AM - Earnings call transcript Q4 2017 | Antero Midstream Corporation

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Operator

Good day and welcome to the Antero Midstream Fourth Quarter and Full Year 2017 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note that today's event is being recorded. At this time, I would now like to turn the conference over to Mr. Michael Kennedy, Chief Financial Officer. ahead. go Please

Michael Kennedy

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

Antero's start our to Antero you will Such that current also regarding are we from and Midstream in number outcomes make Antero comments, many including Before release our may call like what beyond I are disclosures factors Resources, and non-GAAP our GAAP for refer earnings important risks of reconciliations expressed, statements. to that press measures to results differ management such impact AMGP and would implied financial is the of control. remind most or forecast uncertainties, statements comparable financial measures. forward-looking a call, on regarding first the contain could are measures. future Today’s based materially to during Please subject performance this such Actual which certain judgments Antero will of statements. and

and Before starting press response a release. letter recently the shareholder call, we AR quickly the want to published address

initiatives to our and will time any stated completed various we table As with evaluation no of currently measures. Board completion the this future. or be announced there assurances evaluate release, There in our in no for press potential be working can is that definitive are

any related this today’s to we questions During additional will address call not matter.

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

Paul Rady

begin in today. outlook to Mike quarter my discussion a AM. AM. for at the on thank will comments Mike, outlook through to five-year the benefits everyone I’ll with walk and you the to the five-year at fourth call and then listening Thanks, today and results XXXX AR

to last New had attendees like dialed almost We everyone XXX Antero’s almost Day this in York I’d thank into first that the in month. person Analyst XXX ever First and attended who webcast.

all The AM you joining hosting and primary in. and an thank in we So Day that and attended group listened to E&Ps inflection important is the or as reason points of that for an MLPs. analysts both Analyst believe investors AR are elite

inflection five-year titled, points, roll we prepared and to wanted our remarks infrastructure on AR's capital AR In plan. the to billion through $X Slide our I'll X out at five-year addition reduction five-year optimized my midstream publicly the to plans. going plan upstream begin development

at AR's side billion hand plans, in drilling level. compared completion of left $X completion almost and current and can by two you have drilling the the to AR five-years On year the ago plan capital capital the the see consolidated plan green page, orange. the over the Comparing from next in reduced we the the

in Importantly, on longer by despite is are drilling, AR's the side significant recoveries, the the lateral targets page, higher in change driven This right of and production hand step efficiencies. capital. essentially reduction capital unchanged operating

cash of liquids The fractionation generate AR's in primary spending at the liquids-rich is lower the underpins over on on acreage. on in rate AR's AR's high focused result In focused plan next development gathering, higher Antero addition, capital growth five-years. AR, flow. compression, and Midstream highlighted water, at and five-year is dedicated development titled, volume return Slide free reduction capital all of Midstream the plan locations of processing Antero X the liquids-rich and

cash free position on of is on of AR flow for in a As standalone time slide, a basis. from transitioning E&P to first the the depicted generating outspend XXXX one

at midstream cumulative five-years, flow of AR the $X.X the of self-funded The per the estimate generate budget Over the flow oil over barrel next AM. development can free at sponsor an this development cash billion estimate five-years. capital business XXXX $X.X billion or free current the at can AR generate levels, of strip to over plan end prices plan we billion capital a prices. that de-risk additional drilling and is benefits access year This result $XX is remained total a ultimately we the next markets. cash without of completion If the at crude $X.X need

self-funded E&P the flow a strength declining is call sheet supports and improvement to adjusted XX% standalone growth leverage balance turn below drive the balance cash that plan, cash sheet free outlook the expected generating the important an deleveraging. to AR. sponsor This five-year deliver Slide over the with AR's on to improve to over taken of This AM. and rating down investment last has a BBB- few that, is measures to to upgrade production dramatic development X strong the With fitches, profile S&P's development a Ultimately, addition at I'll the at BB+. strength attribute by illustrates let’s affirmed further flow drives AR by move foundation XXXX at believe AR years which basis. plan times been upstream Mike. that of free to In grade turn in titled, recent slide leverage share continues per debt X.X we in

