AM - Earnings call transcript Q3 2017 | Antero Midstream Corporation

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Operator

Good day, everyone, and welcome to the Antero Midstream Partners LP Third Quarter 2017 Earnings Conference Call. [Operator Instructions]. Please note that today's event is being recorded. I would now like to turn the conference over to Michael Kennedy, CFO of Antero Midstream. Please go ahead.

Michael Kennedy

us Midstream's joining Investor Quarter for Call. Conference you for Third Antero XXXX Thank few through for minutes operational a spend We'll going then open highlights, the we'll it up Q&A. and and financial to direct www.anteromidstream.com earnings today's at where call I would that www.anteromidstreamgp.com, also you the be our or a homepage provided have call. will to we presentation website of separate during like reviewed partnership you details. our updated website to that also I encourage presentation, We've would additional review for so

uncertainties, first would forward-looking like many remind which Antero's Midstream we and are start the could Actual forecast beyond and I results of Before of Antero regarding outcomes and make comments, control. statements. during future that will based such Antero or judgments differ expressed, to implied AMGP is Antero call, impact and statements. to from a this in what materially that subject current our you statements are will Resources, risks factors performance on management are number our of Such

Joining Warren, turn the Resources Paul. and I of now CEO Midstream. Midstream; and over and call of Antero Paul of Glen are me Antero Rady, call and Resources and Antero CFO will Antero President on to the President Chairman today

Paul Rady

at capital program through space, AR a second midstream improving de-levering and on unique AM. efficiencies for results within Thanks, today will our the begin the AR. long-term the and with announced AM's listening both with Mike and my a you Mike, positioning to call thank and then then everyone outlook comments quarter to finish and the at in today. I will discussion walk on discussion

are delivering at proven X.XXx low to XX% XXXX, stable to profile position results. a is and AM There remains through has a above the DCF First and with few record reasons foremost, targets AM our XX% track and unique in range, track. why these of in distribution a leverage provide on a long-term coverage Xx growth peer-leading target

First, infrastructure, total its developed growth lifecycle, AM midstream of in its XP is current to developing has date. AR XX% as locations still early only

XX% CAGR support equivalent all processing of its XXXX and and and services and to development most over AR's reserves Additionally, through fractionation. require requiring plan for gathering, XX water of it, XXXX compression Tcf XP long-term

plan, we about that into come where the of producer is exactly will we one think As our primary the this case, growth has intentions development true few another know Antero AM Said customer, strong know MLPs Resources. the in its visibility the such way, and from. of

on just-in-time target business. depend competitive through investing XXXX rates Instead, investment Our the at non-speculative attractive allows top-tier investing and return the within third-party what while growth us philosophy EBITDA truly to are organic for not capital strategy acquisitions or period. drives growth of we Midstream dropdowns, and does XXXX capital. Antero This is

in extra Midstream's of XXXX the for without our organic way need strength allows strength $XXX sheet equity capital. cash strategy to Midstream, for the attractive key we balance has the to million fund the left the back sheet where sheet been Lastly, a it these always all IPO, fund to Antero opportunities. organic stemming balance Antero on opportunities Balance visible

going our and of Our our position Resources, have unitholders, served to a not between our In in unchanged do very deliver always including growth have balance flexibility sheet has we uniquely we sheet, us balance distribution forward. with some to put and Antero strategy seen strength peer-leading where and has stability choose growth well us peers. positions distribution summary, as

line represents updated Marcellus. we Completions various seeing the provided levels intensity from dash Are the the Increasing have to gains X.X on are we Higher an move chart higher AR's from are let's a Slide continued Bcf #X, back per titled in EUR productivity seeing intensity XXXX, per impact foot On production profit from for EURs, showing X,XXX Now completions. we The black completions, curve foot thousand green our demonstrates cumulative per average support dating aggregate the and that represent lines the and production and that advanced X,XXX pound feet early of curve. red well wellhead completions. to The pound X,XXX blue Intensity lateral type per line type

showed slide very we pound recall, early were you As of earnings during foot this in the quarter the second and innings the completions per production. X,XXX same call still

