurrent liabilities6,765 6,424 
197,454 209,495 
Total liabilities879,598 863,478 
COMMITMENTS AND CONTINGENCIES (Note 7)00
Redeemable noncontrolling interest — Apache limited partner863,063 575,125 
Redeemable noncontrolling interest — Preferred Unit limited partners617,191 608,381 
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at June 30, 2021 and December 31, 20201 1 
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at June 30, 2021 and December 31, 20201 1 
Additional paid-in capital0 122,222 
Accumulated deficit(506,200)(369,433)
Accumulated other comprehensive loss0 (145)
(506,198)(247,354)
Total liabilities, noncontrolling interests, and equity$1,853,654 $1,799,630 
  September 30, December 31,
  2020 2019
     
  (In thousands)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $1,983
 $5,983
Accounts receivable 556
 0
Accounts receivable from Apache Corporation (Note 1) 1,213
 5,195
Revenue receivables (Note 3) 11,975
 15,461
Inventories 3,661
 4,027
Prepaid assets and other 999
 1,071
  20,387
 31,737
PROPERTY, PLANT AND EQUIPMENT:    
Property, plant and equipment 215,402
 207,270
Less: Accumulated depreciation and amortization (10,092) (1,468)
  205,310
 205,802
OTHER ASSETS:    
Equity method interests 1,524,410
 1,258,048
Deferred charges and other 6,263
 5,267
  1,530,673
 1,263,315
Total assets $1,756,370
 $1,500,854
     
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY    
CURRENT LIABILITIES:    
Current debt (Note 5) $0
 $9,767
Other current liabilities (Note 6) 16,544
 23,925
  16,544
 33,692
LONG-TERM DEBT 580,000
 396,000
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:    
Asset retirement obligation 63,043
 60,095
Embedded derivative 179,031
 102,929
Other non-current liabilities 5,711
 4,614
  247,785
 167,638
Total liabilities 844,329
 597,330
     
COMMITMENTS AND CONTINGENCIES (Note 7) 

 

     
Redeemable noncontrolling interest — Apache limited partner 238,842
 701,000
Redeemable noncontrolling interest — Preferred Unit limited partners 600,395
 555,599
     
EQUITY:    
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at September 30, 2020 and December 31, 2019(1)
 1
 1
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at September 30, 2020 and December 31, 2019(1)
 1
 1
Additional paid-in capital 473,532
 39,822
Accumulated deficit (400,438) (392,633)
Accumulated other comprehensive loss (292) (266)
  72,804
 (353,075)
Total liabilities, noncontrolling interests, and equity $1,756,370
 $1,500,854

(1)
(1)
Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.
The accompanying notes toConsolidated Balance Sheet as of December 31, 2020 has been derived from the audited consolidated financial statements, are an integral partrevised to reflect the Company’s fair value change of this statement.its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.


ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
  Nine Months Ended September 30,
  2020 2019
     
  (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) including noncontrolling interests $20,192
 $(7,958)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Unrealized derivative instrument loss 76,102
 3,769
Depreciation and accretion 11,984
 28,468
Deferred income tax benefit 0
 (510)
Income from equity method interests, net (47,541) (536)
Distributions from equity method interests 60,435
 3,391
Impairments 0
 9,338
Other 781
 666
Changes in operating assets and liabilities:    
(Increase) decrease in inventories 366
 (676)
Decrease in prepaid assets and other 72
 237
Increase in accounts receivable (556) 0
(Increase) decrease in revenue receivables (Note 2) 3,486
 (798)
(Increase) decrease in account receivables from/payable to affiliate 917
 (5,011)
Increase in accrued expenses 11,145
 9,056
Increase in deferred charges, deferred credits, and other noncurrent liabilities 64
 0
NET CASH PROVIDED BY OPERATING ACTIVITIES 137,447
 39,436
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Capital expenditures(1)
 (29,540) (307,010)
Proceeds from sale of assets 7,629
 0
Contributions to equity method interests (286,227) (337,412)
Distributions from equity method interests 14,235
 0
Acquisition of equity method interests 0
 (670,625)
Capitalized interest paid (7,377) 0
NET CASH USED IN INVESTING ACTIVITIES (301,280) (1,315,047)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Redeemable noncontrolling interest — Preferred Unit limited partners, net
 0
 611,249
Distributions paid to Preferred Unit limited partners (11,562) 0
Proceeds from revolving credit facility 184,000
 235,000
Finance lease (11,789) (17,187)
Deferred facility fees (816) (792)
NET CASH PROVIDED BY FINANCING ACTIVITIES 159,833
 828,270
     
DECREASE IN CASH AND CASH EQUIVALENTS (4,000) (447,341)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,983
 449,935
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,983

$2,594
SUPPLEMENTAL CASH FLOW DATA:    
Accrued capital expenditures(2)
 $256
 $24,306
Finance lease liability(3)
 0
 29,000
Interest paid, net of capitalized interest 94
 685
Cash received for income tax refunds 696
 0

(1)
Following the Business Combination (as defined herein), capital expenditure amounts represent the portion of the total settlements with Apache in the period that are capital in nature, pursuant to the terms of the Construction, Operations and Maintenance Agreement (COMA). Refer to




Note 1—Summary of Significant Accounting Policies and Note 2—Transactions with Affiliates for more information.
(2)
Includes $0.3 million and $0.6 million due from Apache as of September 30, 2020 and 2019, respectively, pursuant to the terms of the COMA. Refer to Note 2—Transactions with Affiliates for more information.
(3)The Company entered into a finance lease in the first quarter of 2019 for power generators, which ended during the first quarter of 2020. The Company then exercised its option to purchase the generators.

The accompanying notes to consolidated financial statements are an integral part of this statement.
3

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
 Six Months Ended June 30,
 2021
2020(1)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests$96,330 $(9,337)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized derivative instrument (gain) loss(14,477)72,569 
Depreciation and accretion8,009 7,976 
Income from equity method interests, net(50,154)(31,554)
Distributions from equity method interests62,091 37,536 
Impairments441 0 
Power credit, net(7,609)0 
Warrants valuation adjustment442 (1,460)
Other307 489 
Changes in operating assets and liabilities:
Decrease in inventories157 256 
Increase in prepaid assets and other(689)(541)
Increase in accounts receivable(923)(101)
Decrease in revenue receivables (Note 2)414 1,889 
Decrease in account receivables from/payable to affiliate551 1,301 
Increase in accrued expenses7,895 6,392 
Increase (decrease) in deferred charges, deferred credits, and other noncurrent liabilities(1,730)1,382 
NET CASH PROVIDED BY OPERATING ACTIVITIES101,055 86,797 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(2,447)(26,520)
Proceeds from sale of assets1,669 6,773 
Contributions to equity method interests(24,155)(154,386)
Distributions from equity method interests13,645 4,211 
Capitalized interest paid0 (5,373)
NET CASH USED IN INVESTING ACTIVITIES(11,288)(175,295)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to Preferred Unit limited partners(23,124)0 
Distributions paid to Apache limited partner(37,500)0 
Dividends paid(11,239)0 
Proceeds from revolving credit facility33,000 97,000 
Finance lease0 (11,789)
Deferred facility fees0 (816)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES(38,863)84,395 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS50,904 (4,103)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR24,188 5,983 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$75,092 $1,880 
SUPPLEMENTAL CASH FLOW DATA:
Accrued capital expenditures(2)
$0 $1,409 
Interest paid, net of capitalized interest4,643 0 
Cash received for income tax refunds0 696 
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Includes $0.7 million due to Apache for the six months ended June 30, 2020, pursuant to the terms of the COMA (as defined herein). Refer to Note 2—Transactions with Affiliates for more information.



The accompanying notes to consolidated financial statements are an integral part of this statement.

4

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
(Unaudited)
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(2)
Redeemable Noncontrolling Interest — Apache Limited PartnerClass A Common StockClass C Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Total Equity
 
Shares(3)
Amount
Shares(3)
Amount
(In thousands)(In thousands)
For the Quarter Ended June 30, 2020(1)
Balance at March 31, 2020 (Revised)$573,861 $230,827 3,746 $1 12,500 $1 $451,037 $(380,305)$(539)$70,195 
Net income (loss)18,764 (1,779)— — — — — (951)— (951)
Accumulated other comprehensive income— 300 — — — — — — 90 90 
Balance at June 30, 2020 (Revised)$592,625 $229,348 3,746 $1 12,500 $1 $451,037 $(381,256)$(449)$69,334 
For the Quarter Ended June 30, 2021
Balance at March 31, 2021$604,749 $662,432 3,746 $1 12,500 $1 $38,217 $(369,253)$0 $(331,034)
Distributions payable to Preferred Unit limited partners(11,562)— — — — — — — — — 
Distributions to Apache limited partner— (18,750)— — — — — — — — 
Common Dividends ($1.50 per share)— — — — — — (5,620)— — (5,620)
Net income24,004 38,174 — — — — — 11,663 — 11,663 
Change in redemption value of noncontrolling interests— 181,207 — — — — (32,597)(148,610)— (181,207)
Balance at June 30, 2021$617,191 $863,063 3,746 $1 12,500 $1 $0 $(506,200)$0 $(506,198)
 
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(1)
 Redeemable Noncontrolling Interest — Apache Limited Partner  Class A Common Stock Class C Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Equity
    
Shares(2)
 Amount 
Shares(2)
 Amount    
                     
 (In thousands)  (In thousands)
                     
For the Quarter Ended September 30, 2019                    
Balance at June 30, 2019$520,933
 $1,272,652
  3,746
 $1
 12,500
 $1
 $473,532
 $(24,156) $(200) $449,178
Net income (loss)17,480
 (20,804)  —
 —
 —
 —
 —
 (4,864) —
 (4,864)
Accumulated other comprehensive loss—
 (478)  —
 —
 —
 —
 —
 —
 (113) (113)
Balance at September 30, 2019$538,413
 $1,251,370
  3,746
 $1
 12,500
 $1
 $473,532
 $(29,020) $(313) $444,201
                     
For the Quarter Ended September 30, 2020                    
Balance at June 30, 2020$592,625
 $230,631
  3,746
 $1
 12,500
 $1
 $473,532
 $(402,741) $(449) $70,344
Distributions paid to Preferred Unit limited partners(11,562) —
  —
 —
 —
 —
 —
 —
 —
 —
Net income19,332
 7,687
  —
 —
 —
 —
 —
 2,303
 —
 2,303
Accumulated other comprehensive income—
 524
  —
 —
 —
 —
 —
 —
 157
 157
Balance at September 30, 2020$600,395
 $238,842
  3,746
 $1
 12,500
 $1
 $473,532
 $(400,438) $(292) $72,804
(1)
Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial AdjustmentNote 10—Series A Cumulative Redeemable Preferred Units.
(2)
Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.


(2)Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 10—Series A Cumulative Redeemable Preferred Units.

(3)Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.













The accompanying notes to consolidated financial statements are an integral part of this statement.

5

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS — (Continued)
(Unaudited)
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(2)
Redeemable Noncontrolling Interest — Apache Limited PartnerClass A Common StockClass C Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Total Equity
 
Shares(3)
Amount
Shares(3)
Amount
(In thousands)(In thousands)
For the Six Months Ended June 30, 2020(1)
Balance at December 31, 2019 (Revised)$555,599 $701,000 3,746 $1 12,500 $1 $17,327 $(372,224)$(266)$(355,161)
Net income (loss)37,026 (37,331)— — — — — (9,032)— (9,032)
Change in redemption value of noncontrolling interests— (433,710)— — — — 433,710 — — 433,710 
Accumulated other comprehensive loss— (611)— — — — — — (183)(183)
Balance at June 30, 2020 (Revised)$592,625 $229,348 3,746 $1 12,500 $1 $451,037 $(381,256)$(449)$69,334 
For the Six Months Ended June 30, 2021
Balance at December 31, 2020 (Revised)$608,381 $575,125 3,746 $1 12,500 $1 $122,222 $(369,433)$(145)$(247,354)
Distributions paid to Preferred Unit limited partners(23,124)— — — — — — — — — 
Distributions payable to Preferred Unit limited partners(11,562)— — — — — — — — — 
Distributions to Apache limited partner— (18,750)— — — — — — — — 
Common Dividends ($1.50 per share)— — — — — — (5,620)— — (5,620)
Net income43,496 40,991 — — — — — 11,843 — 11,843 
Change in redemption value of noncontrolling interests— 265,212 — — — — (116,602)(148,610)— (265,212)
Accumulated other comprehensive income— 485 — — — — — — 145 145 
Balance at June 30, 2021$617,191 $863,063 3,746 $1 12,500 $1 $0 $(506,200)$0 $(506,198)
 
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(1)
 Redeemable Noncontrolling Interest — Apache Limited Partner  Class A Common Stock Class C Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Equity
    
Shares(2)
 Amount 
Shares(2)
 Amount    
                     
 (In thousands)  (In thousands)
                     
For the Nine Months Ended September 30, 2019                    
Balance at December 31, 2018$0
 $1,940,500
  3,746
 $1
 12,500
 $1
 $30
 $(213,746) $0
 $(213,714)
Issuance of Series A Cumulative Redeemable Preferred Units516,790
 —
  —
 —
 —
 —
 —
 —
 —
 —
Net income (loss)21,623
 (23,524)  —
 —
 —
 —
 —
 (6,057) —
 (6,057)
Change in redemption value of noncontrolling interests—
 (664,285)  —
 —
 —
 —
 473,502
 190,783
 —
 664,285
Accumulated other comprehensive loss—
 (1,321)  —
 —
 —
 —
 —
 —
 (313) (313)
Balance at September 30, 2019$538,413
 $1,251,370
  3,746
 $1
 12,500
 $1
 $473,532
 $(29,020) $(313) $444,201
                     
For the Nine Months Ended September 30, 2020                    
Balance at December 31, 2019$555,599
 $701,000
  3,746
 $1
 12,500
 $1
 $39,822
 $(392,633) $(266) $(353,075)
Distributions paid to Preferred Unit limited partners(11,562) —
  —
 —
 —
 —
 —
 —
 —
 —
Net income (loss)56,358
 (28,361)  —
 —
 —
 —
 —
 (7,805) —
 (7,805)
Change in redemption value of noncontrolling interests—
 (433,710)  —
 —
 —
 —
 433,710
 —
 —
 433,710
Accumulated other comprehensive loss—
 (87)  —
 —
 —
 —
 —
 —
 (26) (26)
Balance at September 30, 2020$600,395
 $238,842
  3,746
 $1
 12,500
 $1
 $473,532
 $(400,438) $(292) $72,804
(1)
Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial AdjustmentNote 10—Series A Cumulative Redeemable Preferred Units.
(2)
Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.


(2)Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 10—Series A Cumulative Redeemable Preferred Units.

(3)Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.






The accompanying notes to consolidated financial statements are an integral part of this statement.

6

ALTUS MIDSTREAM COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These consolidated financial statements have been prepared by Altus Midstream Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements discussed below.pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Altus Midstream Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192020 (Form 10-K), which contains a summary of the Company’s significant accounting policies and other disclosures. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Form 10-K.
Unless the context otherwise requires, the “Company,” “ALTM” and “Altus” refers to Altus Midstream Company and its consolidated subsidiaries. “Altus Midstream” refers to Altus Midstream LP and its consolidated subsidiaries. “Apache” refers to Apache Corporation and its consolidated subsidiaries. All references to the Company’s Class A common stock, $0.0001 par value (Class A Common Stock), and Class C common stock, $0.0001 par value (Class C Common Stock), reflect such share amounts as retrospectively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note—9 Equity for further information.
Nature of Operations
Through its consolidated subsidiaries, the Company owns gas gathering, processing, and transmission assets in the Permian Basin of West Texas. Construction on the assets began in the fourth quarter of 2016, and operations commenced in the second quarter of 2017. Additionally, the Company owns equity interests in 4 separate Permian Basin pipeline entities that have or will have access to various points along the Texas Gulf Coast. The Company’s operations consist of 1 reportable segment.
Organization
The Company originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp. (KAAC), for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. KAAC completed its initial public offering in the second quarter of 2017.
On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC. On August 8, 2018, KAAC and Altus Midstream LP entered into a contribution agreement (the Contribution Agreement) with certain wholly-owned subsidiaries of Apache, including the Altus Midstream Entities. The Altus Midstream Entities comprise 4 Delaware limited partnerships (collectively, Altus Midstream Operating) and their general partner (Altus Midstream Subsidiary GP LLC, a Delaware limited liability company),company, and together with Altus Midstream Operating, the Altus Midstream Entities). The Altus Midstream Entities were formed by Apache between May 2016 and January 2017 for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (Alpine High).
On November 9, 2018 (the Closing Date) and pursuant to the terms of the Contribution Agreement, KAAC acquired from Apache the entire equity interests of the Altus Midstream Entities and options to acquire equity interests in five5 separate third-party pipeline projects (the Pipeline Options). The acquisition of the entities and the Pipeline Options is referred to herein as the Business Combination. In exchange, the consideration provided to Apache included economic voting and non-economic voting shares in KAAC and common partnership units representing limited partner interests in Altus Midstream LP (Common Units). Following the Closing Date and in connection with the completion of the Business Combination, KAAC changed its name to Altus Midstream Company.