Michael Kennedy

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

or the announced distribution Additionally, increase at distribution distribution fourth of was since XX XX% the and consecutive share the IPO. consecutive distribution the increase quarter AM a its its $X.X per sequentially. since IPO distribution was AMGP second The AMGP

the per of year XXXX, growth healthy totaled delivered to midpoint times full guidance XX% distributions of maintaining share a range. X.X coverage the distribution AMGP while For AM of the and $X.XX

growth the per number volumes the per midstream year-over-year year. growth were year prior X.X pressure low in pressure high XX growth day the utilizing XX% per high AM XXX day, due Joint Bcf pressure per the compared quarter on including driven the X.X day. quarter. basis. on day to to day gathering fractionation were to excess XXXX throughput. avoid increase pressure the Marcellus The results constraints fourth Bcf was compression represents by million volumes million on pipeline compressor titled, Antero the gathering per capacity almost million pressure compression to quarter in a million during barrels during a High during X move the XX% in volumes downstream of page, Growth were station volumes Compression averaged Starting of volumes by volumes left let’s portion quarter quarter. over year capacity increase Now, of fourth nameplate from the increase a per Bcf XXX over High volumes prior fourth top during expanding per fourth our processing a XXX were Slide quarter. on day beginning prior over quarter day adding pipelines day. per of volumes XXX,XXX third-party of which were a the resources temporary X.X AM XX% low venture XXX%

we of success capacity significant joint with just growth year capacity Sherwood venture illustrates total per online AM up the day. to in we a XXX two By years. which achieved MPLX the end the million a joint January, early X XXXX, processing to venture brings place joint day mentioned, Paul processing have Bcf which the expect in a have As first venture’s in

prior the to business, on with the delivery averaged water day Moving per XXX,XXX volumes fresh quarter. year barrels in line water

the fourth Moving Distributable million, on DCF Stonewall and was increase with quarter approximately line to $XX joint during and in call. X.X million, a EBITDA ratio the processing Equity quarter $XXX financial adjusted fractionation a healthy venture a earnings on for the for quarter totaled from the expectations cash fourth resulting year compared results, prior times. quarter. third million distributions fourth was the to a coverage of quarter flow in the $XXX XX% conveyed

and the resulting EBITDA times. $XXX $XXX year DCF of XXXX, coverage adjusted million flow distributable cash For respectively in million full was X.X

DCF guidance Our and DCF XXXX adjusted ranges. EBITDA our coverage growth within were all distribution

in infrastructure the million Clearwater including quarter, the of Antero in fourth for $XX the infrastructure construction $XX $XX During million invested gathering Antero million facility. Midstream handling water and

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

a Moving its on on and XXXX, of sheet times. XX, balance billion $X.X to resulting of and X.X debt EBITDA drawn in as LPM the facility, net Antero liquidity, billion December liquidity $XXX million in credit Midstream a $X ratio revolving had

rating recently upgraded BB+ line each the Fitch. agency. number momentum momentum credit rating the credit and S&P titled, let’s dash mentioned ratings X AM’s and to credit as to of Now for an AR’s ratings of AM's AM and which ratings ratings in received AM’s associated Paul BBB- corporate were credit illustrates and is profile. function move grade a respective delivering addition solid the by ratings in credit to Slide line upgrades financial by investment ratings conservative at AR The

were targeting ship is the the that graded Next, infrastructure see focused illustrated of page another have towards supports infrastructure. I'll provide reduction you five-year the our almost backlog to existing while project AM The Marcellus project capital a on and of service the in billion plan On the five-year to and to throughput midstream reduce The plan. now was development can and that to of the backlog, high rich targeting a for is five-year titled, capital is production, Slide recap pad by infrastructure is backlog which driven XX% JV. million XXXX. the fractionation able leverages AM's hand from shift Similar project quick XXXX in reduction we the XX% same volumes. five-year project same totals processing AM side by $X.X reduction left organic while AR's gas AR's backlog organic on $XXX its Marcellus X

see XX I'll titled, Day infrastructure. high into just AM the year return the we of inflection over investment and main Slide velocity few the the and to return on significant XX% can efficient generate The X Moving from capital invested call at titled, to fourth Antero Midstream our just next AR. point which my capital, is our Analyst the return, generated continue in capital we impact and plan leverage direct comments at of AM's greater teens capital, today. points by were with invested visibility and time as development further a to on years summary since the the IPO, on we our investment, Slide grows driven ability attractive finish returns existing

has growing invest a Our been supporting always capital to strong sponsor. and efficiently strategy

does backlog. to fund rely equity strategy Our additional or project dropdown acquisition on organic market not organic the competitive

provide ready and leverage. Additionally, of generate attractive MLP some that return allows in to and the visibility with end and targets a us dated level into AR's The corporate the With to distribution growth MLP operator, top development space. we’re result plan a the questions. longest low take is project self-funding rates tier distribution

Operator

We Jeremy ahead. our JP will now [Operator first Instructions] question-and-answer And the begin Morgan. Tonet question with comes go from Please session.