X.X wellhead can of XX%, the curve continue update, by the type significantly an approximately Bcf you outperform see from with XXX of thousand production. now completions the As to X,XXX-pound average per days

a titled Slide improving #X, Efficiencies increasing Continue per and for Capital is lateral Improve. to benefits capital type The increasing Midstream at of early efficiency it AM combined foot positive to point, profit efficiency. I'll touch the this for on per X,XXX simple, to recoveries completions, as to ever-growing relates all we further well new remain wells point capital formula intensity. increased While wells, still curve it the you assigning is about To per pad, longer

since in that have lengths We and same of the are X wells system, capital investing pipelines mileage that capacity, produce This less able XX% of to pads gathered we have thousand identical the will of and since its to consists by pads for and now Concept per which same of ultimately our increasing larger X foot Instead volume. invest volumes XXXX. volume. and over to more station pad, capital results XX% respectively, that the through XXXX. per connect compressed EURs XX%, connect lateral gathering increased or is incremental AM's AM's number increased compressor infrastructure service

my discussed on has that by per foot which XX from foot barrels Antero's. Facility drive that completions, finish XX% the increased update per to the processing and XX barrels in remarks of the XXXX. require I'll addition, JV EURs In advanced just and increased a brief fractionation Clearwater I watering more with completions the

immediately. the We but philosophy, that second our record almost placed capital filled may service. the always in we've joint processing is broken future to was venture cornerstones about is just-in-time it like believed historical AM's Sherwood quarter, X and it plant a success. sound one of third investment During was and This processing plant speaking the

one titled Clearwater in of is Facility employees one-of-a-kind over Clearwater commissioning Mike. and treatment to full of most is X, that, to Completion, within into project. world their this What and on growth Nearing projects to advanced Antero is truly of wastewater the extremely proud shale, all the our weeks. to a gas Slide oil hard be and dedication This the and significant facility work for of call and placed project the stages Facility operations. is turn service I'll commercial to Moving final the in schedule Antero We're the date, few our next largest

Michael Kennedy

per I'll the Paul. a year-over-year AM third first you, We and an distribution AMGP distribution on recently Thank for an and the of distribution increase touch $X.XXX $X.XX AMGP AM quarter. of per XX% unit, for share. announced

AMGP XXth quarter The and its distribution the of its this the early first third quarter full was since AM increase was distribution since year. consecutive at IPO, distribution the distribution IPO in May

distributions on achieving entities. our coverage provided and the us to DCF growth previously distribution targets Importantly, track keep at both

approximately beginning that of portion year prior fees for prior day of impacted pad flowed third-party both Throughput. an period from the represents gathering Bcf which let's Growth in were Now Low-pressure with to the the quarter. in the negatively results, or left charged of were increase XX% per physically move Low-pressure Year-over-year second Midstream Slide adjustment a X.X to volumes #X, page. $X top from Starting AM's per million area dedication, one-time by historical second was at a High the volumes on XX titled million quarter, area day quarter dedication.

currently X,XXX a AM's but area that Bcf and XXXX increase Additionally, of XX% development third-party on third year in freshwater X.X Antero Compression as averaged footprint additional delivery the the per outside per on quarter. the second volumes the compared through liquids-rich Antero's prior completion gas AM's focused dock to XXXX during of dedication regime day, of not part system advanced of tested and future the a pilot Antero's gas in during pound a completions third-party into foot lean is included development the utilize program a highly quarter flowed program, quarter the pad locations. area quarter. dedication does

placed and Marcellus High-pressure volumes High-pressure bringing volumes low-pressure than on growth to a day. XXX in per higher utilizing per Marcellus, day. the were AM volumes gathering day, barrels service million over year. XXX to fractionation into avoid day total venture per to station we X,XXX a million Utica were Antero volumes Bcf Bcf X.X pipelines X.X high-pressure were day pipeline downstream capacity due Joint compressor growth prior processing During were compression volumes our and the per quarter, XX% per Resources over temporary constraints third-party basis. increase

an was utilization X Sherwood the venture AM which our our processing joint accomplishment. during the average for actually so MPLX placed mentioned, third Paul incredible almost As plants, is in joint quarter service XXX% venture

X% water the Moving volumes a onto business. delivery we quarter. the communicated Consistent last increase the day, Freshwater expectations in compared per call, with XXX,XXX earnings to prior we averaged year barrels an serviced the quarter, freshwater fewer delivery quarter. volumes during decrease record our second in the completions freshwater XX% to system resulted as with the which in delivery volumes third compared in

completions in the of comparison approximately had this XX $X water the quarter. and resulted As a for we assuming lower EBITDA to per second million fewer quarter, EBITDA quick completion, the total

on to with the to the plan, more as quarter, we system expect Antero keeps Resources our our us to based development year full track to ahead XXXX financial achieve wells on fourth Looking compared service which third quarter, freshwater guidance.

