AM - Earnings call transcript Q4 2020 | Antero Midstream Corporation

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Operator

Greetings and welcome to the Antero Midstream Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note that this conference is being recorded. conference Finance our and the Senior Michael turn President, Vice Chief now over host, to Kennedy, I'll Financial Officer. sir. you, Thank

You begin. may

Michael Kennedy

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

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

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

Paul Rady

raised on sheet Slide the over several million us X. sale times of the taken sales, AR allowed to discussing by and term allowed Since embarking royalty Antero of is executed XXXX volumetric assets capital steps access $X.X AR structure the Thanks assets $X.X just These partnership. unsecured $XXX billion overriding $X.X level to on drilling to the number Mike. through start in a included senior has note a of in like raising improve also to creative endorsement program transaction year-ago, billion billion financings, now successfully balance market XXXX, operations. proactive the senior of eliminate support and and strong steps; and has approximately AR of which has Antero's and proceeds. a a asset near-term payment counterparty maturities. This on significant I'd which committed production

XXXX open and As combination depicted the and has a on purchases completely its maturities market slide, redemptions. of AR through eliminated XXXX early

over maturities improve cash billion Looking sheet to balance markets flow to repay In schedule. senior free unsecured the tremendous of made the refinance. and to strength the financial strides right XXXX, to access expects size $X.X AR forward, of generate maturity the cumulative to to we've through long-term AR and in summary, addition ability

percentage interest to Now drilling working and four discuss and each with Capital, wells Slide starting that Quantum of January this will in years, of in well as the Basin completion to of proportionate of year. a Under completion XXXX let's number XX% drilling participate this in last Appalachian every for next exchange drills that the spud. in XXXX the through over well XXXX spud in QL X, X Antero Energy XX% agreement, capital QL between and AR's an total will fund turn formation Partners in of partnership. XX% a capital and drilling affiliate

program. our will maintenance remain XXXX, incremental XX unchanged of right slide, prior over as our the you drilled complete drill see initial is four and an The years capital the and the being wells over a on hand On plan. base through net As together. compared capital result spending side we'll can lower XXX to next development net AR's from wells basis, production

AM's to and a drilling gathering drive drilling X from unique However, completions water benefit Slide incremental illustrates to how partnership. benefiting businesses. expected a is both are and position Antero gross processing in growth the partnership incremental number production

undeveloped First, acreage AR efficient premium has that X,XXX and development. Ohio, locations and footprint Utica, core over delivers drilling in Marcellus a contiguous the

of are well locations liquids that X,XXX in locations prices. approximately remaining X,XXX recent XX% we Second, Based remaining represent X,XXX AR locations plus locations of take study the in premium NGL since to Appalachia. these of undeveloped AR's of liquids positioned on strong rich wide core AR over basin core is undeveloped the Appalachia, our advantage rich, estimate the

has production and gas Northeast transportation AR have to its indices gross deliver experience supply. to the basis gas firm to shut-in many premium incremental unutilized to NYMEX markets base that that blowouts frequent and partner partnership. the AR allows unlike Third, from This supports drilling producers often

as able are nature titled given AR partner number detailed increase enhancement. its are and free several in free AR Midstream. the quickly all to resource next years of AR develop factors X, Antero and Slide profile over which to These the flexibility the flow Lastly, on cash AR's of drive substantial flow unique the cash integrated

the earnouts note processing gathering, the offsets from gathering than $XX additional addition AM increase through earnouts through additional completions program totaling to XXXX. to incremental we compression, As side the approximately $XX on earnout in depicted and partnership premium the paid AM Freshwater per by the red throughput. million the million or important over $XXX the the on by and the five pressure that XXXX, growth allows fractionation in when by drilling EBITDA the throughput marketing unutilized additional AR firm It's now million hand the more years, dedicated expense acreage, next low fill AM AR to page, beginning benefit expires. transportation Driven by approximately AM left box year achieve expect of to reduce receives the approximately in net

partnership by on million drilling increases payments the the per depicted IRR XXXX. cash $XXX we green as Lastly, AR achieving assume will million a by free one-time through in partnership approximately AR's certain flow thresholds. delayed that In carry the that receive form of tranche total the $XX by total, bar, drilling approximately

enhances free as drilling flow AM's Slide cash detailed also profile X. Importantly, partnership the on

depicted maintenance results EBITDA million the low-single-digit in assets incremental drive can net of bar, earnouts completions dividends flow AM's $XXX through annual throughput of As compared over the turn grey incremental $XX of you pressure a $XXX an $XXX the to low I'll million maintenance million capital, processing and is million incremental to XXXX capital, that, see Freshwater Freshwater blue EBITDA the in delivery of netting acceleration we're AR AR base capital which compared the With five the plan. to expect additional out we forecasting fee it program. of next approximately years incentive the after free approximately by the After under gathering box, Mike. over most In plan. serviced cash million additional $XXX cumulative incremental capital to of gross of of the