Jeremy Tonet

downtime think impact AM how AR AM that Sherwood in the color sure read through you as in operation? of just that a you bit guidance the give there? more cold provide quarter could Can as well the weather to first the outage. for provide the you the Wondering some in the us January for as If the on more you production and impacts with as far issues color

Michael Kennedy

similar for throughput be the Yes, XXXX. the the first fourth to quarter quarter would read volumes will through of the be

Jeremy Tonet

kind here, in just appetite at I capture us you kind third-party outlook when as business well this of the part was wondering growth ability that looking if of you're the refresh at and front? What’s to also of point. as could

Michael Kennedy

with volumes we that Well, coming include in day. guidance be capacity barrels per facility We when is on fully around to barrels and any be related or opportunities and about the our outlook. to see that, XX,XXX actual do actually XX,XXX will initial the guidance or opportunities third-party our online third-party forecast, Clearwater do not amount

be with third-party the opportunities will facility. there So, Clearwater for

in included So, we those, have that or of we but outlook do of not we the any provided. see some forecast

Jeremy Tonet

it’s it have you the in like And point? not you gathering well, in there. area as this density see on opportunities if the winning at seems Do for business budget even side the some here

Michael Kennedy

because without areas acreage From There our be other really be may math gathering, dominant we you highly nature of just but have of our any and contiguous there, it our here operation. around opportunities position if a systems. our would smaller operators seen and

Operator

next go Our comes Vikram Citi. question from ahead. with Please Bagri

Vikram Bagri

you its marineries any projects quarter? five Is today Are project? My the are update say, on there And pipe ethane or whether in three today deciding first in talked closer on a project you other about $X AM. than that or question than making backlog? were downstream is, our would decision project to billion in any additional to last you you potential at you ago shales your closer months

Paul Rady

Yes, thanks.

hard it's characterize to them that think way, I right now.

will still and there. some and as this a just to for time to only potential going tell that, discussions still We’re work an all that’s I have having really today. we And report backlog, nothing wouldn’t investment earmark out it's characterize but confidence

Vikram Bagri

those processing more bring the And had Would a volume also those year, the year processing about I capacity excess later expectations timeline second you processing to your the is in even this plans build given saw quarter. gets capacity disruptions? you additional online? that and look forward was question to given disruptions tied this And fourth chance your there

Paul Rady

have forecast filled are come on time our and we right go of plans and Well, quickly. generally electing and are we production they we on course as quite

don’t In be just much and just unfilled, able we as pace where are continue our of available the terms to we unfilled production. that see the plans on bring on shouldn’t

this production the been course of the before for downtime the Sherwood that is just of early some relatively new stage freeze-off. processing was or hadn’t this winter the think and I like tested over

lessons was operator project not tape, is learned doesn’t installation sure heating but happen there. quite that, make hard and that to So, don’t just we there seeing working and again. enough anymore The there

Vikram Bagri

I per noticed foot of proppant reported in quarter. lastly on square average intensity pounds fourth And then X,XXX just about water, the AR

update type your deck You’ve proppant tested the to your outperforming Could as of higher high foot as intensity I you of continue X,XXX you forward? And with loadings what test was you end proppant terms loadings? anymore. were curve. high on EURs seeing pounds and intensity with EURs, an crop provide see don’t in type would high load proppant slide square based going well into that

Paul Rady

higher proppant so the we we’ve highest X,XXX to Yes, is done broader pounds. test continue a on loading and scale

of done design is the have number base X,XXX pilots area. Our where XXXX same very in we but pounds right we’ve

proportion we in holds the the it's XXX pounds. time side with So pounds there tell the going bed, to it as say but better south And do whether its of will hangs X,XXX X,XXX test it’s X,XXX north side the off and results see pounds X,XXX But gone response in will We’ve the continue X,XXXs merited. as longer see pounds of it's relatives high pounds, the even as up. until we to and too. there if X,XXX slightly to that a smaller term and see

Vikram Bagri

we for update quarter during year the or third year Should call? loadings, this sometime higher on end of middle conference look an maybe

Paul Rady

call pilots more usually know Yes, and different wait a as to make more results. well, on the XX us definitely. least of a types days but we’ll show at these We

doing We also doing tighter are XXX doing where cluster we’re well. spacing as only we’re and pilots MASH

learn to continue we optimize. So to

Operator

Our Bellamy next Please question ahead. comes from go with Ethan Baird.