Stonewall joint on quarter the the distributions year $XXX from totaled to fractionation XX% was the million, venture and quarter. EBITDA $X results. a second financial Moving processing million quarter. the and prior during to compared third for Adjusted Equity increase

in healthy strength ahead cash approximately coverage volumes. quarter, consistent processing and provided for we to driven with the flow quarter DCF Looking X.Xx. million, of third was the approximately guidance, an by previously our Distributable increase fourth fractionation $XXX the resulting a in distributions expect million, $XX to in equity

in Clearwater quarter, including During invested in Antero construction infrastructure, Midstream the of infrastructure Antero $XX million $XX $XX and million for the gathering Handling continued the Facility. million Water third

water, second $XX venture and and fractionation the gathering joint quarter. the million invested in AM processing to addition In during

the liquidity. to Moving on and balance sheet

Midstream XX, on September resulting of billion and EBITDA $XXX of liquidity billion debt million to LTM facility, ratio $X.X in X.Xx. Antero $X.X its a drawn revolving credit in As had net

Return AM program, touch we Slide Invested briefly #X, our titled to the to are partnership-wide wanted on Attractive AR the moving or capital delevering ROIC. I on return illustrates our investments. on Before seeing invested on Capital, on capital returns

specifically, side, is organic on capital focus and efficiencies you capital on growth estimates. XXXX high growth only increasing organic in ROIC are teens on the bar the AM's is in investments. of which XX%. returns prudent of operations, and our estimated increasing These capital our result attractive a fourth In see year direct on non-speculative on focus based invested result returns on As consensus the can range graph and right-hand the

to out completed AR Lastly, summarize the wanted the today, quarter. to comments de-levering on round I third that my program call the was during

that AR forward Slide price the summarized titled $X.XX Delevering allowed and September hedge in Program protections. bring to $X AR volumes As the prices and XXXX. on of million announced Completed, it and $X.XX gains per swap while in the to hedge hedge overall Mcf restructured in #X, $XXX not XXXX maintaining Mcf commodity Billion value This per XXXX in changing significant

Specifically, AR's XX on AR targeted transaction at standalone leverage XXXX billion. gas $X.XX hedge September of June gain reduces of future through natural E&P at a has XX% basis. a X.Xx and X.Xx of per XX production its $X.X unrealized as from Mcf to hedged The

a is hedge production unique its via leader indicators within and that, cash downside book. market-leading very balance generating NGL outspend a in has In flow model to Additionally, summary, now AR low CAGR on Xx operator, sheet, a to a expects range. grow all with questions. Antero's in XXXX profile. the well to in in the positive price All high-coverage model, XXXX AM rising free to is period. take while flow, through this for sponsor transaction protected AM's environment historical is ready a target cash complements to continue a will production the leverage With market maintaining that growth distribution from its tied de-levered XX% transition we're

Operator

questioner will Tonet today [Operator our Instructions]. be And with JPMorgan. first Jeremy

Jeremy Tonet

from regards the follow in Is changing saying, bringing longer like up me I'm well things? XXXX you for bit. AR foot with you're wrong, way doesn't about that a material laterals growth in and are have guidance. fair decrease can per correct on the AM, barrels what kind to readthrough to offset guidance, provide? impact in if of just Just seems is completions AM a any Or through really other gather, down what little And increase I want the to the it there think details a

Michael Kennedy

right, the that's well completions, pound be all the feed you increased down they will at from assuming completions as advanced When in Jeremy. previous lateral Yes, but did look these as come the hundred the schedule, range. XXXX well

is is at between or pounds per XX, your per So, pounds per average X,XXX barrels which the or foot barrel X,XXX the XX foot per foot X,XXX barrels foot.

on when all it barrels similar per in XXXX. math the that, do So, XXXX comes you to day out through used very

Jeremy Tonet

momentum be moves just if And refresh forward? what Great. then proposal there's I'm current wondering like - - here on some seems some reform. tax you AMGP if for of there out there mean it us could that could with can the

Michael Kennedy

extremely we to Yes. But incorporated any talk do not sort that. seeing beneficial that movements tax so of rate, haven't still AMGP be assume that so some into around the estimates has obviously incorporated The anything current distributions. been XX% the yet. AMGP, XX%, that will on that We've that

Paul Rady

change the Roughly a rate. XX-point tax in

XX, if by concerned. flow far XX% as distributable cash about XX AMGP the into So, of you cash from as to the increases flow drop that's

Operator

questioner the with Horowitz next will be And Raymond today Darren James.