7

Ownership of Altus Midstream LP
FollowingAs of and following the Closing Date and in connection with the completion of the Business Combination, the Company’s wholly-owned subsidiary, Altus Midstream GP LLC, a Delaware limited liability company (Altus Midstream GP), is the sole general partner of Altus Midstream LP. The Company operates its business through Altus Midstream LP and its subsidiaries, which include Altus Midstream Operating. The Company holds approximately 23.1 percent of the outstanding Common Units, and a controlling interest, in Altus Midstream, while Apache holds the remaining 76.9 percent.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).
Principles of Consolidation
The consolidated financial results of Altus Midstream are included in the Company’s consolidated financial statements due to the Company’s 100 percent ownership interest in Altus Midstream GP, and Altus Midstream GP’s control of Altus Midstream.
The Company has no independent operations or material assets other than its partnership interests in Altus Midstream, which constitutes all of its business. Additionally, the Company’s balance sheet reflects the presentation of noncontrolling interest ownership attributable to the limited partner interests in Altus Midstream held by Apache and the holders of Series A Cumulative Redeemable Preferred Units holders (the Preferred Units). Refer to Note 9—Equity and Note 10—Series A Cumulative Redeemable Preferred Units for further information.
Variable Interest Entity
Altus Midstream is a variable interest entity (VIE) because the partners in Altus Midstream with equity at risk lack the power, through voting or similar rights, to direct the activities that most significantly impact Altus Midstream’s economic performance.
A reporting entity that concludes it has a variable interest in a VIE must evaluate whether it has a controlling financial interest in the VIE, such that it is the VIE’s primary beneficiary and should consolidate. The Company is the primary beneficiary of Altus Midstream, and therefore should consolidate Altus Midstream because (i) the Company has the ability to direct the activities of Altus Midstream that most significantly affect its economic performance, and (ii) the Company has the right to receive benefits or the obligation to absorb losses that could be potentially significant to Altus Midstream.
Redeemable Noncontrolling Interest — Apache Limited Partner
The Company’s redeemable noncontrolling interest presented in the consolidated financial statements consists of Common Units representing limited partner interests in Altus Midstream held by Apache. Pursuant to certain provisions of the partnership agreement of Altus Midstream (as amended in connection with the Business Combination, and subsequent issuance of Preferred Units, the Amended LPA), the limited partner interests held by Apache are equal to the number of shares of the Company’s Class C common stock, $0.0001 par value (Class C Common Stock),Stock, held by Apache.
The Company initially recorded the redeemable noncontrolling interest upon the issuance of the Common Units to Apache as part of the Business Combination and based on the recapitalization value ascribed at the Closing Date to the limited partner interest. All or a portion of these Common Units may be redeemed at Apache’s option. The Company has the ability to settle the redemption option either (i) in shares of Class A common stock, $0.0001 par value (Class A Common Stock),Stock, on a 1-for-one basis, or (ii) in cash (based on the fair market value of the Class A Common Stock as determined pursuant to the Contribution Agreement), subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. Upon the future redemption or exchange of Common Units held by Apache, a corresponding number of shares of Class C Common Stock will be cancelled.
The Company’s policy is to record the redeemable noncontrolling interest represented by the Common Units held by Apache at the higher of (i) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the redemption value as of the balance sheet date.
See discussion and additional detail further discussed in Note 9—Equity.
8

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering, and the purchasers of the Preferred Units were admitted as limited partners of Altus Midstream. The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of Closingthe closing of the Preferred Unit offering or upon the occurrence of specified events, unless otherwise redeemed by Altus Midstream.


The Preferred Units are accounted for on the Company’s consolidated balance sheetssheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units. Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value and are accounted for on the Company’s consolidated balance sheet as a long-term liability embedded derivative.
See discussion and additional detail further discussed in Note 10—Series A Cumulative Redeemable Preferred Units.
Equity Method Interests
The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity interests are carried originally at acquisition cost, increased by Altus’ proportionate share of the equity interest’s net income and contributions made by Altus, and decreased by Altus’ proportionate share of the equity interest’s net losses and distributions received by Altus. Please refer to Note 8—Equity Method Interests, for further details of the Company’s equity method interests.
Use of Estimates
Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its 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 carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its financial statements, and changes in these estimates are recorded when known.

9

Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment
Warrants
On April 12, 2021, the SEC Staff issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACs) (the SEC Staff Statement). The SEC Staff Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to the Company’s public and private warrants outstanding at the time of the Business Combination. The SEC determined that certain features of warrants issued in SPAC transactions common across many entities, such as those outstanding for the Company, should be recorded as a derivative liability under ASC 815 “Derivatives and Hedges” with any changes in fair value being recorded as a gain or loss in the Company’s Statement of Consolidated Operations. The Company has historically accounted for its warrants as equity, with no change in fair value being recorded in the applicable period. The Company has concluded that the previous accounting policy to account for its warrants as equity rather than as a liability was an immaterial error. The Company has corrected this immaterial error by revising its consolidated financial statements as of and for the year ended December 31, 2020 and as of and for the three and six months ended June 30, 2020 and related notes included herein to include the effect of accounting for the warrants as a liability from the date of the Business Combination. Note 12—Net Income (Loss) Per Share and Note 13—Fair Value Measurements have also been updated to reflect this revision. In addition, management has also corrected previously identified immaterial errors related to income from its equity method interests unrelated to the SEC Staff Statement.
The impacts of this adjustment in fiscal year 2020, as presented in the accompanying financial statements, are as follows:
Statement of Consolidated Operations:
Three Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Income from equity method interests, net$16,923 $(1,211)$15,712 
Warrants valuation adjustment0 (417)(417)
Total other income (loss)6,243 (1,628)4,615 
Net income (loss) before income taxes17,662 (1,628)16,034 
Net income (loss) including noncontrolling interests17,662 (1,628)16,034 
Net income (loss) attributable to common shareholders(1,102)(1,628)(2,730)
Net income (loss) attributable to Apache limited partner(847)(932)(1,779)
Net income (loss) attributable to Class A common shareholders(255)(696)(951)
Net Income (Loss) Attributable To Class A Common Shareholders, Per Share
Basic$(0.07)$(0.18)$(0.25)
Diluted$(0.07)$(0.18)$(0.25)
10

Six Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Income from equity method interests, net$33,221 $(1,667)$31,554 
Warrants valuation adjustment0 1,460 1,460 
Total other income (loss)(39,613)(207)(39,820)
Net income (loss) before income taxes(9,826)(207)(10,033)
Net income (loss) including noncontrolling interests(9,130)(207)(9,337)
Net income (loss) attributable to common shareholders(46,156)(207)(46,363)
Net income (loss) attributable to Apache limited partner(36,048)(1,283)(37,331)
Net income (loss) attributable to Class A common shareholders(10,108)1,076 (9,032)
Net Income (Loss) Attributable To Class A Common Shareholders, Per Share
Basic$(2.70)$0.29 $(2.41)
Diluted$(2.84)$(0.01)$(2.85)
(1)All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.
Statement of Consolidated Comprehensive Income (Loss):
Three Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Net income (loss) including noncontrolling interests$17,662 $(1,628)$16,034 
Comprehensive income (loss) including noncontrolling interests18,052 (1,628)16,424 
Comprehensive income (loss) attributable to Apache limited partner(547)(932)(1,479)
Comprehensive income (loss) attributable to Class A Common Shareholders(165)(696)(861)
Six Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Net income (loss) including noncontrolling interests$(9,130)$(207)$(9,337)
Comprehensive income (loss) including noncontrolling interests(9,924)(207)(10,131)
Comprehensive income (loss) attributable to Apache limited partner(36,659)(1,283)(37,942)
Comprehensive income (loss) attributable to Class A Common Shareholders(10,291)1,076 (9,215)
(1)All changes related to Income from equity method interests, net relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.
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Consolidated Balance Sheet:
December 31, 2020
As ReportedChangeAs Revised
(In thousands)
Other non-current liabilities$5,539 $885 $6,424 
Total liabilities862,593 885 863,478 
Additional paid-in capital144,716 (22,494)122,222 
Accumulated equity (deficit)(391,042)21,609 (369,433)
Statement of Consolidated Cash Flows:
Six Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests$(9,130)$(207)$(9,337)
Income from equity method interests, net(33,221)1,667 (31,554)
Warrants valuation adjustment0 (1,460)(1,460)
Net Cash Provided by Operating Activities86,797 0 86,797 
(1)All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.
Fair Value Measurements
Accounting Standards Codification (ASC) 820-10-35, “Fair Value Measurement” (ASC 820), provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority.
The valuation techniques that may be used to measure fair value include a market approach, an income approach and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models, and the excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
Embedded features identified within the Company’s agreements are bifurcated and measured at fair value at the end of each period on the Company’s consolidated balance sheet. Such recurring fair value measurements are presented in further detail in Note 13—Fair Value Measurements. TheWhen required the Company also uses fair value measurements on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment.
Accounts Receivable From/Payable To Apache
The accounts receivable from or payable to Apache represent the net result of Altus Midstream’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache as provided under the COMAConstruction, Operations and Maintenance Agreement (COMA) between the two entities. Generally, cash in this amount will be transferred to or from Apache in the month after the Company’s transactions are processed and the net results of operations are determined. However, from time to time, the Company may estimate and transfer the cash settlement amount in the month the transactions are processed, in order to minimize related-party working capital balances. See discussion and additional detail in Note 2—Transactions with Affiliates.
Change in Accounting Policy
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Historically,Other Income
In 2020, the Company reported income and loss from equity method interests onentered into a one-month reporting lag. Effective October 1, 2019, the Company eliminated this one-month reporting lag. In accordancecontract with ASC 810-10-45-13, “A Change in the Fiscal Year-End Lag Between Subsidiary and Parent” (ASC 810), the elimination of this previously existing reporting lag is considered a voluntary change in accounting principle in accordance with ASC 250-10-50, “Change in Accounting Principle.” The Company believes that this change in accounting principle is preferable as it providesprovider to supply the Company with electrical power. If the ability to present the resultsCompany does not utilize all of its equity method interestsfixed purchase volumes under this contract, then it will receive a credit based on a market rate for the same period as all other consolidated resultsrelated underutilization. In conjunction with increased power pricing due to the Texas freeze event and underutilization of contractual electricity volumes, the Company which improves


overall financial reporting to investors by providingrecognized an estimated credit of approximately $2.5 million for the mostthree months ended June 30, 2021 with a total credit of approximately $9.7 million being recognized for the six months ended June 30, 2021. These amounts are recorded on the statement of consolidated operations in “Other income.” The related power credit will offset the Company’s future monthly power payments and is recorded in “Prepaid assets and other” for the current information available.portion and “Deferred charges and other” for the long-term portion on the consolidated balance sheet. NaN credits were recorded for the three and six months ended June 30, 2020. The Company has not retrospectively applied the change in accounting principle since its impactno remaining performance obligations related to the consolidated balance sheet and related statementsthese credits as of operations and cash flows was immaterial for all periods. For more information on equity method interests owned by the Company, please refer to Note 8—Equity Method Interests.June 30, 2021.
Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, “Financial Instruments-Credit Losses.” The standard changes the impairment model for trade receivables, held-to-maturity debt securities, net investments in leases, loans, and other financial assets measured at amortized cost. This ASU requires the use of a new forward-looking “expected loss” model compared to the current “incurred loss” model, resulting in accelerated recognition of credit losses. The Company adopted this standard in the first quarter of 2020 with no material impact on its financial statements.
In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This pronouncement is part of the Simplification Initiative and simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC Topic 740 “Income Taxes.” In addition, the amendment improves consistent application of and simplifies GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. This update is effective for the Company beginning in the first quarter of 2021, with early adoption permitted. The Company early adopted this standard in the first quarter of 2020 with no material impact on its financial statements.
New Pronouncements Issued But Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)” to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. This update is effective for Altus beginning in the first quarter of 2022, with early adoption permitted, using either the modified or fully retrospective method with a cumulative effect adjustment to the opening balance of retained earnings. The Company is evaluating the effect of adoption of the ASU and does not believe it will have a material impact on its financial statements.
2.    TRANSACTIONS WITH AFFILIATES
Revenues
The Company has contracted to provide services including gas gathering, compression, processing, transmission, and NGL transmission, pursuant to acreage dedications provided by Apache, comprising the entire Alpine High acreage. In accordance with the terms of these agreements, the Company receives prescribed fees based on the type and volume of product for which the services are provided. Additionally, beginning in 2020, Altus Midstream entered into 3 agreements to provide operating and maintenance services for Apache’s compressors in exchange for a fixed monthly fee per compressor serviced.
Revenues generated under these agreements are presented on the Company’s statement of consolidated operations as “Midstream services revenue — affiliate.” Revenues earned that have not yet been invoiced to Apache are presented on the Company’s consolidated balance sheet as “Revenue receivables.” Refer to Note 3—Revenue Recognition for further discussion.
Cost and Expenses
The Company has no employees and prior to the Business Combination, the Company had no banking or cash management facilities. As such, the Company has contracted with Apache to receivereceives certain operational, maintenance, and management services. In accordance withservices from Apache under the terms of these agreements,COMA. Under the COMA, the Company incurred operations and maintenance expenses of $1.2$1.5 million and $2.2$1.3 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively, and $4.0$2.3 million and $7.1$2.8 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. The Company incurred general and administrative (G&A) expenses from affiliates of $1.6$2.3 million and $2.1$1.6 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively, and $5.1$4.6 million and $4.7$3.6 million for the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, respectively, including expensesrespectively. These costs were primarily related to expenses associated with the operational services agreement and the COMA as further described below.COMA. Further information on thethis related-party operating lease agreement in place during the period is also provided below.


Construction, Operations and Maintenance Agreement
At the closing of the Business Combination, the Company entered into the COMA with Apache. Under the terms of the COMA, Apache provides certain services related to the design, development, construction, operation, management, and maintenance of certain gathering, processing and other midstream assets, on behalf of the Company. In return, the Company paid or will pay fees to Apache of (i) $3.0 million for the period beginning on the execution of the COMA at the closing of the Business Combination through December 31, 2019, (ii) $5.0 million for the period of January 1, 2020 through December 31, 2020, (iii)(ii) $7.0 million for the period of January 1, 2021 through December 31, 2021 and (iv)(iii) $9.0 million annually thereafter, adjusted based on actual internal overhead and general and administrative costs incurred, until terminated. The annual fee was negotiated as part of the Business Combination to reimburse Apache for indirect costs of performing administrative corporate functions for the Company, including services for information technology, risk management, corporate planning, accounting, cash management, and others.
In addition, Apache may be reimbursed for certain internal costs and third-party costs incurred in connection with its role as service provider under the COMA. Costs incurred by Apache directly associated with midstream activity, where substantially all the services are rendered for Altus Midstream, are charged to Altus Midstream on a monthly basis.
The COMA stipulates that the Company shall provide reimbursement of amounts owing to Apache attributable to a particular month by no later than the last day of the immediately following month. Unpaid amounts accrue interest until settled.
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The COMA will continue to be effective until terminated (i) upon the mutual consent of Altus and Apache, (ii) by either of Altus and Apache, at its option, upon 30 days’ prior written notice in the event Apache or an affiliate no longer owns a direct or indirect interest in at least 50 percent of the voting or other equity securities of Altus, or (iii) by Altus if Apache fails to perform any of its covenants or obligations due to willful misconduct of certain key personnel and such failure has a material adverse financial impact on Altus.
Lease AgreementDistributions to Apache
ConcurrentIn December of 2020 and May of 2021, the Company’s Board of Directors declared a cash dividend of $1.50 per share on the Company’s Class A Common Stock, with each dividend declared totaling $5.6 million. The dividends were paid to stockholders during the closingfirst and second quarters of 2021. Each dividend included payment of approximately $0.5 million to Apache due to its 9.8 percent ownership of the Business Combination,Company’s Class A Common Stock. The Class A Common Stock dividends were funded by distributions from Altus Midstream entered into an operating lease agreement with Apache (the Lease Agreement) relatingto its common unitholders of $1.50 per Common Unit, totaling $24.4 million for both the first and second quarters of 2021. For each distribution, $5.6 million, as noted above, was paid to the useCompany to fund the cash dividend payments to Class A Common stockholders, and the balance of certain office buildings, warehouse and storage facilities located in Reeves County, Texas. Under the terms of the Lease Agreement, Altus Midstream shall pay$18.8 million was paid to Apache on a monthly basis the sumdue to its 76.9 percent ownership of (i) a base rental charge of $44,500 and (ii) an amount based on Apache’s estimate of the annual costs it expectsoutstanding Common Units. Please refer to incur in connection with the ownership, operation, repair, and/or maintenance of the facilities. The Company incurred total expenses of $0.2 million and $0.3 millionNote 9—Equity for the three months ended September 30, 2020 and 2019, respectively, and $0.7 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, in relation to the Lease Agreement, which are included within operations and maintenance expenses. Unpaid amounts accrue interest until settled. The initial term of the Lease Agreement is four years and may be extended by Altus Midstream for 3 additional, consecutive periods of twenty-four months. To accommodate Altus Midstream’s desire to vacate the leased premises, the Lease Agreement was amended in July 2020 to provide for its termination  with respect to all or any portion of the leased premises which Apache may sell, with a pro rata rent reduction if Apache sells less than all of the leased premises.further information.