Ethan Bellamy

AR? any potential for sales any magnitude at of there Is acreage

Paul Rady

not dollars last acreage AQT. we it’s I We’ve the small sales that we million whether one or near-term not, the in like have. a big year some and did done everything million some Probably it think we was XXX the like

So we’re on that, now. at horizon, don’t always looking the see anything but right

We’re don’t outlying much really acreage. consolidated, have

Ethan Bellamy

Hook. And stake then investing downstream at in Hook taking I see MEX -- energy hypothetically Marcus to with a potentially market strategic and speaking, rationale some further transfer could for

be second, make that that for is activity midstream at option? at should AM AMGP other buying an as to First, would price? something or done at AMGP now third-party would presume appeal any we or that or investment any potential the you asset right would for you M&A, And using or

Michael Kennedy

you folks, as AM a certainly in the an that should watching be good presume always morning. of Ethan, that overtime possibility, we and shipper. that. But anchor GP MEX have matures like project but in carefully it on possible would GP lead I think terms Yes, stake quite is as but were lot of

to continue investment to other report nothing there be online an that out we’ll looking a year, of plays once anxious that standpoint this to we’re from lot watch at, things just that today. so, but get to we’re continue like And interested but

Operator

[Operator Instructions] Company. go comes Our Tudor Zeng next Hall Tina Pickering with Please ahead. from question &

Tina Zeng

have So the I question on just a Clearwater commissioning.

is in wastewater an is facility, to trying water aggregate? of through flowing fairly the flow for get well? So Or there element really contribution of the back completion? there completion that to Just a sense the the produced from sensitive as versus will be how count the

Paul Rady

water. both Tina, produced Yes, and back well, flow it is, water

salinity flow there. say going be it’s would back. rest of a probably So water most at be through difference water, the in flow have to produced XX% proportions relative would that there but total the produced to I of I back, is would XX% don’t

going So to forward. be the going that’s higher proportion

Tina Zeng

that any contributions? will And third-party with change

Paul Rady

Well, on. it pads probably what flow be would and their they would complete from be back third would water as parties getting so mostly we and

there there. So, can be quite serge

if think do back. mostly be water yes, flow it I is So will it third-party

Tina Zeng

going then whole that AR next was uptick of if of the the flat quarters an flat. year there throughput guide, make has see kind wondering growth? back up QX that so And guide for would couple that kept in given QX to in I to we

Paul Rady

That’s the imply. guidance would

Operator

ahead. with from R. comes Please Raymond question Next James. go Weston J

J R. Weston

AM’s the rest the rest a I wondering first assume quarter And quarter of a the impact well the I or wondering for year continue discuss of in progress. there I year, first more cadence it’s was serviced will it if the of to of quarter. the that kind obviously first probably is down in the step then little maybe figure constraints bit if guess you water and the detail, throughout just a on business could then and the linear

the how might the any segment? that quarter the impact water more and Just in color first issues on

Michael Kennedy

production the No, then segment. water volumes impact actual the

cold slowdown water bit, a does it because it bit linear, water we serviced it’s activity being is year During typically throughout the of pretty have the less wells so generally but the winter, segment. by a a

J R. Weston

no I there were result of the the guess constraint? that well in completions service So, were a as slowdown

Michael Kennedy

absolutely No, not.

J R. Weston

Okay. row talked the normal already, low pressure, to if maybe And expect guess quarter? pressure of quarter then I bit we return you that second a that other just I the one wondering but little second guys I high in volumes above that a about to probably just of in guess guess kind

Michael Kennedy

million the put We it use actually an in quarter, less. but expected Bobcat quarter cold but was the quarter. October much third versus we fourth in the active XXX return month, you XXX normal first to day the a on about the weather, became a that when lateral

Operator

At this back any our remarks. closing this session. over to time, turn question-and-answer conclude like the for Michael will I’d Kennedy to conference

Michael Kennedy

I in today. everyone to for want conference participating call thank our

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

Operator

The today’s conference much now very attending Thank concluded. has for presentation. you

disconnect. now may You

Antero Midstream (AM) 14 Feb 182017 Q4 Earnings call transcript