Darren Horowitz

or to As XXXX? think completions AR's about you serviced XXXX on to the in that what maybe XXX to completed do then and the bit? guys XXX in And to based waterside for to drill plus is servicing AM, builds wells the thought more just get still going closer process about on or completions minus

Michael Kennedy

No.

That's think that, are if 'XX, where perspective not they're that again are to XXX We using what tied be then It's out have It's the water beginning actually actually 'XX. Those I schedule complete about in in you until new XXXX. in more to in in don't AR. and yet of 'XX there. We and know than from XXXX. sales our sales. I completing water a saw XXX 'XX. 'XX completions that we'll in just Darren, tied XXX

that's new of kind account. a So

foot slide, which so have a greater more increasing pounds with water a you have X,XXX new feet - completion also on that We lateral the lateral per and assume too, now feet we used. being or

combination, that over all So, just usage time. water similar a count. it's of well lower It's in amount a

Darren Horowitz

Okay. And the Mike, the frame? variance of what some there, what's XX low-compression volume from the I thought as over quarter, and a color that the as same to third caused perspective, in appreciate to the kind then of corresponds time process XX-month

Michael Kennedy

a catch-up. any be mentioned, day, that. I of a XX was more Yes. That There as million onetime shouldn't

X development occur outside won't item that So the over this that AM on pad, anymore. time only that's And our of also, wells frame.

result we pressure relationship do So, downstream when a we normal between return downstream low XXX high like And pressure low bobcat issues, Midstream, and volumes high relationship. a of that pressure will times these be the be normal Sherwood. connector but Antero should up now, of that pressure use whether day in from is that do from will have which should million in excess it

high times, our a going So, bit X% pressure should like then times But is a growth constrained from low And normal now, about in XXX million pressure. low unconstrained, it's day it higher than pressure. will high pressure track higher production AR forward. than about in where by be

Darren Horowitz

is the low fees Okay. bit appreciate than the turbulence cause a pressure perspective. given of higher there I on significantly color in tends especially the that forecasting to from model high a pressure

Operator

next the Tillett Christopher with will And Barclays. questioner with be

Christopher Tillett

expecting fourth completions completions it and say, that sounds like even the a imply wondering quarter. you to for like I to but guys XXX equal just counting it if was so down guiding few date, more. I'm would - your to looks about roughly, Antero's XXX you are a XQ that maybe few would I reconcile the outlook us on could about in help I mean, year.

was I just... So,

Michael Kennedy

high referencing completing the number actually in you're sales in actually the is servicing XXXX. many them We're speak that's water, they're with tying in. XXs how the When because into not quarter, we we're actually early you're XXX about wells wells, Yes. them but the until fourth tied water

there. in XXXs of high wells. XXs, the XXs What bit AM in result so a correct. by serviced to XXX being referenced, reconciling water mentioned, to is wells item that as I high in XXX the a there's So, We're you would

Christopher Tillett

Okay.

Okay, ticked And materially. this like up your segment in segment that's then the looked helpful. pretty - in also, quarter, expenses it for the water operating

volumes one little up quite but wastewater on one So, were a a not for bit basis.

there. specific curious was I so, on there just And if was going anything

Michael Kennedy

things Yes, there's two there.

recall, you As it XXX,XXX the water in was completions quarter barrels record per the of at water second day.

So, that of quarter. increase you third the did an the of because water handled amount have in in

commissioning the wastewater advanced commissioning reason of the Antero The the we treatment facility, phase Facility, other was Clearwater during testing. are the

that because in that trucking are truck commission plant. water - of handling additional we so, to And additional

increase So, million million, related EBITDA X% an to in in Water item. up operating in from a in the all, expenses Handling contract, had $XX that quarter. you second that's like the know, it But to so cost-plus our direct resulted as $XX revenue

So, the the revenues it in associated million the third $XX $XX to million was with second that quarter, quarter. in increased

So, really impact contract, EBITDA no for the on the quarter. a so it is cost-plus