3.    REVENUE RECOGNITION
The following table presents a disaggregation of the Company’s revenue.
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
Gas gathering and compression$5,352
 $4,604
 $15,466
 $10,914
Gas processing28,533
 25,315
 81,613
 68,994
Transmission3,861
 3,388
 11,262
 11,219
NGL transmission708
 702
 2,121
 867
Other415
 0
 790
 0
Midstream services revenue — affiliate38,869
 34,009
 111,252
 91,994
Product sales — third parties
1,303
 0
 1,900
 0
Total revenues$40,172
 $34,009
 $113,152
 $91,994

Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Gas gathering and compression$4,513 $4,394 $8,848 $10,114 
Gas processing23,745 23,184 46,939 53,080 
Transmission3,128 3,226 6,284 7,401 
NGL transmission593 587 1,122 1,413 
Other488 225 803 375 
Midstream services revenue — affiliate32,467 31,616 63,996 72,383 
Product sales — third parties
3,126 0 5,743 0 
Total revenues$35,593 $31,616 $69,739 $72,383 
The Company primarily generates revenue from itsThere have been no significant changes to the Company’s contracts with customers forduring the gathering, compression, processing,three and transmission,six months ended June 30, 2021 and sale of natural gas and NGLs in exchange for a fee per unit of volumes processed or delivered during a given month.2020.
Midstream Services Revenue — Affiliate
Midstream services revenue is attributable to services performed for Apache pursuant to separate long-term commercial midstream agreements. As part of these agreements, substantiallyPayments under all of Apache’s natural gas production from its existing and future owned or controlled properties within the dedicated area of its entire Alpine High resource play is provided to the Company, so long as Apache has the right to market such product. Providing the related service on each volumetric unit represents a single, distinct performance obligation that is satisfied over time as servicescontracts with customers are rendered. The Company does not own or take title to the volumes it services under these agreements. Altus Midstream, in return for its performance, receives a fee per volumetric unit serviced during a given month. The related service fee charged per unit is set forth for each contract year, subject to yearly fee escalation recalculations.
As the amount of volumes serviced are not subject to minimum commitments and each midstream service agreement contains provisions for fee recalculations, substantially all of the transaction price is variable at inception of each contract term. Revenue is measured using the output method based on the amount of volumes serviced eachtypically due one month and the applicable service fee and recognized over time in the amount to which Altus Midstream has the right to invoice, as performance completed to date corresponds directly with the value to its customers. The transaction price is not constrained as variability is resolved prior to the recognition of revenue.
Product Sales Revenue
Product sales revenues are attributable to the sale of purchased and processed NGL volumes with third party customers. As part of these agreements, Altus Midstream purchases volumes from a third party, which it then owns, controls and services, prior to ultimate sale to the customer. Theafter physical delivery of each unit of quantity represents a single, distinct performance obligation that is satisfied at a point in time when control transfers to the customer, generally determined as the point of delivery. Prices are determined based on market-indexed values, adjusted for quality and other market-reflective differentials. As there are no provisions for minimum volume commitments and pricing is variable based on index values, revenue is measured by allocating an entirely variable market price to each performance obligation and recognized at a point in time when control is transferred to the customer. The transaction price is not constrained as variability is resolved prior to the recognition of revenue.
Sales revenues and associated expenses related to such third-party purchases are recorded as “Product sales — third parties” and “Costs of product sales,” respectively, in the Company’s statement of consolidated operations.




Payment Terms and Contract Balances
Payments are due the month immediately following the month of service. Amounts settled with Apache each month are based on the net amount owed to either party.or service has been rendered. Revenue receivables from the Company’s contracts with Apache totaled $12.0$11.0 million and $15.5$11.4 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, as presented on the Company’s consolidated balance sheet. Sales revenue receivablesAccounts receivable from the Company’s contracts with third parties totaled $0.6$2.0 million and $1.0 million as of SeptemberJune 30, 2021 and December 31, 2020, respectively, as presented on the Company’s consolidated balance sheet.
In accordance with the provisions of ASC Topic 606, “Revenue from Contracts with Customers,” a variable transaction pricemarket prices for each short-term sale isare allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations. As such, the Company has elected the practical expedients available under the standard to not disclose the aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.


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4.    PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at carrying value, is as follows:
June 30,December 31,
20212020
(In thousands)
Gathering, processing and transmission systems and facilities(1)
$206,130 $204,643 
Construction in progress281 904 
Other property and equipment3,239 3,323 
Total property, plant and equipment209,650 208,870 
Less: accumulated depreciation and amortization(18,858)(13,034)
Total property, plant and equipment, net$190,792 $195,836 
  September 30, December 31,
  2020 2019
     
  (In thousands)
Gathering, processing and transmission systems and facilities $211,975
 $198,133
Construction in progress(1)
 104
 5,443
Other property and equipment 3,323
 3,694
Total property, plant and equipment 215,402
 207,270
Less: accumulated depreciation and amortization (10,092) (1,468)
Total property, plant and equipment, net $205,310
 $205,802
(1)
Included in construction in progress was capitalized interest of $0.6 million at December 31, 2019. There was 0 capitalized interest included in construction in progress(1)Included in gathering, processing, and transmissions systems and facilities are compressors under lease to Apache totaling $10.1 million and $6.2 million, net as of June 30, 2021 and December 31, 2020, respectively.September 30, 2020.

The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective balance sheet date.
Property, plant, and equipment are evaluated for potential impairment when events or changes in circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset group. In conjunction with Apache’s decision in the fourth quarter of 2019 to materially reduce funding to Alpine High, Altus management assessed its long-lived infrastructure assets for impairment given the expected reduction to future throughput volumes. As a result of this assessment, Altus recorded impairments totaling $1.3 billion on its gathering, processing, and transmission assets in the fourth quarter of 2019. The fair values of the impaired assets were determined to be $203.6 million as of the time of the impairment and were estimated using the income approach. Altus has classified these nonrecurring fair value measurements as Level 3 in the fair value hierarchy.
The Company also elected to cancel construction on a compressor station in the third quarter of 2019, and as a result certain of its components were marketed for sale. Accordingly, Altus management reclassified these assets to current assets held for sale, and they were measured at fair value less costs to sell. The Company recorded an impairment of $9.3 million on these assets, which were written down to their fair value of $18.2 million. The fair value of the assets was determined using the market approach based on estimated sales proceeds, classified as Level 1 inputs in the fair value hierarchy. NaN impairments were recorded for the nine months ended September 30, 2020.


5.    DEBT AND FINANCING COSTS
In November 2018, Altus Midstream entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream’s 2, one year extension options). The agreement for this revolving credit facility, as amended (the Amended Credit Agreement), provides aggregate commitments from a syndicate of banks of $800.0 million. The aggregate commitments include a letter of credit subfacility of up to $100.0 million and a swingline loan subfacility of up to $100.0 million. Altus Midstream may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of SeptemberJune 30, 20202021, there were $657.0 million of borrowings and a $2.0 million of letter of credit outstanding under this facility. As of December 31, 2019, total outstanding2020, there were $624.0 million of borrowings were $580.0 million and $396.0 million, respectively, and 0 letters of credit were outstanding under this facility.
Altus Midstream’s revolving credit facility is unsecured and is not guaranteed by the Company, Apache, APA Corporation or any of their respective subsidiaries.
At Altus Midstream’s option, the interest rate per annum for borrowings under this facility is either a base rate, as defined, plus a margin, or the London Interbank Offered Rate (LIBOR), plus a margin. Altus Midstream also pays quarterly a facility fee at a rate per annum on total commitments. The margins and the facility fee vary based upon (i) the Leverage Ratio (as defined below) until Altus Midstream has a senior long-term debt rating and (ii) such senior long-term debt rating once it exists. The Leverage Ratio is the ratio of (1) the consolidated indebtedness of Altus Midstream and its restricted subsidiaries to (2) EBITDA (as defined in the Amended Credit Agreement) of Altus Midstream and its restricted subsidiaries for the 12-month period ending immediately before the determination date. At SeptemberJune 30, 2020,2021, the base rate margin was 0.05 percent, the LIBOR margin was 1.05 percent, and the facility fee was 0.20 percent. In addition, a commission is payable quarterly to the lenders on the face amount of each outstanding letter of credit at a per annum rate equal to the LIBOR margin then in effect. Customary letter of credit fronting fees and other charges are payable to issuing banks.
The Amended Credit Agreement contains restrictive covenants that may limit the ability of Altus Midstream and its restricted subsidiaries to, among other things, incur additional indebtedness or guaranty indebtedness, sell assets, make investments in unrestricted subsidiaries, enter into mergers, make certain payments and distributions, incur liens on certain property securing indebtedness, and engage in certain other transactions without the prior consent of the lenders.
Altus Midstream also is subject to a financial covenant under the Amended Credit Agreement, which requires it to maintain a Leverage Ratio not exceeding 5.00:1.00 at the end of any fiscal quarter, starting with the quarter ended December 31, 2019, except that during the period of up to one year following a qualified acquisition, the Leverage Ratio cannot exceed 5.50:1.00 at the end of any fiscal quarter. Unless the Leverage Ratio is less than or equal to 4.00:1.00, the Amended Credit Agreement limits distributions in respect of Altus Midstream LP’s capital to $30 million per calendar year until either (i) the consolidated net income of Altus Midstream LP and its restricted subsidiaries, as adjusted pursuant to the Amended Credit Agreement, for three consecutive calendar months equals or exceeds $350.0 million on an annualized basis or (ii) Altus Midstream LP has a specified senior long-term debt rating; in addition, before the occurrence of one of those events, the Leverage Ratio must be less than or equal to 5.00:1.00. In no event can any distribution be made that would, after giving effect
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to it on a pro forma basis, result in a Leverage Ratio greater than (i) 5.00:1.00 or (ii) for a specified period after a qualifying acquisition, 5.50:1.00. The Leverage Ratio as of SeptemberJune 30, 20202021 was less than 4.00:1.00.
The terms of Altus Midstream’s Preferred Units also contain certain restrictions on distributions on Altus Midstream LP’s Common Units, including the Common Units held by the Company, and any other units that rank junior to the Preferred Units with respect to distributions or distributions upon liquidation. Refer to Note 10—Series A Cumulative Redeemable Preferred Units for further information. In addition, the amount of any cash distributions to Altus Midstream LP by any entity in which it has an interest accounted for by the equity method is subject to such entity’s compliance with the terms of any debt or other agreements by which it may be bound, which in turn may impact the amount of funds available for distribution by Altus Midstream LP to its partners.
There are no clauses in the Amended Credit Agreement that permit the lenders to accelerate payments or refuse to lend based on unspecified material adverse changes. The Amended Credit Agreement has no drawdown restrictions or prepayment obligations in the event of a decline in credit ratings. However, the agreement allows the lenders to accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches, and if Altus Midstream or any of its restricted subsidiaries defaults on other indebtedness in excess of the stated threshold, is insolvent, or has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold. Lenders may also accelerate payment maturity and terminate lending and issuance commitments if Altus Midstream undergoes a specified change in control or has specified pension plan liabilities in excess of the stated threshold. Altus Midstream was in compliance with the terms of the Amended Credit Agreement as of SeptemberJune 30, 2020.2021.


As of September 30, 2020 and December 31, 2019, the Company had debt outstanding totaling $580.0 million and $405.8 million, respectively. At December 31, 2019, $9.8 million of debt outstanding was related to a finance lease obligation for which the term ended in the first quarter of 2020.
Interest Income and Financing Costs, Net of Capitalized Interest
The following table presents the components of Altus Midstream’s interest income and financing costs, net of capitalized interest:
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
Interest income$0
 $617
 $9
 $3,584
Interest income$0
 $617
 $9
 $3,584
        
Interest expense$2,133
 $1,496
 $7,498
 $3,234
Amortization of deferred facility fees292
 237
 857
 652
Capitalized interest(2,012) (1,211) (7,377) (2,378)
Financing costs, net of capitalized interest$413
 $522
 $978
 $1,508

Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Interest expense$2,323 $2,007 $4,630 $5,365 
Amortization of deferred facility fees292 292 583 565 
Capitalized interest0 (2,007)0 (5,365)
Financing costs, net of capitalized interest$2,615 $292 $5,213 $565 
6.    OTHER CURRENT LIABILITIES
The following table provides detail of the Company’s other current liabilities at SeptemberJune 30, 20202021 and December 31, 2019:2020:
June 30,December 31,
 20212020
(In thousands)
Accrued taxes other than income$7,567 $165 
Accrued product purchases2,340 996 
Accrued incentive compensation729 1,466 
Accrued capital costs364 360 
Accrued operations and maintenance expense236 926 
Accrued professional and consulting fees216 421 
Other2,130 1,279 
Total other current liabilities$13,582 $5,613 
  September 30, December 31,
  2020 2019
     

 (In thousands)
Accrued taxes other than income $11,054
 $689
Accrued operations and maintenance expense 1,470
 1,520
Accrued incentive compensation 1,100
 1,425
Accrued professional and consulting fees 360
 158
Accrued capital costs 527
 17,035
Accrued finance lease liability 0
 1,989
Other 2,033
 1,109
Total other current liabilities $16,544
 $23,925


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7.    COMMITMENTS AND CONTINGENCIES

Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, there were 0 accruals for loss contingencies.
Litigation
The Company is subject to governmental and regulatory controls arising in the ordinary course of business. The Company is not aware of any pending or threatened legal proceedings against it at the time of the filing of this Quarterly Report on Form 10-Q that would have a material impact on its financial position, results of operations, or liquidity.
On April 30, 2020, a case styled Sierra Club v. US Army Corp of Engineers et al. was filedin the United States District Court, Western District of Texas. Plaintiff seeks to invalidate verifications issued by the Army Corps of Engineers allowing Permian Highway Pipeline LLC to conduct dredging and filling activities and to enjoin certain further dredging and other ground disturbing activities in jurisdictional waters. Permian Highway Pipeline LLC has intervened in the suit in defense of the verifications and in opposition to any injunctive relief. The Company has a minority equity interest in Permian Highway Pipeline LLC.
Environmental Matters
As an owner of infrastructure assets and with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages. In some instances, Altus Midstream may be directed to suspend or cease operations. The Company maintains insurance coverage, which management believes is customary in the industry, although insurance does not fully cover against all environmental risks. Additionally, there can be no assurance that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered. The Company is not aware of any environmental claims existing as of SeptemberJune 30, 2020,2021, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.
Contractual Obligations
Altus Midstream’s existing fee-based midstream services agreements, which have no minimum volume commitments or firm transportation commitments, are underpinned by acreage dedications covering Alpine High. Pursuant to these agreements, Altus Midstream is obligated to perform low and high pressure gathering, processing, dehydration, compression, treating, conditioning, and transportation on all volumes produced from the dedicated acreage, so long as Apache has the right to market such gas.

At the closing of the Business Combination, the Company entered into the COMA and the Lease Agreement with Apache, which includeincludes contractual obligations for the Company to pay certain management and lease rental fees respectively, to Apache over the term of the agreements.agreement. Refer to Note 2—Transactions with Affiliates for further discussion.discussion of the COMA.

In the second quarter of 2019, Altus Midstream issued and sold the Preferred Units. Under the terms of the Amended LPA, the Preferred Unit holders are entitled to receive quarterly distributions until such time as the Preferred Units are redeemed or exchanged. Refer to Note 10—Series A Cumulative Redeemable Preferred Units for further discussion regarding the terms of the Preferred Units and the rights of the holders thereof.

Additionally, the Company is required to fund its pro-rata portion of any future capital expenditures for the development of the pipeline projects as referenced in Note 8—Equity Method Interests.
At SeptemberJune 30, 20202021 and December 31, 2019,2020, there were no other material contractual obligations related to the entities included in the consolidated financial statements other than the performance of asset retirement obligations and required credit facility fees discussed in Note 5—Debt and Financing Costs.

17

8.    EQUITY METHOD INTERESTS
As of SeptemberJune 30, 2020,2021, the Company owned the following equity method interests in Permian Basin long-haul pipeline entities. For each of the equity method interests, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the equity method interests. The table below presents the ownership percentage held by the Company for each entity:
   September 30, 2020 December 31, 2019
 Ownership Amount Amount
      
   (In thousands)
Gulf Coast Express Pipeline LLC16.0% $284,849
 $291,628
EPIC Crude Holdings, LP15.0% 182,260
 163,199
Permian Highway Pipeline LLC26.7% 575,782
 310,421
Breviloba, LLC33.0% 481,519
 492,800
   $1,524,410
 $1,258,048

June 30, 2021December 31, 2020
OwnershipAmountAmount
(In thousands)
Gulf Coast Express Pipeline LLC16.0%$277,785 $283,530 
EPIC Crude Holdings, LP15.0%167,399 176,640 
Permian Highway Pipeline LLC26.7%635,526 615,186 
Breviloba, LLC33.0%473,675 479,826 
$1,554,385 $1,555,182 
As of SeptemberJune 30, 20202021 and December 31, 2019,2020, unamortized basis differences included in the equity method interest balances were $36.5$37.1 million and $29.7$37.7 million, respectively. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into net income over the useful lives of the underlying pipeline assets when they are placed into service.assets.
The following table presents the activity in the Company’s equity method interests for the ninesix months ended SeptemberJune 30, 2020:2021:
 Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC  
     Total
          
 (In thousands)
Balance at December 31, 2019$291,628
 $163,199
 $310,421
 $492,800
 $1,258,048
Contributions1,399
 27,000
 257,828
 0
 286,227
Distributions(39,304) 0
 0
 (35,366) (74,670)
Capitalized interest(1)
0
 0
 7,377
 0
 7,377
Equity income (loss), net31,126
 (7,826) 156
 24,085
 47,541
Accumulated other comprehensive loss0
 (113) 0
 0
 (113)
Balance at September 30, 2020$284,849
 $182,260
 $575,782
 $481,519
 $1,524,410

(1)Altus’ proportionate share of the Permian Highway Pipeline (PHP) construction costs is funded with the revolving credit facility. Accordingly, Altus capitalized $7.4 million of related interest expense during the nine months ended September 30, 2020, which is included in the basis of the PHP equity interest.



Gulf Coast Express Pipeline LLCEPIC Crude Holdings, LPPermian Highway Pipeline LLCBreviloba, LLC
Total
(In thousands)
Balance at December 31, 2020$283,530 $176,640 $615,186 $479,826 $1,555,182 
Contributions0 1,500 22,655 0 24,155 
Distributions(24,898)0 (30,015)(20,823)(75,736)
Equity income (loss), net19,153 (11,371)27,700 14,672 50,154 
Accumulated other comprehensive income0 630 0 0 630 
Balance at June 30, 2021$277,785 $167,399 $635,526 $473,675 $1,554,385 
Summarized Financial Information
The following table represents aggregated selected income statement data for the Company’s equity method interests (on a 100 percent basis):
Six Months Ended June 30,
20212020
Gulf Coast Express Pipeline LLCEPIC Crude Holdings, LPPermian Highway Pipeline LLCBreviloba, LLCGulf Coast Express Pipeline LLCEPIC Crude Holdings, LPPermian Highway Pipeline LLCBreviloba, LLC
(In thousands)
Revenues$179,072 $72,482 $197,214 $81,976 $182,231 $85,971 $0 $83,120 
Operating income (loss)120,874 (24,388)105,024 45,302 128,872 2,463 (46)51,289 
Net income (loss)120,319 (65,798)104,909 45,004 128,470 (27,376)480 46,345 
Other comprehensive income (loss)0 4,197 0 0 0 (5,037)0 0 
  Nine Months Ended September 30,
  2020 
2019(1)
  Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC
         
                 
  (In thousands)
Revenues $273,760
 $128,837
 $0
 $128,727
 $16,476
 $8,015
 $0
 $78,749
Operating expenses 77,606
 138,945
 69
 47,980
 1,218
 33,610
 41
 27,189
Operating income (loss) 196,154
 (10,108) (69) 80,747
 15,258
 (25,595) (41) 51,560
Net income (loss) 195,460
 (53,048) 587
 74,188
 17,090
 (35,620) 785
 51,560
Other comprehensive loss 0
 (752) 0
 0
 0
 (11,450) 0
 —
18

(1)Although the Company’s interests in EPIC Crude Holdings, LP, Permian Highway Pipeline LLC, and Breviloba, LLC were acquired in March, May, and July of 2019, respectively, the financial results are presented for the nine months ended September 30, 2019 for comparability.
9. EQUITY
Reverse Stock Split
On June 30, 2020, the Company effected a reverse stock split of the Company’s Class A Common Stock and Class C Common Stock by a ratio of one-for-twenty. The par value and number of authorized shares of common stock and preferred stock were not affected by the reverse stock split. A corresponding number of Altus Midstream Common Units were also restated as part of the reverse stock split. All corresponding per-share and share amounts for periods prior to June 30, 2020 have been retroactively restated in this Quarterly Report on Form 10-Q for all periods presented to reflect the reverse stock split.
Redeemable Noncontrolling Interest — Apache Limited Partner
In conjunction with its ownership of the Class C Common Stock, Apache owns 12,500,000 Altus Midstream Common Units, representing approximately 76.9 percent of the total Common Units issued and outstanding. The financial results of Altus Midstream and its subsidiaries are included in the Company’s consolidated financial statements as detailed in Note 1—Summary of Significant Accounting Policies, under the section titled “Principles of Consolidation.”
Apache has the right, at any time, to cause Altus Midstream to redeem all or a portion of the Common Units issued to Apache, in exchange for shares of the Company’s Class A Common Stock on a 1-for-one basis or, at Altus Midstream’s option, an equivalent amount of cash; provided that the Company may, at its option, effect a direct exchange of cash or Class A Common Stock for such Common Units in lieu of such a redemption by Altus Midstream. Upon the future redemption or exchange of Common Units held by Apache, a corresponding number of shares of Class C Common Stock held by Apache will be cancelled.
Apache’s limited partner interest associated with the Common Units issued with the Class C Common Stock is reflected as a redeemable noncontrolling interest in the Company. The redeemable noncontrolling interest is recognized at the higher of (i) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest and (ii) the maximum redemption value as of the balance sheet date. The redemption value is determined based on a 5-day volume weighted average closing price of the Class A Common Stock (5-day VWAP) as defined in the Amended LPA, a Level 1 non-recurring fair value measurement. At SeptemberJune 30, 2020, the redeemable noncontrolling interest of $238.8 million was recorded based on the initial fair value plus accumulated earnings2021 and losses to date. The maximum redemption value at September 30, 2020 based on the 5-day VWAP was $137.8 million. At December 31, 2019,2020, the redeemable noncontrolling interest was recorded at the maximum redemption value based on the 5-day VWAPredemption value as of $701.0 million.the balance sheet date of $863.1 million and $575.1 million, respectively.
For further discussion of Apache’s right to receive additional shares of Class A Common Stock, and other outstanding equity instruments that may impact ownership interests and the limited partner interests of Altus Midstream in future periods, see Note 12—Net Income (Loss) Per Share.


Redeemable Noncontrolling Interest — Preferred Unit Limited Partners
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering, and the purchasers of the Preferred Units were admitted as limited partners of Altus Midstream. The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of Closing (as defined below) or upon the occurrence of specified events, unless otherwise redeemed by Altus Midstream. Refer to Note 10—Series A Cumulative Redeemable Preferred Units for further discussion.
Common Stock Dividend
In December 2020 and May 2021, the Company’s Board of Directors declared a cash dividend of $1.50 per share on the Company’s Class A Common Stock, with each dividend declared totaling $5.6 million. The dividends were paid to stockholders during the first and second quarters of 2021. Each dividend included payment of approximately $0.5 million to Apache due to its 9.8 percent ownership of the Company’s Class A Common Stock. The Class A Common Stock dividends were funded by distributions from Altus Midstream to its common unitholders of $1.50 per Common Unit, totaling $24.4 million for both the first and second quarters of 2021. For each distribution, $5.6 million, as noted above, was paid to the Company to fund the cash dividend payments to Class A Common stockholders, and the balance of $18.8 million was paid to Apache due to its 76.9 percent ownership of outstanding Common Units.


19

10.    SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Closing). The Closing occurred pursuant to a Preferred Unit Purchase Agreement among Altus Midstream, the Company, and the purchasers party thereto, dated as of May 8, 2019. A total of 625,000 Preferred Units were sold at a price of $1,000 per Preferred Unit, for an aggregate issue price of $625.0 million. Altus Midstream received approximately $611.2 million in cash proceeds from the sale after deducting transaction costs and discounts to certain purchasers.
Accounting for the Preferred Units
Classification
The Preferred Units are accounted for on the Company’s consolidated balance sheetssheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units, including the redemption rights with respect thereto.
Initial Measurement
The net transaction price as shown below was based on the negotiated transaction price, less issue discounts and transaction costs.
  June 12, 2019
  (In thousands)
Transaction price, gross $625,000
Issue discount (3,675)
Transaction costs to other third parties (10,076)
Transaction price, net $611,249
Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value. As such, the net transaction price shown in the table above was allocated to the preferred redeemable noncontrolling interest and the embedded features according to the associated initial fair value measurements as follows:
  June 12, 2019
  (In thousands)
Redeemable noncontrolling interest - Preferred Units $516,790
Long-term liability: Embedded derivative(1)
 94,459
  $611,249
(1)
See Note 13—Fair Value Measurements for further discussion on the nature and recognition of the embedded derivative.
Subsequent Measurement
The Company applies a two-step approach to subsequently measure the redeemable noncontrolling interest related to the Preferred Units, by first allocating a portion of the net income of Altus Midstream in accordance with the terms of the Amended LPA described above.


Midstream.
After consideration of the foregoing, the Company records an additional adjustment to the carrying value of the Preferred Unit redeemable noncontrolling interest at each period end, if applicable. The amount of such adjustment is determined based upon the accreted value method to reflect the passage of time until the Preferred Units are exchangeable at the option of the holder. Pursuant to this method, the net transaction price is accreted using the effective interest method, to the Redemption Price calculated at the seventh anniversary of Closing. The total adjustment is limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end is equal to the greater of (a) the sum of (i) the carrying amount of the Preferred Units determined in accordance with ASC 810, plus (ii) the fair value of the embedded derivative liability and (b) the accreted value of the net transaction price.
Activity related to the Preferred Units duringfor the nineyear ended December 31, 2020 and six months ended SeptemberJune 30, 20202021 is as follows:
Units Outstanding
Financial Position(2)
(In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units: at December 31, 2019638,163 $555,599 
Distribution of in-kind additional Preferred Units22,531 — 
Cash distributions paid to Preferred Unit limited partners— (23,124)
Allocation of Altus Midstream net incomeN/A75,906 
Redeemable noncontrolling interest — Preferred Units: at December 31, 2020660,694 608,381 
Cash distributions paid to Preferred Unit limited partners— (23,124)
Distributions payable to Preferred Unit limited partners— (11,562)
Allocation of Altus Midstream net incomeN/A39,260 
Accreted redemption value adjustmentN/A4,236 
Redeemable noncontrolling interest — Preferred Units: at June 30, 2021660,694 $617,191 
Embedded derivative liability(1)
124,532 
$741,723 
  Nine Months Ended September 30, 2020
  Units Outstanding 
Financial Position(2)
     
  (In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units: at December 31, 2019 638,163
 $555,599
Distribution of in-kind additional Preferred Units 22,531
 —
Cash distributions paid to Preferred Unit limited partners —
 (11,562)
Allocation of Altus Midstream net income N/A
 56,358
Redeemable noncontrolling interest — Preferred Units: at September 30, 2020 660,694
 $600,395
Embedded derivative liability(1)
   179,031
    $779,426

(1)Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value. See Note 13—Fair Value Measurements for discussion of the fair value changes in the embedded derivative liability during the period.
(1)
See Note 13—Fair Value Measurements for discussion of the fair value changes in the embedded derivative liability during the period.
(2)The Preferred Units are redeemable at Altus Midstream’s option at a redemption price (the Redemption Price), which as of June 30, 2021 is calculated as the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital. As of June 30, 2021, the Redemption Price would have been based on a 1.3 times multiple of invested capital, which was $812.5 million, less certain cash distributions. This was greater than using an 11.5 percent internal rate of return, which would equate to a redemption value of $721.2 million.
(2)The Preferred Units are redeemable at Altus Midstream’s option at September 30, 2020 at a price (the Redemption Price) equal to (a) the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital. As of September 30, 2020, the greater of these two amounts was a 1.3 times multiple of invested capital which equaled $812.5 million. As of September 30, 2020, the aggregate Redemption Price using an 11.5 percent internal rate of return was $708.6 million.
N/A - not applicable.
20

11. INCOME TAXES
The Company is subject to U.S. federal income tax and the Texas margin tax. Altus Midstream LP is a partnership for federal income tax purposes and passes through its taxable income to its partners, the Company, Apache, and the Preferred Unit holders. Thus, Altus Midstream LP does not record a federal income tax provision. Altus Midstream LP is subject to the Texas margin tax and as such, records a state income tax provision.
On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in response to the COVID-19 pandemic. Under the CARES Act, 100 percent of net operating losses arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five preceding tax years of such loss. In the first quarter of 2020, the Company recorded a current income tax benefit of $0.7 million associated with a net operating loss carryback claim.
During the three and ninesix months ended SeptemberJune 30, 2021, the Company’s effective income tax rate was primarily impacted by a decrease in valuation allowance. During the three and six months ended June 30, 2020, the Company’s effective income tax rate was primarily impacted by the net operating loss carryback claim under the CARES Act and an increase in valuation allowance. During the three and nine months ended September 30, 2019, the Company’s effective income tax rate was primarily impacted by the net loss attributable to the noncontrolling interest, income allocated to the Preferred Unit holders, and the impact of state income taxes.
In the first quarter of 2020, the Company early adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes.” The Company’s early adoption of ASU 2019-12 during the quarter ended March 31, 2020 using the prospective transition approach did not result in a material impact on the consolidated financial statements.

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. Each quarter, the Company assesses the recognition amount and, as a result, may increase (expense) or reduce (benefit) the amount of interest and penalties. Interest and penalties are recorded as a component of income tax expense. The contributor of Altus Midstream’s operating assets, Apache, is currently under IRS audit for the 2014-2017 tax years as part of its normal course of business.