Operator

will question Howard be Stewart with Holly from next the Weil. And Scotia

Holly Stewart

kind year going impacting capital efficiencies of sort a years of forward AM. going bigger talk year more How capital X, you've X future? out million quick we capital at the inefficiencies first more couple laid at the $X.X forward. $XXX the $XXX investment that you call over in that efficient the of kind about it, Just of sort that think next in million that result can a capital implies, of a these picture, thinking maybe a was would billion follow-ups. of Slide through I AR and about One, how

Michael Kennedy

AR have and a those capital of we're detailed per in in number. plan factoring actually drilling. our captured Obviously, that pad where on Well, is wells number are the

year, that. already about, captured But billion, accurate. you what that next run million would number, So That's last the rate so $X.X the been of Holly, couple years. is if average higher it in than for business $XXX have you the the over about that seen it's talked

Holly Stewart

Okay.

making the there housekeeping down read trended that maintenance or specific ticked to Okay, ones. X And down CapEx sure I in correct. just maybe then through? It Anything looked quarter. quick just third think like

Michael Kennedy

still on on build a I $XX spent. capital associated and final The million amount the with gathering compression large quarter Well, the third we it of part the capital of There's based in saw, was we - Facility. that as it's that. similar Clearwater out, that think, high-pressure

into the two doesn't that pressure similar on as and compression, maintenance was factor So capital. have a both X, percentage freshwater high capital, and that obviously does maintenance items the But quarters those before. it

Holly Stewart

Okay, great. just the barrels another didn't those between see water you usage Marcellus per one then final, I slide housekeeping. numbers quarter the for And breaks that foot? Do the and Utica. the down on have

Michael Kennedy

it No. the But Utica And in is in the lower the foot would We Marcellus, are It as around barrels quite per usage. foot generally much have XX barrels barrels. in been don't water. there. per use the XX more then

Operator

And be Seaport. the questioner next with will Bernie Colson

Bernard Colson

Just the follow-up a quick OpEx. on

was the on in Revenues were the So, looking million quarter-over-quarter little a higher it bit down quarter. at OpEx - $XX the so side.

you in they looking I if could to kind this if quarter uplifts been were the of and the have of similar volumes So, help expense? had been I'm quarter. of that hoping kind same as kind just Water the treating we was of first same about quarter, didn't - revenue at compare, quantify would Handling first

more million You've of got $XX revenue.

Michael Kennedy

Yes.

about. I talked So, it's what

mentioned, And the part, I because as a X%. of OpEx Water that's cost-plus is Handling. On the the first up

about down the at the wells though, and total revenues we it's serviced in are water So, per to quarter only XX $X similar well. expenses. third million revenues, And because

the XX than less So, and the quarter activity in third quarter. first wells actually less it quarter was in second the

than second that what really that's the drove the being lower revenue quarter. $XX million So

Operator

Sachs. be next [Operator questioner Holder Goldman Jerren Instructions]. And the with will

Jerren Holder

a say, the Mariner XXX change East to so? X XXXX, guys completions To amount or gets that XXXX of hypothetically, let's number you do delayed, into in degree that does would that

Paul Rady

Yes.

into said you Jerren, So XXXX?

Jerren Holder

Yes.

yes. and, it say delayed just Let's gets

Paul Rady

are it'll deeply staying sensitivities of end quarter depends think But - - the exporting. on And be delayed. lot local Yes. for we're at into say, second impact. XXXX, Northeast, but 'XX so, our think first We versus there's of guess, our it not we - the I have the winter change, there, or with done so would least We've see little probably at a second XX foreseeable so. months I financial of differentials again, the of pretty how narrow XXXX, would through not home XXXX, the I much 'XX quarter don't so so of barrels product in impact. or and keeping

Jerren Holder

Okay. you you I And done? at have recognize still program. there ATM on guys AM, expect you that? the Is guys to need Or don't on equity but do more equity, you are

Michael Kennedy

No, we're not done, Jerren.

facility, the We third we million years, We we of But next period. million during assume million $XXX left. that $XX time X it have approximately so there's the active use done about do this on that through $XXX XXXX, over weren't quarter.

Operator

like the And back conference this Kennedy question-and-answer would turn conclude remarks. will for the session. to I to closing any Michael over

Michael Kennedy

for today. on our joining conference us you call Thank

If Thanks you to have contact again. questions, free any further feel please us.

Operator

Thank you presentation. has conference the concluded. now for attending And today's

You now disconnect. may

Antero Midstream (AM) 5 Nov 172017 Q3 Earnings call transcript