21

12.    NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is calculated by dividing net income (loss) attributable to Class A common shareholders by the weighted average number of shares of Class A Common Stock outstanding during the period. Class C Common Stock is excluded from the weighted average shares outstanding for the calculation of basic net income (loss) per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions.
The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock, (ii) earn-out consideration payable inan assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock and (iii) an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock. The treasury stock method is used to determine the potential dilutive effect of its outstanding warrants.any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.
The computation of basic and diluted net income (loss) per share for the periods presented in the consolidated financial statements is shown in the tablestable below.
Three Months Ended June 30,
2021
2020(1)
IncomeSharesPer ShareLossSharesPer Share
(In thousands, except per share data)
Basic:
Net income (loss) attributable to Class A common shareholders$11,663 3,746 $3.11 $(951)3,746 $(0.25)
Effect of dilutive securities:
Redeemable noncontrolling interest — Apache limited partner$16,345 12,500 $0 0 
Redeemable noncontrolling interest — Preferred Unit limited partners$14,826 16,342 $0 0 
Diluted(2)(3)(4):
Net income (loss) attributable to Class A common shareholders$42,834 32,588$1.31 $(951)3,746 $(0.25)
Six Months Ended June 30,
Three Months Ended September 30,2021
2020(1)
2020 2019IncomeSharesPer ShareLossSharesPer Share
Income Shares Per Share Loss 
Shares(1)
 
Per Share(1)
           (In thousands, except per share data)
Basic:Basic:
Net income (loss) attributable to Class A common shareholdersNet income (loss) attributable to Class A common shareholders$11,843 3,746 $3.16 $(9,032)3,746 $(2.41)
(In thousands, except per share data)
Basic and diluted:           
Net income (loss) attributable to Class A common shareholders$2,303
 3,746
 $0.61
 $(4,864) 3,746
 $(1.30)
Effect of dilutive securities:           Effect of dilutive securities:
Redeemable noncontrolling interest — Apache limited partner$0
 0
   $(19,222) 12,500
  Redeemable noncontrolling interest — Apache limited partner$0 0 $(37,331)12,500 
Redeemable noncontrolling interest — Preferred Unit limited partners$26,813
 93,609
   $0
 0
  Redeemable noncontrolling interest — Preferred Unit limited partners$38,442 16,342 $0 0 
Diluted(2)(3):
           
Diluted(2)(3)(4):
Diluted(2)(3)(4):
Net income (loss) attributable to Class A common shareholders$29,116
 97,355
 $0.30
 $(24,086) 16,246
 $(1.48)Net income (loss) attributable to Class A common shareholders$50,285 20,088$2.50 $(46,363)16,246 $(2.85)
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
 Nine Months Ended September 30,
 2020 2019
 Loss Shares Per Share Loss 
Shares(1)
 
Per Share(1)
            
 (In thousands, except per share data)
Basic:           
Net loss attributable to Class A common shareholders$(7,805) 3,746
 $(2.08) $(6,057) 3,746
 $(1.62)
Effect of dilutive securities:           
Redeemable noncontrolling interest — Apache limited partner$(28,361) 12,500
   $(21,919) 12,500
 

Diluted(2):
           
Net loss attributable to Class A common shareholders$(36,166) 16,246
 $(2.23) $(27,976) 16,246
 $(1.72)
(1)
(2)Share and per share amounts have been retroactively restated to reflect the Company’s reverse stock split which was effected June 30, 2020. Refer to Note 9—Equity for further information.
(2)The effect of an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock would have been anti-dilutive for the three month period ended September 30, 2019, and also the nine month periods ended September 30, 2020 and 2019.
(3)The effect of the exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for the three month period ended September 30, 2020.
The diluted earnings per share calculation excludes the effects of the outstanding warrants of the Company to purchase an aggregate 947,082 shares of Class A Common Stock sincewould have been anti-dilutive for the associated impactsthree and six months ended June 30, 2020.
(3)The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all relevant periods presented.
(4)The effect of the exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for the three months ended June 30, 2020 and six months ended June 30, 2021.
22

Further discussion of the Preferred Units and associated embedded features can be found in Note 10—Series A Cumulative Redeemable Preferred Units and Note 13—Fair Value Measurements, respectively. Earn-out consideration granting Apache the right to receive additional shares of Class A Common Stock is not included in the earnings per share calculation above, as the conditions for issuance were not satisfied asfor any of September 30, 2020.the periods presented.


13. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of: cash and cash equivalents; revenue receivables; accounts receivable; accounts receivable from/payable to Apache; dividends and distributions payable; the Company’s private and public warrants and an embedded derivative liability related to the issuance of Preferred Units (as further described above). This embedded derivative liability is recorded on the Company’s consolidated balance sheet at fair value. The carrying amounts reported on the consolidated balance sheet for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. The carrying amount of Altus Midstream’s revolving credit facility approximates fair value because the interest rate is variable and reflective of market rates. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the nine months ended September 30, 2020 or year ended December 31, 2019.Units.
The Company bifurcated and recognized the embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Amended LPA. The valuation of the embedded derivative (using an income approach) was based on a range of factors, including:including expected future interest rates using the Black-Karasinski model, the Company’s imputed interest rate, interest rate volatility, the expected timing of periodic cash distributions, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units. The Company recorded an unrealized gain of $31.0 million and an unrealized loss of $3.5 million and $3.8$10.6 million for the three months ended SeptemberJune 30, 2021 and 2020, respectively, and 2019, respectively,an unrealized gain of $14.5 million and an unrealized loss of $76.1 million and $3.8$72.6 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively, which are recorded in “Unrealized derivative instrument loss”gain (loss)” in the statement of consolidated operations. Altus has classified these recurring fair value measurements as Level 3 in the fair value hierarchy.
As of the SeptemberJune 30, 20202021 valuation date, the Company used the forward B-rated Energy Bond Yield curve to develop the following key unobservable inputs used to value this embedded derivative:
  Quantitative Information About Level 3 Fair Value Measurements
  Fair Value at September 30, 2020 Valuation Technique Significant Unobservable Inputs Range/Value
         
  (In thousands)      
Preferred Units Embedded Derivative $179,031
 Option Model Altus Midstream Company’s Imputed Interest Rate 14.54-16.18%
      Interest Rate Volatility 35.32%

Quantitative Information About Level 3 Fair Value Measurements
Fair Value at June 30, 2021Valuation TechniqueSignificant Unobservable InputsRange/Value
(In thousands)
Preferred Units Embedded Derivative$124,532 Option ModelAltus Midstream Company’s Imputed Interest Rate5.62-11.50%
Interest Rate Volatility38.33%

The Company’s comparative imputed interest rate at December 31, 2019 ranged from 9.60 percent to 12.68 percent, with an interest rate volatility assumption of 21.89 percent. A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative liability at SeptemberJune 30, 2020,2021, while a one percent decrease would have the directionally inverse affectlead to a similar decrease in value as of SeptemberJune 30, 2020.2021. The assumed expected timing until exercise of the exchange option at June 30, 2021 was 4.95 years.
The Company has additional embedded derivatives in the Preferred Units related to the exchange option and redemption features that are accounted for separately from the Preferred Units. Level 3 valuations of the embedded derivatives are based on a range of factors, including the likelihood of the event occurring, and these factors are assessed quarterly. There was no value associated with these additional identified embedded derivatives for any applicable period presented.
The carrying value of the Company’s public warrants are recorded at fair value based on quoted market prices, a Level 1 fair value measurement. The carrying value of the Company’s private warrants are recorded at fair value determined using an option pricing model, a Level 3 fair value measurement, which is calculated based on key assumptions related to expected volatility of the Company’s common stock, an expected dividend yield, the remaining term of the warrants outstanding and the risk-free rate based on the U.S. Treasury yield curve in effect at the time of the valuation. These assumptions are estimated utilizing historical trends of the Company’s common stock, public warrants and other factors. The Company has recorded a liability of $1.3 million and $0.9 million as of June 30, 2021 and December 31, 2020, respectively, in “Other noncurrent liabilities” included in its consolidated balance sheet and approximately $0.2 million of income and $0.4 million of expense for the three months ended June 30, 2021 and 2020, respectively, and $0.4 million of expense and $1.5 million of income for the six months ended June 30, 2021 and 2020, respectively, reflected as “Total other income (loss)” in its statement of consolidated operations related to the fair value changes of the underlying warrants.
23

The carrying amounts reported on the consolidated balance sheet for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. The carrying amount of Altus Midstream’s revolving credit facility approximates fair value because the interest rate is variable and reflective of market rates. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the six months ended June 30, 2021 or year ended December 31, 2020.
14.    SUBSEQUENT EVENTS
Common Stock Dividend
On August 3, 2021, the Company’s Board of Directors declared a cash dividend of $1.50 per share on the Company’s Class A Common Stock, totaling $5.6 million, to be paid on September 30, 2021, to stockholders of record as of the close of business on August 27, 2021. The common stock dividend will be funded by a distribution from Altus Midstream to its common unitholders of $1.50 per Common Unit, totaling $24.4 million, of which $5.6 million is payable to the Company and the balance is payable to Apache.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read together with the Company’s consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial“Consolidated Financial Statements” of this Quarterly Report on Form 10-Q, as well as the Company’s consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192020 (Form 10-K). Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Form 10-K.
Overview
Altus Midstream Company (the Company or Altus), through its ownership interest in Altus Midstream LP (Altus Midstream), owns gas gathering, processing, and transmission assets in the Permian Basin of West Texas, anchored by midstream service agreements to service Apache Corporation’s (Apache) production from its Alpine High resource play and surrounding areas (Alpine High). Additionally, the Company owns equity interests in four intrastate Permian Basin pipelines (the Equity Method Interest Pipelines) that have or will have access to various points along the Texas Gulf Coast. The Company’s operations consist of one reportable segment.
The Company has no independent operations or material assets outside its ownership interest in Altus Midstream, which is reported on a consolidated basis. As of SeptemberJune 30, 2020,2021, Altus Midstream’s assets included approximately 182 miles of in-service natural gas gathering pipelines, approximately 46 miles of residue gas pipelines with four market connections, and approximately 38 miles of NGL pipelines. Three cryogenic processing trains, each with nameplate capacity of 200 MMcf/d, were placed into service during 2019. Other assets include an NGL truck loading terminal with six Lease Automatic Custody Transfer units and eight NGL bullet tanks with 90,000 gallon capacity per tank. The Company’s existing gathering, processing, and transmission infrastructure is expected to provide capacity levels capable of fulfilling its midstream contracts to service Apache’s production from Alpine High and potential third-party customers.
As of SeptemberJune 30, 2020,2021, the Company owns the following Equity Method Interest Pipelines:
a•A 16 percent equity interest in the Gulf Coast Express Pipeline Project (GCX), which is owned and operated by Kinder Morgan Texas Pipeline, LLC (Kinder Morgan);. GCX transports natural gas from the Waha area in West Texas to Agua Dulce near the Texas Gulf Coast. GCX was placed in service during 2019, with the total capacity of 2.0 Bcf/d fully subscribed under long-term contracts.
a•A 15 percent equity interest in the EPIC crude oil pipeline (EPIC), which is owned by EPIC Pipeline LP and operated by EPIC Consolidated Operations, LLC;LLC. EPIC transports crude oil from Orla, Texas in Northern Reeves County to the Port of Corpus Christi, Texas. EPIC was placed in service early 2020, with initial throughput capacity of approximately 600 MBbl/d.
an•An approximate 26.7 percent equity interest in the Permian Highway Pipeline (PHP), which is also owned and operated by Kinder Morgan;Morgan. PHP transports natural gas from the Waha area in northern Pecos County, Texas to the Katy, Texas area with connections to Texas Gulf Coast and Mexico markets. PHP was placed in service January 2021, with the total capacity of 2.1 Bcf/d fully subscribed under long-term contracts.
a•A 33 percent equity interest in the Shin Oak NGL Pipeline (Shin Oak), which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC. Shin Oak transports NGLs from the Permian Basin to Mont Belvieu, Texas. Shin Oak was placed in service during 2019, with total capacity of up to 550 MBbl/d.
The global economy and the energy industry have been deeply impacted by the effects of the coronavirus disease 2019 (COVID-19) pandemic and related governmental actions. Uncertainty in the oil markets and the negative demand implications of the COVID-19 pandemic continue to impact oil supply and demand. Altus management continues to monitor natural gas throughput volumes from Apache and capacity utilization of its equity method interests.the Equity Method Interest Pipelines. The Company remains focused on increasing third-party processing opportunities in addition to Alpine High; however, the current market situation has slowed the pace of this activity. Altus has no upcoming debt maturities, and the term of its revolving credit facility revolver extends through November of 2023 to provide liquidity to meet foreseeable investment needs. Additionally, the Company expects to be cash flow positive upon the start-up of PHP anticipated in early 2021, at which point future capital requirements are expected to be minimal.2023.
The current crisis, however, is still evolving and may become more severe and complex. The ultimate impact and the extent to which the COVID-19 pandemic will continue to affect the Company’s business, results of operation, and financial condition is difficult to predict and depends on numerous evolving factors outside Altus’ control, including the duration and scope of the pandemic, new and continuing government, social, business, and other actions taken in response to the pandemic,
25

any additional waves of the virus, the availability and ultimate efficacy of the vaccines on new variants of the virus, and the effect of the pandemic on short- and long-term general economic conditions. As a result, the COVID-19 pandemic may still materially and adversely affect Altus’ results in a manner that is either not currently known or that the Company does not currently consider to be a significant risk to its business. For additional information about the business risks relating to the COVID-19 pandemic, please refer to Part II, I, Item 1A—Risk Factors of this Quarterlythe Company’s Annual Report on Form 10-Q.



10-K for the fiscal year ended December 31, 2020.
Altus Midstream Operational Metrics
The Company uses a variety of financial and operational metrics to assess the performance of its operations and growth compared to expected plan estimates. These metrics include:
•Throughput volumes and associated revenues;
•Costs and expenses; and
•Adjusted EBITDA (as defined below).
Throughput Volumes and Associated Revenues
The Company’s operating results are driven primarily by the volume of natural gas gathered, processed, compressed, and/or transmitted. For the periods presented, substantially all revenues were generated through fee-based agreements with Apache, a related party. The volumes of natural gas that Altus gathers or processes in future periods will depend on the production level of Apache’s assets in areas Altus services and any additional third-party service contracts. The Company’s assets were initially constructed to serve Apache’s anticipated development of Alpine High and its surrounding areas. As such, the amount and pace of upstream development activity by Apache will directly impact Altus’ aggregate gathering and processing volumes because the production rate of natural gas wells declines over time.
In the second quarter of 2020, several events had a negative impactThe Company remains focused on throughput volumesincreasing third-party processing opportunities in addition to Alpine High, and associated revenues. Apache shut in approximately 70 MMcf/d of production in response to low commodity prices, which fell as a result of lower demand and higher uncertainty associated with the COVID-19 pandemic. In addition, unplanned downtime to address moisture in the residue pipeline reduced throughput by approximately 40 MMcf/d. These volumes were back on-line at the beginning of the third quarter.
Additionally, other producers are also developing oil and gas plays in surrounding areas that may provide Altus opportunities to enter into third-party processing and gathering agreements. Producers’ willingness to engage in new drilling is determined by a number of factors, all of which are affected by the COVID-19 pandemic, the most important of which are the prevailing and projected prices of oil, natural gas, and NGLs, the cost to drill and operate a well, the availability and cost of capital, and environmental and government regulations. Company management believes that its midstream assets are positioned in one of the most active regions for oil and gas exploration and development activities in the United States, and the Company is actively pursuing new supplies of natural gas and processing arrangements with third parties to increase throughput volumes in its systems.
Costs and Expenses
Costs of product sales
Costs of product sales represent purchases of NGLs from a third party, which the Company then owns, controls and processes, prior to ultimate sale to customers. These costs are directly associated with the volume and amount of third-party contracts entered into and could fluctuate depending on market conditions and product prices.
Operations and maintenance
Operations and maintenance expenses primarily comprise those costs that are directly associated with the operations of the Company’s assets. The most significant of these costs are associated with direct labor and supervision, power, repair and maintenance expenses, and equipment rentals. Fluctuations in commodity prices impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase (or decrease) in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals.
Depreciation and accretion
Depreciation on the capitalized costs incurred to acquire and develop the Company’s midstream assets is computed based on estimated useful lives and estimated salvage values. Also included within this expense is the accretion associated with estimated asset retirement obligations (ARO). Depreciation and accretion expense would be expected to increase during future periods in-line with additional infrastructure costs incurred; however, any future asset sales or long-lived asset impairments would decrease expected depreciation expense to commensurate levels.
26

General and administrative
General and administrative (G&A) expense represents indirect costs and overhead expenditures incurred by the Company associated with managing the midstream assets. These expenses primarily comprise fixed fees set forth in the Construction, Operations and Maintenance Agreement (COMA) entered into with Apache. Refer to Note 2—Transactions with Affiliates in the Notes to Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q for further information.
Taxes other than income
Taxes other than income are primarily related to ad valorem taxes on the Company’s midstream assets.


Adjusted EBITDA
The Company defines Adjusted EBITDA as net income (loss) including noncontrolling interests before financing costs (net of capitalized interest), interest income, income taxes, depreciation, and accretion and adjusts such items, as applicable, from income from equity method interests.the Equity Method Interest Pipelines. Altus also excludes (when applicable) impairments, unrealized gains or losses on derivative instruments, and other items affecting comparability of results to peers. Company management believes Adjusted EBITDA is useful for evaluating operating performance and comparing results of operations from period-to-period and against peers without regard to financing or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) including noncontrolling interests or any other measure determined in accordance with accounting principles generally accepted in the United States (GAAP) or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing Altus’ financial performance, such as cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. The presentation of Adjusted EBITDA should not be construed as an inference that the Company’s results will be unaffected by unusual or non-recurring items. Additionally, the Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
Adjusted EBITDA is not defined in GAAP
The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income (loss) including noncontrolling interests. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income (loss) including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income (loss) including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
Reconciliation of non-GAAP financial measure
Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income (loss) including noncontrolling interests, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.
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The following table presents a reconciliation of the GAAP financial measure of net income (loss) including noncontrolling interestinterests to the non-GAAP financial measure of Adjusted EBITDA.
Three Months Ended June 30,Six Months Ended June 30,
2021
2020(1)
2021
2020(1)
(In thousands)
Reconciliation of net income (loss) including noncontrolling interests to Adjusted EBITDA
Net income (loss) including noncontrolling interests$73,841 $16,034 $96,330 $(9,337)
Add:
Financing costs, net of capitalized interest2,615 292 5,213 565 
 Depreciation and accretion4,009 4,062 8,009 7,976 
Impairments— — 441 — 
Unrealized derivative instrument loss— 10,585 — 72,569 
Equity method interests Adjusted EBITDA48,385 28,231 88,296 51,917 
Warrants valuation adjustment— 417 442 — 
Other287 — 456 290 
Less:
Gain on sale of assets200 264 276 76 
 Interest income1 2 2 9 
Unrealized derivative instrument gain31,006 — 14,477 — 
Income from equity method interests, net28,466 15,712 50,154 31,554 
Warrants valuation adjustment222 — — 1,460 
Income tax benefit— — — 696 
Other— 2 — 2 
Adjusted EBITDA$69,242 $43,641 $134,278 $90,183 
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
28
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
Reconciliation of net income (loss) including noncontrolling interests       
Net income (loss) including noncontrolling interests$29,322
 $(8,188) $20,192
 $(7,958)
Add:       
Financing costs, net of capitalized interest413
 522
 978
 1,508
  Depreciation and accretion4,008
 11,710
 11,984
 28,468
Impairments—
 9,338
 —
 9,338
Unrealized derivative instrument loss3,533
 3,769
 76,102
 3,769
Equity method interests Adjusted EBITDA29,952
 2,707
 81,869
 2,873
Other—
 644
 290
 644
Less:       
Gain on sale of assets, net—
 —
 76
 —
  Interest income—
 617
 9
 3,584
Income from equity method interests, net14,320
 1,564
 47,541
 536
Income tax benefit—
 505
 696
 510
Other—
 —
 2
 —
Adjusted EBITDA$52,908
 $17,816

$143,091

$34,012


Results of Operations

The following table presents the Company’s results of operations for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2021
2020(1)
2021
2020(1)
(In thousands)
REVENUES:
Midstream services revenue — affiliate$32,467 $31,616 $63,996 $72,383 
Product sales — third parties3,126 — 5,743 — 
Total revenues35,593 31,616 69,739 72,383 
COSTS AND EXPENSES:
Costs of product sales3,351 — 5,344 — 
Operations and maintenance7,340 9,508 14,742 20,099 
General and administrative3,475 2,988 6,930 7,166 
Depreciation and accretion4,009 4,062 8,009 7,976 
Impairments— — 441 — 
Taxes other than income3,812 3,347 7,620 6,790 
Total costs and expenses21,987 19,905 43,086 42,031 
OPERATING INCOME13,606 11,711 26,653 30,352 
Unrealized derivative instrument gain (loss)31,006 (10,585)14,477 (72,569)
Interest income1 2 2 9 
Income from equity method interests, net28,466 15,712 50,154 31,554 
Warrants valuation adjustment222 (417)(442)1,460 
Other3,155 (97)10,699 (274)
Total other income (loss)62,850 4,615 74,890 (39,820)
Financing costs, net of capitalized interest2,615 292 5,213 565 
NET INCOME (LOSS) BEFORE INCOME TAXES73,841 16,034 96,330 (10,033)
Current income tax benefit— — — (696)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS73,841 16,034 96,330 (9,337)
Net income attributable to Preferred Unit limited partners24,004 18,764 43,496 37,026 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS49,837 (2,730)52,834 (46,363)
Net income (loss) attributable to Apache limited partner38,174 (1,779)40,991 (37,331)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$11,663 $(951)$11,843 $(9,032)
KEY PERFORMANCE METRICS:
Adjusted EBITDA(2)
$69,242 $43,641 $134,278 $90,183 
OPERATING DATA:
Average throughput volumes of natural gas (MMcf/d)447 434 442 505 
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Adjusted EBITDA is not defined by GAAP and should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measures prepared under GAAP. For the definition and reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see the section titled Altus Midstream Operational Metrics—Adjusted EBITDA above.
29
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
REVENUES:       
Midstream services revenue — affiliate$38,869
 $34,009
 $111,252
 $91,994
Product sales — third parties1,303
 —
 1,900
 —
Total revenues40,172
 34,009
 113,152
 91,994
COSTS AND EXPENSES:       
Costs of product sales1,177
 —
 1,693
 —
Operations and maintenance8,960
 13,063
 29,059
 43,466
General and administrative2,936
 3,242
 10,102
 8,314
Depreciation and accretion4,008
 11,710
 11,984
 28,468
Impairments—
 9,338
 —
 9,338
Taxes other than income4,143
 3,239
 10,933
 9,702
Total costs and expenses21,224
 40,592
 63,771
 99,288
OPERATING INCOME (LOSS)18,948
 (6,583) 49,381
 (7,294)
OTHER INCOME (LOSS):       
Unrealized derivative instrument loss(3,533) (3,769)
(76,102) (3,769)
Interest income—
 617

9
 3,584
Income from equity method interests, net14,320
 1,564

47,541
 536
Other—
 —

(355) (17)
Total other income (loss)10,787
 (1,588) (28,907) 334
Financing costs, net of capitalized interest413
 522
 978
 1,508
NET INCOME (LOSS) BEFORE INCOME TAXES29,322
 (8,693) 19,496
 (8,468)
Current income tax benefit—
 —
 (696) —
Deferred income tax benefit—
 (505) —
 (510)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS29,322
 (8,188) 20,192
 (7,958)
Net income attributable to Preferred Unit limited partners19,332
 17,480
 56,358
 21,623
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS9,990
 (25,668) (36,166) (29,581)
Net income (loss) attributable to Apache limited partner7,687
 (20,804) (28,361) (23,524)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$2,303
 $(4,864) $(7,805) $(6,057)
KEY PERFORMANCE METRICS:       
Adjusted EBITDA(1)
$52,908
 $17,816
 $143,091
 $34,012
OPERATING DATA:       
Average throughput volumes of natural gas
(MMcf/d)
531
 467
 514
 464
Average volumes of natural gas processed
(MMcf/d)
525
 467
 509
 464
(1)
Adjusted EBITDA is not defined by GAAP and should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measures prepared under GAAP. For the definition and reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, see the section entitled Adjusted EBITDA above.



Since the Company commenced operations in the second quarter of 2017, its onlymost significant customer has been Apache. Altus Midstream is pursuing similar long-term commercial service contracts with third-parties that could be accommodated by existing capacity. Altus’ midstream service agreements with Apache contain no minimum volume commitments and as such, future results of operations may be materially impacted by Apache’s production volumes from Alpine High and Altus’ ability to contract third-party business. Refer to Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Part II, Item 1A—Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk and Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q, for further discussion.
Revenues
The following table summarizes the Company’s revenues for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
REVENUES:
Midstream services revenue — affiliate$32,467 $31,616 $63,996 $72,383 
Product sales — third parties3,126 — 5,743 — 
Total revenues$35,593 $31,616 $69,739 $72,383 
  Three Months Ended September 30, Nine Months Ended September 30,
  2020 2019 2020 2019
         
  (In thousands)
REVENUES:        
Midstream services revenue — affiliate $38,869
 $34,009
 $111,252
 $91,994
Product sales — third parties 1,303
 —
 1,900
 —
Total revenues $40,172
 $34,009
 $113,152
 $91,994
Substantially all midstreamMidstream services revenue was primarily generated from fee-based midstream services provided under the terms of separate commercial midstream service agreements with Apache for the gas gathering, processing, and transmission of volumes from the dedicated area in the Alpine High field. Altus receives a per-unit fee based on the quantity of natural gas and natural gas liquid volumes that flow through its systems. During the periods presented, Altus did not own or take title to the affiliate volumes that were processed through its systems. For more details, please refer to Note 3—Revenue Recognition in the Notes to Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q for further information.
ProductThree months ended June 30, 2021 as compared to three months ended June 30, 2020
Midstream services revenue from affiliate increased by $0.9 million to $32.5 million for the three months ended June 30, 2021, as compared to $31.6 million for the three months ended June 30, 2020. The increase was primarily driven by slightly higher throughput of natural gas volumes from Apache.
The $3.1 million in product sales revenues during the three months ended June 30, 2021 were generated from sales of NGLs and condensates purchased and processed by Altus from a third-partythird party and subsequently sold to non-affiliated customers.
Three No significant revenues from such sales occurred during the three months ended SeptemberJune 30, 20202020.
Six months ended June 30, 2021 as compared to threesix months ended SeptemberJune 30, 20192020
Midstream services revenue from affiliate increaseddecreased by $4.9$8.4 million to $38.9$64.0 million for the threesix months ended SeptemberJune 30, 2020,2021, as compared to $34.0$72.4 million for the threesix months ended SeptemberJune 30, 2019.2020. The increasedecrease was primarily driven by higherlower throughput of rich natural gas volumes due to increased capacity as a result of the third cryogenic processing train being placed into service during the fourth quarter of 2019.from Apache.

The $1.3$5.7 million in product sales was driven by purchasedrevenues during the six months ended June 30, 2021 were generated from NGLs and condensates volumespurchased and processed by Altus from a third party and subsequently sold to third-parties starting in 2020.
Ninenon-affiliated customers. No significant revenues from such sales occurred during the six months ended SeptemberJune 30, 2020 as compared to nine months ended September 30, 20192020.

Midstream services revenue from affiliate increased by $19.3 million to $111.3 million for the nine months ended September
30 2020, as compared to $92.0 million for the nine months ended September 30, 2019. The increase was primarily driven by higher throughput of rich natural gas volumes due to increased capacity as a result of the three cryogenic processing trains coming on line starting in the second quarter of 2019.

The $1.9 million in product sales was driven by purchased NGLs and condensates volumes processed and sold to third-parties starting in 2020.



Costs and Expenses
The following table summarizes the Company’s costs and expenses for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Costs of product sales$3,351 $— $5,344 $— 
Operations and maintenance7,340 9,508 14,742 20,099 
General and administrative3,475 2,988 6,930 7,166 
Depreciation and accretion4,009 4,062 8,009 7,976 
Impairments— — 441 — 
Taxes other than income3,812 3,347 7,620 6,790 
Total costs and expenses$21,987 $19,905 $43,086 $42,031 
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
Costs of product sales$1,177
 $—
 $1,693
 $—
Operations and maintenance8,960
 13,063
 29,059
 43,466
General and administrative2,936
 3,242
 10,102
 8,314
Depreciation and accretion4,008
 11,710
 11,984
 28,468
Impairments—
 9,338
 —
 9,338
Taxes other than income4,143
 3,239
 10,933
 9,702
Total costs and expenses$21,224
 $40,592
 $63,771
 $99,288
Three months ended SeptemberJune 30, 20202021 as compared to three months ended SeptemberJune 30, 20192020
Costs of product sales
The $1.2$3.4 million in costs of product sales represent purchases of NGLs from a third-party, starting in 2020.which were used to support the product sales to third parties discussed above.
Operations and maintenance
Operations and maintenance expenses decreased by $4.1approximately $2.2 million to $9.0$7.3 million for the three months ended SeptemberJune 30, 2020,2021, as compared to $13.1$9.5 million for the three months ended SeptemberJune 30, 2019,2020. This decrease was primarily driven by increased operational efficiency as a result of transitioning from mechanical refrigeration units to the Company’s centralized Diamond cryogenic complex startingcomplex. Work related to this transition was still being completed in the second quarter of 2019.2020. The transition resulted in decreases in employee-relatedvarious costs, the most significant being contract labor, lower suppliesequipment rentals, chemical expenses, and lower equipment rentals. These savings are coupled with an overall decrease in Company labor from headcount reductions.
General and administrative
G&A expense decreasedincreased by $0.3$0.5 million to $2.9$3.5 million for the three months ended SeptemberJune 30, 2020,2021, as compared to $3.2$3.0 million for the three months ended SeptemberJune 30, 2019,2020, primarily driven by lower expenses incurred related to severance costs, salaries and wages, and incentive and stock compensation. These decreases were partially offset by a higher fees paid under the COMA, fee in 2020.
Depreciation and accretion
Depreciation and accretion expense decreased by $7.7 million to $4.0 million forwhich escalate on an annual basis per the three months ended September 30, 2020, as compared to $11.7 million for the three months ended September 30, 2019. The decrease was a result of impairments recorded on the carrying valueterms of the property, plant, and equipment atagreement. Refer to Note 2—Transactions with Affiliates in the endNotes to Consolidated Financial Statements set forth in Part I of 2019.this Quarterly Report on Form 10-Q for further information.
Taxes other than income
The increase in taxes other than income was driven by changes related to ad valorem taxes, which increased by $0.9$0.4 million to $4.1$3.7 million for the three months ended SeptemberJune 30, 2020,2021, as compared to $3.2$3.3 million for the three months ended SeptemberJune 30, 2019.2020. The $0.9$0.4 million increase reflectreflects adjustments in estimated tax assessments related to the completion of construction and capacity utilization of certain assets.
NineSix months ended SeptemberJune 30, 20202021 as compared to ninesix months ended SeptemberJune 30, 20192020
Costs of product sales
The $1.7$5.3 million in costs of product sales represent purchases of NGLs from a third-party, starting in 2020.




which were used to support the product sales to third parties discussed above.
Operations and maintenance
Operations and maintenance expenses decreased by $14.4$5.4 million to $29.1$14.7 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to $43.5$20.1 million for the ninesix months ended SeptemberJune 30, 2019,2020. This decrease was primarily driven by increased operational efficiency as a result of transitioning from mechanical refrigeration units to the Company’s centralized Diamond cryogenic complex startingcomplex. Work related to this transition was still being completed in the second quarterfirst half of 2019.2020. The transition resulted in
31

decreases in employee-relatedvarious costs, the most significant being contract labor, lower suppliesequipment rentals, chemical expenses, and lower equipment rentals. These savings are coupled with an overall decrease in Company labor from headcount reductions. These savings were partially offset by higher power usage costs.
General and administrative
G&A expense increaseddecreased by $1.8$0.3 million to $10.1$6.9 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to $8.3$7.2 million for the ninesix months ended SeptemberJune 30, 2019,2020, primarily driven by higher expenses incurred related to a higher COMA fee in 2020,lower professional fees, and insurance. These increases were partially offset by lower severance costs, salaries and wages, legalhigher fees and incentive and stock compensation.
Depreciation and accretion
Depreciation and accretion expense decreased by $16.5 million to $12.0 million forpaid under the nine months ended September 30, 2020, as compared to $28.5 million forCOMA, which escalate on an annual basis per the nine months ended September 30, 2019. The decrease was a result of impairments recorded to the carrying valueterms of the property, plant, and equipment atagreement. Refer to Note 2—Transactions with Affiliates in the endNotes to Consolidated Financial Statements set forth in Part I of 2019.this Quarterly Report on Form 10-Q for further information.
Taxes other than income
The increase in taxes other than income was driven by ad valorem taxes, which increased by $1.2$0.8 million to $10.7$7.4 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to $9.5$6.6 million for the ninesix months ended SeptemberJune 30, 2019.2020. The $1.2$0.8 million increase reflectreflects adjustments in estimated tax assessments related to the completion of construction and capacity utilization of certain assets.
32

Other Income (Loss) and Financing Costs, Net of Capitalized Interest
The components of other income, other loss and financing costs, net of capitalized interest are presented below:
Three Months Ended June 30,Six Months Ended June 30,
2021
2020(1)
2021
2020(1)
(In thousands)
Unrealized derivative instrument gain (loss)$31,006 $(10,585)$14,477 $(72,569)
Interest income1 2 2 9 
Income from equity method interests, net28,466 15,712 50,154 31,554 
Warrants valuation adjustment222 (417)(442)1,460 
Other3,155 (97)10,699 (274)
Total other income (loss)$62,850 $4,615 $74,890 $(39,820)
Interest expense$2,323 $2,007 $4,630 $5,365 
Amortization of deferred facility fees292 292 583 565 
Capitalized interest— (2,007)— (5,365)
Total Financing costs, net of capitalized interest$2,615 $292 $5,213 $565 
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
        
 (In thousands)
Unrealized derivative instrument loss$(3,533) $(3,769) $(76,102) $(3,769)
Interest income—
 617
 9
 3,584
Income from equity method interests, net14,320
 1,564
 47,541
 536
Other—
 —
 (355) (17)
Total other income (loss)$10,787
 $(1,588) $(28,907) $334
        
Interest expense$2,133
 $1,496
 $7,498
 $3,234
Amortization of deferred facility fees292
 237
 857
 652
Capitalized interest(2,012) (1,211) (7,377) (2,378)
Financing costs, net of capitalized interest$413
 $522
 $978
 $1,508


(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
Unrealized derivative instrument lossgain (loss)
During the three and ninesix months ended SeptemberJune 30, 2020,2021, the Company recognized an unrealized lossderivative instrument gain of $3.5$31.0 million and $76.1$14.5 million, respectively, in relation to an embedded featureexchange option identified upon the issuance and sale of Series A Cumulative Redeemable Preferred Units (the Preferred Units) in the second quarter of 2019.. The recognizedunrealized loss related to this embedded feature was $3.8$10.6 million and $72.6 million for the three and ninesix months ended SeptemberJune 30, 2019.2020, respectively. The associated derivative liability is recorded on the consolidated balance sheet at fair value. The fair value of the embedded derivative is determined (using an income approach) by a range of factors, including:including expected future interest rates using the Black-Karasinski model;model, interest rate volatility, the Company’s imputed interest rate;rate, the expected timing of periodic cash distributions, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units. The value of the derivative during the ninethree and six months ended SeptemberJune 30, 2020 changed significantly based on the volatility of2021 was primarily impacted by expected future interest rates, mainly given current macroeconomic factors associated with the COVID-19 pandemic and related governmental actions.rates. Refer to Note 13—Fair Value Measurements within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q for further discussion.
Income from equity method interests, net
Income from equity method interests increased $12.8 million and $47.0$18.6 million for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively, as compared to the three and ninesix months ended SeptemberJune 30, 2019.2020. The increase was primarily fromdue to the Company’s proportionate26.7 percent share of net income from the Permian Highway Pipeline which commenced service in the GCX and Shin Oak pipelines, in whichJanuary 2021.
Other Income
In 2020, the Company ownsentered into a 16 percent and 33 percent interest, respectively. GCX was placed into service in September of 2019, and Shin Oak was in-service whencontract with a provider to supply the Company acquiredwith electrical power. If the Company does not utilize all of its equity interestfixed purchase volumes under this contract, then it will receive a credit based on a market rate for the related underutilization. In February 2021, in Breviloba, LLC duringconjunction with increased power pricing due to the third quarterTexas freeze event and underutilization of 2019.
Interest Income
Interest income decreased $0.6contractual electricity volumes, the Company recognized an estimated credit of approximately $2.5 million and $3.6$9.7 million for the three and ninesix months ended SeptemberJune 30, 2020, respectively, as compared to2021, respectively. No credits were recorded for the three and ninesix months ended SeptemberJune 30, 2019, as a result of a decrease in cash and cash equivalents.2020.

33

Financing costs, net of capitalized interest
Financing costs incurred, net of capitalized interest, includes increases in interest expense related to higher balances under the Company’s credit facility; however, substantially all of the interest expense on the Company’s credit facility wasnot eligible to have interest capitalized in all periods presented.
Provision for Income Taxes
Duringrelated to balances drawn on Altus Midstream’s credit facility throughout the three and nine months ended September 30, 2020, the Company recognized a current income tax benefit of nil and $0.7 million, respectively, as comparedquarter. The changes to nilgross interest expense for the three and nine months ended September 30, 2019. On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in response to the COVID-19 pandemic. Under the CARES Act, 100 percent of net operating losses arising in tax years beginning after December 31, 2017, and before January 1, 2021 may be carried back to each of the five preceding tax years of such loss. In the first quarter of 2020, the Company recorded a current income tax benefit of $0.7 million associated with a net operating loss carryback claim.
The Company recorded nodeferred income tax expense during the three and nine months ended September 30, 2020, as compared to $0.5 million for the three and nine months ended September 30, 2019, respectively. The reduction to deferred income tax expense during three and nine months ended September 30, 2020 as compared to the three and nine months ended September 30, 2019 is the result of an increase in valuation allowance against the Company’s deferred tax assets.


periods presented was insignificant.
Key Performance MetricsMetric—EBITDA
Three months ended SeptemberJune 30, 20202021 as compared to three months ended SeptemberJune 30, 20192020
Net income before income taxes was $29.3$73.8 million for the three months ended SeptemberJune 30, 2020,2021, an increase of $38.0$57.8 million from a net lossincome before income taxes of $8.7$16.0 million for the three months ended SeptemberJune 30, 2019.2020. The increase in net income before income taxes was primarily driven by an increase of $6.2a $41.6 million in total revenues, $12.8 million of higher income from equity method interests, $4.1 million decrease in operations and maintenance expense, a $9.3 million decrease in impairment expense recorded in the third quarter of 2019, and a $7.7 million decrease in depreciation and accretion. These amounts were offset by a $2.1 million increase in various other individually insignificant costs of the Company.
Adjusted EBITDA increased by $35.1 million for the three months ended September 30, 2020 compared to the prior year period. Adjusted EBITDA, which excludes the impacts of depreciation, accretion, and impairment expense impacting net income above, benefited from an incremental $14.4 million increase related to excluding depreciation and interest in the Company’s proportionate share of EBITDA from its equity method interests. This amount was offset by a $0.4 million increase in various other individually insignificant costs of the Company.
Nine months ended September 30, 2020 as compared to nine months ended September 30, 2019
Net income before income taxes was $19.5 million for the nine months ended September 30, 2020, an increase of $28.0 million from a net loss before income taxes of $8.5 million for the nine months ended September 30, 2019. The increase in net income before income taxes was primarily driven by an increase of $21.2 million in total revenues, $47.0 million of higher income from equity method interests, a $14.4 million decrease in operations and maintenance expenses, a $9.3 million decrease in impairment expense, and a $16.5 million decrease in depreciation and accretion expense compared to the prior year period. The increases to net income were offset by a $72.3 million increase to expense related to the fair value measurement of an embedded derivative at SeptemberJune 30, 20202021, a $12.8 million increase in income from the Equity Method Interest Pipelines, a $4.0 million increase in total revenues, a $3.3 million increase of other income primarily related to a power credit, and $8.1a $2.2 million decrease in operations and maintenance expenses. The increases to net income were offset by a $2.3 million increase in interest expense, and a $3.8 million net increase of various other costs of the Company.individually insignificant costs.
Adjusted EBITDA increased by $109.1$25.6 million for the ninethree months ended SeptemberJune 30, 20202021 compared to the prior year period. Adjusted EBITDA, which excludes the impacts of depreciation, accretion, impairments, interest expense, and the changes to the embedded derivative noted above, benefited from an incremental $32.0$7.4 million increase related to excluding depreciation, interest and interestother discrete items in the Company’s proportionate share of EBITDA from its equity method interests.Equity Method Interest Pipelines.
Six months ended June 30, 2021 as compared to six months ended June 30, 2020
Net income before income taxes was $96.3 million for the six months ended June 30, 2021, an increase of $106.4 million from net loss before income taxes of $10.0 million for the six months ended June 30, 2020. The increase in net income before income taxes was primarily driven by an $87.0 million decrease to expense related to the fair value measurement of an embedded derivative at June 30, 2021, an $18.6 million increase in income from the Equity Method Interest Pipelines, an $11.0 million increase of other income primarily related to a power credit, and a $5.4 million decrease in operations and maintenance expenses. The increases to net income were offset by a $5.3 million increase in costs of product of sales, a $2.6 million decrease in total revenue, a $4.6 million increase in interest expense, and a $3.1 million net increase of various other costs.
Adjusted EBITDA increased by $44.1 million for the six months ended June 30, 2021 compared to the prior year period. Adjusted EBITDA, which excludes the impacts of depreciation, accretion, impairments, interest expense, and the changes to the embedded derivative noted above, benefited from an incremental $17.8 million increase related to excluding depreciation, interest and other discrete items in the Company’s proportionate share of EBITDA from its Equity Method Interest Pipelines. This amount was was further benefited by an insignificant decrease, in the aggregate, of $2.6$1.9 million of various other costs of the Company.

For additional information, see the section titled Altus Midstream Operational Metrics—Adjusted EBITDA above.



34

Capital Resources and Liquidity
The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of the Equity Method Interest Pipelines and associated subsequent construction costs. For the remainder of 2020,2021, the Company’s primary use of capital willspending requirements are anticipated to be forrelated to equity contributions associated with its proportionate share of remaining construction, commissioning, and maintenance costs relating to the Permian Highway Pipeline, which is still under construction.Equity Method Interest Pipelines, and the Company’s payment of a quarterly cash dividend on its Class A common stock as may be declared by its Board of Directors.
During the ninesix months ended SeptemberJune 30, 2020,2021, the Company’s primary sources of cash were distributions from the Equity Method Interest Pipelines, borrowings under the revolving credit facility, and cash generated from operations, distributions from equity method interests, and proceeds from sale of assets.operations. Based on Altus’ current financial plan and related assumptions, the Company believes that cash from operations, a reduced capital program for its midstream infrastructure, and distributions from equity method intereststhe Equity Method Interest Pipelines will begin to generate operating cash flows in excess of capital expenditures byand the first quarter ofamount required to fund the Company’s planned quarterly dividend during 2021.
Given the recent crude oil price collapse on lower demandvolatility and uncertain economic activity resulting from the COVID-19 pandemic and related governmental actions, the Company continues to monitor expected natural gas throughput volumes from Apache and capacity utilization of itsthe Equity Method Interest Pipelines. Projections for 2020 and 2021 remain dynamic. Altus' results, including projections related to capital resources and liquidity, could be materially affected by the continuing COVID-19 pandemic.
Altus Midstream Capital Requirements
During the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, capital spending for midstream infrastructure assets totaled $29.5$2.4 million and $307.0$26.5 million, respectively. Management believes its existing gathering, processing, and transmission infrastructure capacity is capable of fulfilling its midstream contracts to service Apache’s production from Alpine High and any potentialadditional third-party customers. As such, the Company expects remaining capital requirements for its existing infrastructure assets during 2020 and 2021 to be primarily related to maintenance of these assets.minimal.
Additionally, during the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, the Company made cash contributions of $286.2totaling $24.2 million and $1.0 billion,$154.4 million, respectively, for certain of itsto the Equity Method Interest Pipelines, as described below:which includes the following equity interest ownership stakes:
A•a 16.0 percent interest in GCX, which delivers natural gas from the Waha area in West Texas to Agua Dulce near the Texas Gulf Coast. Full commercial service began at the end of September 2019, and the total capacity of 2.0 Bcf/d is fully subscribed under long-term contracts.GCX;
A•a 15.0 percent interest in EPIC, which began full service during the second quarter of 2020. The pipeline has initial capacity of approximately 600 MBbl/d and transports crude oil from Orla, Texas to the Port of Corpus Christi, Texas.EPIC;
An•an approximate 26.7 percent interest in PHP, a long-haul pipeline that is expected to have approximately 2.1 Bcf/d of natural gas transportation capacity. The pipeline will transport natural gas from the Waha area in northern Pecos County, Texas, to the Katy, Texas area, with connections to Texas Gulf CoastPHP; and other markets. PHP is anticipated to be in service in early 2021.
A•a 33.0 percent interest in Shin Oak, which transports NGLs primarily from the Permian BasinOak.
The Company estimates it will incur minimal capital contributions of between $5 million to Mont Belvieu, Texas. Shin Oak, which was in-service when the Company acquired$7 million for its equity interest in the pipeline during the third quarter of 2019, has capacity of approximately 550 MBbl/d.
With Shin Oak, GCX, and EPIC already in service, thethese joint venture pipelines. The Company anticipates that its existing capital resources will be sufficient to fund the Company’s continuing obligations, primarilyfuture capital expenditures for the Equity Method Interest Pipelines and the Company’ existing infrastructure assets. For further information on the Equity Method Interest Pipelines, refer to Note 8—Equity Method Interests in the Notes to Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q.
Altus Midstream Class A Common Stock Dividend and Common Units Distributions
In the first and second quarters of 2021, the Company made payments of $24.4 million, per quarter, related to its quarterly dividend program. For more information please refer to Note 2—Transactions with Affiliates and Note 9—Equity in the remaining constructionNotes to Consolidated Financial Statements set forth in Part I, of PHP.this Quarterly Report on Form 10-Q.

On August 3, 2021, the Company’s Board of Directors declared a cash dividend of $1.50 per share on the Company’s Class A Common Stock, totaling $5.6 million, to be paid on September 30, 2021, to stockholders of record as of the close of business on August 27, 2021. The Class A Common Stock dividend will be funded by a distribution from Altus Midstream to its common unitholders of $1.50 per Common Unit, totaling $24.4 million, of which $5.6 million is payable to the Company and the balance is payable to Apache.
35

Series A Cumulative Redeemable Preferred Units
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Closing). The Closing occurred pursuant to a Preferred Unit Purchase Agreement among Altus Midstream, the Company, and the purchasers party thereto, dated as of May 8, 2019. A total of 625,000 Preferred Units were sold at a price of $1,000 per Preferred Unit, for an aggregate issue price of $625.0 million.
The Preferred Units entitle the holders thereof to receive quarterly distributions at a rate of 7 percent per annum, commencing with the quarter ended June 30, 2019. The rate increases to 10 percent per annum after the fifth anniversary of Closing and upon the occurrence of specified events. For any quarter ending on or prior to December 31, 2020, Altus Midstream could elect to pay distributions in-kind and did so in respect of quarters ended on and before March 31, 2020. For further information on the Preferred Units, refer to Note 10—Series A Cumulative Redeemable Preferred Units in the Notes to Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q.

Sources and Uses of Cash
The following table presents the sources and uses of the Company’s cash and cash equivalents for the periods presented.
 For the Six Months Ended
June 30,
 20212020
 (In thousands)
Sources of cash and cash equivalents:
Proceeds from revolving credit facility$33,000 $97,000 
Proceeds from sale of assets1,669 6,773 
Capital distributions from equity method interests13,645 4,211 
Net cash provided by operating activities101,055 86,797 
Total Sources of Cash and Cash Equivalents149,369 194,781 
Uses of cash and cash equivalents:
Capital expenditures(1)
(2,447)(26,520)
Distributions paid to Preferred Unit limited partners(23,124)— 
Distributions paid to Apache limited partner(37,500)— 
Dividends paid(11,239)— 
Contributions to equity method interests(24,155)(154,386)
Finance lease payments— (11,789)
Deferred facility fees— (816)
Capitalized interest paid— (5,373)
Total Uses of Cash and Cash Equivalents(98,465)(198,884)
Increase (decrease) in cash and cash equivalents$50,904 $(4,103)
  For the Nine Months Ended
September 30,
  2020 2019
     
  (In thousands)
Sources of cash and cash equivalents:    
Redeemable noncontrolling interest — Preferred Unit limited partners, net $—
 $611,249
Proceeds from revolving credit facility 184,000
 235,000
Proceeds from sale of assets 7,629
 —
Capital distributions from equity method interests 14,235
 —
Net cash provided by operating activities 137,447
 39,436
  $343,311
 $885,685
Uses of cash and cash equivalents:    
Capital expenditures(1)
 $(29,540) $(307,010)
Distributions paid to Preferred Unit limited partners (11,562) —
Contributions to and acquisition of equity method interests (286,227) (1,008,037)
Finance lease payments (11,789) (17,187)
Deferred facility fees (816) (792)
Capitalized interest paid (7,377) —
  (347,311) (1,333,026)
Decrease in cash and cash equivalents $(4,000) $(447,341)
(1)The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this document, which include accruals.
(1)The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this document, which include accruals.
Liquidity
The following table presents a summary of the Company’s key financial indicators at the dates presented:
 September 30, 2020 December 31, 2019June 30, 2021December 31, 2020
    
 (In thousands) (In thousands)
Cash and cash equivalents $1,983
 $5,983
Cash and cash equivalents$75,092 $24,188 
Total debt 580,000
 405,767
Total debt657,000 624,000 
Available committed borrowing capacity 220,000
 404,000
Available committed borrowing capacity141,000 176,000 
Cash and cash equivalents
As of SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had $2.0$75.1 million and $6.0$24.2 million, respectively, in cash and cash equivalents. The majority of the cash is invested in highly liquid, investment-grade instruments with maturities of three months or less at the time of purchase.
Debt
36

As of September 30, 2020Total Debt and December 31, 2019, the Company had debt outstanding totaling $580.0 million and $405.8 million, respectively. At December 31, 2019, $9.8 million of debt outstanding was related to a finance lease obligation which expired during the first quarter of 2020.


Available credit facilities
In November 2018, Altus Midstream entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream’s two, one-year extension options). The agreement for this revolving credit facility, as amended (the Amended Credit Agreement), provides aggregate commitments from a syndicate of banks of $800.0 million. The aggregate commitments include a letter of credit subfacility of up to $100.0 million and a swingline loan subfacility of up to $100.0 million. Altus Midstream may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of SeptemberJune 30, 20202021, there were $657.0 million of borrowings and a $2.0 million of letter of credit outstanding under this facility. As of December 31, 2019, total outstanding2020, there were $624.0 million of borrowings were $580.0 million and $396.0 million, respectively, and no letters of credit were outstanding under this facility.
Altus Midstream’s revolving credit facility is unsecured and is not guaranteed by the Company, Apache, APA Corporation or any of their respective subsidiaries.
At Altus Midstream’s option, the interest rate per annum for borrowings under this amended credit facility is either a base rate, as defined, plus a margin, or the London Interbank Offered Rate (LIBOR), plus a margin. Altus Midstream also pays quarterly a facility fee at a rate per annum on total commitments. The margins and the facility fee vary based upon (i) the Leverage Ratio (as defined below) until Altus Midstream has a senior long-term debt rating and (ii) such senior long-term debt rating once it exists. The Leverage Ratio is the ratio of (1) the consolidated indebtedness of Altus Midstream and its restricted subsidiaries to (2) EBITDA (as defined in the Amended Credit Agreement) of Altus Midstream and its restricted subsidiaries for the 12-month period ending immediately before the determination date. At SeptemberJune 30, 2020,2021, the base rate margin was 0.05 percent, the LIBOR margin was 1.05 percent, and the facility fee was 0.20 percent. In addition, a commission is payable quarterly to the lenders on the face amount of each outstanding letter of credit at a per annum rate equal to the LIBOR margin then in effect. Customary letter of credit fronting fees and other charges are payable to issuing banks.
The Amended Credit Agreement contains restrictive covenants that may limit the ability of Altus Midstream and its restricted subsidiaries to, among other things, incur additional indebtedness or guaranty indebtedness, sell assets, make investments in unrestricted subsidiaries, enter into mergers, make certain payments and distributions, incur liens on certain property securing indebtedness, and engage in certain other transactions without the prior consent of the lenders.
Altus Midstream also is subject to a financial covenant under the Amended Credit Agreement, which requires it to maintain a Leverage Ratio not exceeding 5.00:1.00 at the end of any fiscal quarter, starting with the quarter ended December 31, 2019, except that during the period of up to one year following a qualified acquisition, the Leverage Ratio cannot exceed 5.50:1.00 at the end of any fiscal quarter. Unless the Leverage Ratio is less than or equal to 4.00:1.00, the Amended Credit Agreement limits distributions in respect of Altus Midstream LP’s capital to $30 million per calendar year until either (i) the consolidated net income of Altus Midstream LP and its restricted subsidiaries, as adjusted pursuant to the Amended Credit Agreement, for three consecutive calendar months equals or exceeds $350.0 million on an annualized basis or (ii) Altus Midstream LP has a specified senior long-term debt rating; in addition, before the occurrence of one of those two events, the Leverage Ratio must be less than or equal to 5.00:1.00. In no event can any distribution be made that would, after giving effect to it on a pro forma basis, result in a Leverage Ratio greater than (i) 5.00:1.00 or (ii) for a specified period after a qualifying acquisition, 5.50:1.00. The Leverage Ratio as of SeptemberJune 30, 20202021 was less than 4.00:1.00.
The terms of Altus Midstream’s Preferred Units also contain certain restrictions on distributions on Altus Midstream LP’s Common Units, including the Common Units held by the Company, and any other units that rank junior to the Preferred Units with respect to distributions or distributions upon liquidation. Refer to Note 10—Series A Cumulative Redeemable Preferred Units in the Notes to Consolidated Financial Statements set forth in Part I of this Quarterly Report on Form 10-Q for further information. In addition, the amount of any cash distributions to Altus Midstream LP by any entity in which it has an interest accounted for by the equity method is subject to such entity’s compliance with the terms of any debt or other agreements by which it may be bound, which in turn may impact the amount of funds available for distribution by Altus Midstream LP to its partners.
There are no clauses in the Amended Credit Agreement that permit the lenders to accelerate payments or refuse to lend based on unspecified material adverse changes. The Amended Credit Agreement has no drawdown restrictions or prepayment obligations in the event of a decline in credit ratings. However, the agreement allows the lenders to accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches, and if Altus Midstream or any of its restricted subsidiaries defaults on other indebtedness in excess of the stated threshold, is insolvent, or has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold. Lenders may also accelerate payment maturity and terminate lending and issuance commitments if Altus Midstream undergoes a specified change in control or has specified pension plan liabilities in excess of the stated threshold. Altus Midstream was in compliance with the terms of the Amended Credit Agreement as of SeptemberJune 30, 2020.2021.
37

There is no assurance that the financial condition of banks with lending commitments to Altus Midstream will not deteriorate. Altus closely monitors the ratings of the banks in the Company’s bank group. Having a large bank group allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.


Series A Cumulative Redeemable Preferred Units
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Closing). The Closing occurred pursuant to a Preferred Unit Purchase Agreement among Altus Midstream, the Company, and the purchasers party thereto, dated as of May 8, 2019. A total of 625,000 Preferred Units were sold at a price of $1,000 per Preferred Unit, for an aggregate issue price of $625.0 million. Altus Midstream received approximately $611.2 million in cash proceeds from the sale after deducting transaction costs and discounts to certain purchasers. These proceeds were used to fund ongoing capital contributions related to Altus’ Equity Method Interest Pipelines and repayment of outstanding principal on the revolving credit facility (discussed above).
Off-Balance Sheet Arrangements

Other than the arrangements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, the Company has not entered into any transactions, agreements, or other contractual arrangements with unconsolidated entities that are reasonably likely to materially affect the Company’s liquidity or capital resource positions.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative DisclosuresDisclosure About Market Risk
The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below. The Company continually monitors its market risk exposure, including the impact and developments related to the COVID-19 pandemic, which has introduced significant volatility and uncertainties in the financial markets subsequent to the year ended December 31, 2019.during 2020 and 2021.
Commodity Price Risk
Currently, essentially all of the Company’s midstream service agreements are fee-based, with no direct commodity price exposure to oil, natural gas, or NGLs, and only an immaterial portion of the agreements are based on the underlying value of a commodity. However, the Company is indirectly exposed to adverse changes in commodity prices through Apache and potential third-party customers’ economic decisions to develop and produce oil and natural gas from which Altus receives revenues for providing gathering, processing, and transmission services.
Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase (or decrease)or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. Management regularly reviews the Company’s potential exposure to commodity price risk, and may periodically enter into financial or physical arrangements intended to mitigate potential volatility.
Interest Rate Risk
At SeptemberJune 30, 2020,2021, Altus Midstream had $580.0$657.0 million of loans outstanding underproceeds drawn on its revolving credit facility. The interest rate for the facility is variable, which exposes the Company to the risk of increased interest expense in the event of increases to short-term interest rates. If interest rates increased by 1.0 percent, the Company’s annual consolidated interest expense would have increased by approximately $1.5$1.7 million for the quarter ended SeptemberJune 30, 2020.2021. Accordingly, the results of operations, cash flows, financial condition, and the ability to make cash distributions could be adversely affected by significant increases in interest rates. Altus currently has no interest rate derivative instruments outstanding, but the Company continues to monitor its interest rate exposure and may enter into interest rate derivative instruments in the future if it determines that it is necessary to invest in such instruments in order to mitigate its interest rate risk.
Credit Risk
The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, Apache and current and potentialor third-party customers. Any increase in the nonpayment and nonperformance by, or the insolvency or liquidation of, the Company’s customers could adversely affect the Company’s results of operations.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and the Company’s Chief Financial Officer and Treasurer, in his capacity as principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of SeptemberJune 30, 2020,2021, the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation and as of the date of that evaluation, these officers concluded that there was a material weakness in the Company’s disclosure controls and procedures, were effective, providing effective means to ensurein connection with the immaterial revision discussed in Note 1—Summary of Significant Accounting Policies—Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the informationCompany’s annual or interim financial statements will not be prevented or detected on a timely basis.
As initially disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, the Company is required to disclose under applicable lawsidentified a material weakness in its controls over the accounting for the public and regulations is recorded, processed, summarized, and reported withinprivate warrants outstanding at the time periods specifiedof the Business Combination. The Company’s controls to evaluate the accounting for complex financial instruments, such as the warrants, did not operate effectively to appropriately apply the provisions of ASC 815-40. This material weakness resulted in an immaterial error in the Commission’s rules and forms and accumulated and communicated toCompany’s accounting for the warrants as more fully described in Note 1—Summary of Significant Accounting Policies—Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment within Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q. Based on the Company’s assessment, management includingnow concludes that, as of June 30, 2021, its principal executive officer and principalinternal control over financial officer, to allow timely decisions regarding required disclosure.reporting was not effective.
The Company periodically reviewsTo remediate the design and effectiveness of its disclosure controls, including compliance with various laws and regulations that apply to operations. The Company makes modifications to improve the design and effectiveness of its disclosure controls, and may take other corrective action, if the Company’s reviews identify deficiencies or weaknesses in its controls.
Changes in Internal Control Over Financial Reporting

There were no changesmaterial weakness in the Company’s internal controlscontrol over financial reporting, during the quarter ended September 30, 2020, that have materially affected, or are reasonably likelyCompany implemented additional review procedures, additional training, and enhancements to materially affect, the Company’s internal controls over financial reporting, including any changesaccounting policy related to the COVID-19 pandemicaccounting for equity and liability instruments (including those with warrants) to determine proper accounting in accordance with GAAP.
As previously disclosed, the transitionCompany’s remediation plan has been implemented. The material weakness cannot be considered remediated until the controls operate for a sufficient period and management has concluded, through testing, that its internal controls are operating effectively. While management believes that the remedial efforts will resolve the identified material weakness, there is no assurance that management’s remedial efforts conducted to a remote working environment.date will be sufficient or that additional remedial actions will not be necessary.


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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not aware of any pending or threatenedFor further information regarding legal proceedings, against it atrefer to Note 7—Commitments and Contingencies in the time of the filingNotes to Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q that would have a material impact on its financial position, results of operations, or liquidity.

On April 30, 2020, a case styled Sierra Club v. US Army Corp of Engineers et al. was filedin the United States District Court, Western District of Texas. Plaintiff seeks to invalidate verifications issued by the Army Corps of Engineers allowing Permian Highway Pipeline LLC to conduct dredging and filling activities and to enjoin certain further dredging and other ground disturbing activities in jurisdictional waters. Permian Highway Pipeline LLC has intervened in the suit in defense of the verifications and in opposition to any injunctive relief. The Company has a minority equity interest in Permian Highway Pipeline LLC.10-Q.

ITEM 1A. RISK FACTORS 
Please refer to Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Part II, Item 1A-Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q.2020.
The global economy and the energy industry have been deeply impacted by the effects of the coronavirus disease 2019 (COVID-19) pandemic and related governmental actions. As of the date of this report, efforts to contain COVID-19 have not succeeded in many regions, and the global pandemic remains ongoing. Uncertainty in the oil markets and the negative demand implications of the COVID-19 pandemic continue to impact oil supply and demand. The COVID-19 pandemic and its unprecedented consequences have amplified, and may continue to amplify, certain risks identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, including, without limitation, risks related to: the demand for and prices of oil, natural gas, and NGLs; economic and competitive conditions; the availability of capital; cash flow and the timing of expenditures; inflation rates; the availability of goods and services; legislative, regulatory or policy changes; terrorism or cyberattacks; property acquisitions or divestitures; the impact of health and safety and other governmental regulations; the effectiveness of the Company’s business strategy; market-related risks; the timing, amount and terms of the future issuances of debt and equity securities; the completion and performance of the third-party pipelines in which the Company holds a minority equity interest; and the Company’s exposure to customer, partner, and counterparty credit risk. Given the uncertainty regarding the duration and scope of the COVID-19 pandemic and its prolonged impact on the global economy and the energy industry, there can be no assurance that the pandemic will not materially and adversely affect the Company’s business, financial condition, cash flows, and results of operations in the future.
Any discussion of the impact of the COVID-19 pandemic included in this Quarterly Report on Form 10-Q speaks only as of the filing date of this Quarterly Report on Form 10-Q and is subject to change without notice, as the Company cannot predict all risks related to this rapidly evolving event.

ITEM 6. EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1***–
Contribution Agreement, dated as of August 8, 2018, by and among Kayne Anderson Acquisition Corp., Altus Midstream LP, Apache Midstream LLC, Alpine High Gathering LP, Alpine High Pipeline LP, Alpine High Processing LP, Alpine High NGL Pipeline LP and Alpine High Subsidiary GP LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 8, 2018, SEC File No. 001-38048).
3.1–
Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No. 001-38048).
3.2–
First Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 1, 2020, SEC File No. 001-38048).
3.3–
Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 filed on March 7, 2017, SEC File No. 333-216514).
31.1*–
Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*–
Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**–
Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
101*–The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Consolidated Balance Sheet, (iv) Statement of Consolidated Cash Flows, (v) Statement of Consolidated Changes in Equity and Noncontrolling Interests and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
101.SCH*–Inline XBRL Taxonomy Schema Document.
101.CAL*–Inline XBRL Calculation Linkbase Document.
101.DEF*–Inline XBRL Definition Linkbase Document.
101.LAB*–Inline XBRL Label Linkbase Document.
101.PRE*–Inline XBRL Presentation Linkbase Document.
104*–Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
EXHIBIT NO.DESCRIPTION
2.1***–
Contribution Agreement, dated as of August 8, 2018, by and among Kayne Anderson Acquisition Corp., Altus Midstream LP, Apache Midstream LLC, Alpine High Gathering LP, Alpine High Pipeline LP, Alpine High Processing LP, Alpine High NGL Pipeline LP and Alpine High Subsidiary GP LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 8, 2018, SEC File No. 001-38048).
3.1–
Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No. 001-38048).
3.2–
First Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 1, 2020, SEC File No. 001-38048).
3.3–
Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 filed on March 7, 2017, SEC File No. 333-216514).
31.1*–
Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*–
Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**–
Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
101*–The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Consolidated Balance Sheet, (iv) Statement of Consolidated Cash Flows, (v) Statement of Consolidated Changes in Equity and Noncontrolling Interests, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
101.SCH*–Inline XBRL Taxonomy Schema Document.
101.CAL*–Inline XBRL Calculation Linkbase Document.
101.DEF*–Inline XBRL Definition Linkbase Document.
101.LAB*–Inline XBRL Label Linkbase Document.
101.PRE*–Inline XBRL Presentation Linkbase Document.
104*–Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Furnished herewith.
*** Schedules and exhibits to this Exhibit have been omitted pursuant to Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
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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 hereunto duly authorized.
    
ALTUS MIDSTREAM COMPANY
Dated:NovemberAugust 5, 20202021/s/ Ben C. Rodgers
Ben C. Rodgers
Chief Financial Officer and Treasurer
(Principal Financial Officer)
Dated:NovemberAugust 5, 20202021/s/ Rebecca A. Hoyt    
Rebecca A. Hoyt
Senior Vice President, Chief Accounting Officer, and Controller
(Principal Accounting Officer)


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