Michael Kennedy

fourth BCF compared represents Thanks, day sequentially. from the number increase and Paul. in the Slide I'll portion the X X.X in increase per my XX% Starting low per beginning quarter begin X.X an the flat page, of the were which on a year-over-year with XX% Midstream AM top volumes pressure Compression Throughput. the day, comments BCF to quarter prior-year operational quarter, prior-year. during titled quarter fourth results left gathering averaged volumes

during from XX% increase compared per Freshwater averaged averaged day, to ahead fractionation utilized the during of sales. prior-year Antero Our the XX% the activity quarter. the of capacity capacity quarter. the recent the to XX,XXX day, volumes BCF turned a by XX:XX decrease outperformance by were fractionation lines and a of driven expected. barrels pads XX,XXX prior-year. prior-year due joint per averaged volumes lower to Resources gross gross venture X.X fourth acceleration delivery increase as Throughput expectations processing barrels well XXX% day, JV XX% quarter was turning per Processing a was quarter. volumes completion XXX% volumes JV from utilized over

and touch moving to balance I Before liquidity. wanted our briefly to XXXX full-year achievements on on sheet our

$XXX As leverage its consecutive XX, drawn on Midstream both respectively. times facility, resulting for billion were billion flat of and $X.X $X.X XXXX, December debt of has total And revolving credit X.X and quarter Antero in billion liquidity. approximately third $X.XX at million

and and XXXX expenditures on number full-year was full-year of achievements our for Adjusted EBITDA $XXX the mid-point year-over-year guidance. decrease capital line in to XXXX Slide million, record and million to just the compared of XX% million million generated on prior-year. free $XXX $XXX with move increase $XX X. guidance. Capital let's XXXX year-over-year declining the X% cash were AM's $XX dividends a the in EBITDA growth in company a million, Now the before flow above

increase highlighting to point asset capital return invested XXXX, four a of prior-year, the capital fund Slide our the of capital and of budget. high budget XXXX generated just-in-time and compared a we our Importantly, illustrates reallocation XX utilization to XX% capital rates. philosophy in capital the on benefits

targets capital the on $XXX page, of million. capital detailed supporting plan maintenance side prior left was base hand AR's our the As

expects capital budget capital of million million. to revised AM approximately accelerate to million to into the With $XXX the $XXX announcement drilling $XX the XXXX, partnership, bringing in

rate Over the to AM's additional finance to reduction activity million incremental allocate AM per share development towards to highest of result the as portfolio of quarter partnership the plan. XXXX. return and $XXX investment, and to next support we This incremental dividend announced allows from years, In us reduction a project $X.XX expanded the invest order in five AM's of drilling throughput capital a an to beginning the the the partnership. drilling growth expects capital in first

so incremental its this page, of to self-funding de-risks this hand of AM right We to business return capital internally longer C-Corp in significantly shareholders outside the deliver this AM on capital organic both capital on guidance. investments model program. on transition depicted requires XXXX of allows As this growth and fund believe side no mid-point the based to that to

billion over AM In growth through XX in expects EBITDA illustrates announcement. XXXX XXXX. XXXX partnership, growth drilling XXXX from through times number on to addition, five-year drilling less years. de-lever the which the three based forecasting EBITDA outlook annual Driven partnership to $X.X next billion the for Slide results to five the through XXXX AM in of by throughput low-single-digit from from $X.X we're the cumulative or

years this we of return be organic over five next years. June dividends fully the excess approximately opportunistically two and in purple in cash under flow cash utilized to shares depicted XXXX. billion $XXX As and to next extended which $X.XX XX, to to billion repurchase program, free orange flow an repurchase backlog of our million totals excess capital reduce debt over years. funds share our Remaining the additional $X.XX This free shareholders will have after you can see, five project

summary. drilling partnership the on titled from the million a to per plan. an XX As with of $XXX remaining previously Antero my share outlook maintenance finish an at million $X.XX I'll AM we $XXX capacity, number repurchasing This leaving comments of compared of price Midstream Slide share, utilized slide program million based outlook XX $XXX capital average the repurchase to capacity. have shares benefits the reminder, AR illustrates base previous million

plan. for drilling that Midstream EBITDA free the increase. With dividends to million free upfront backlog after over AM compared the after a project EBITDA dividends Antero online XXXX million forecasted growth profile compared capital cash or $X.X AM's flow of $XXX the and projects, generate increases Drilling partnership, after organic are the Due low-single-digit cumulative to in XXXX of also annual projects XXXX. result of previously. cash flat in break-even cash those are through acceleration through organic and after expects to mid-point to incremental flow be placed through then approximately from $XXX timeframe partnership projects dividends $XXX expect at million XXXX XXXX $XXX to free These flow to billion previous from to XXXX a we maintenance million

leverage high that continue times or to Importantly, less leading we AM to the generate declined in high three range. prior mid times the expect per the partnership to enhance peer the teens, resulted XXXX share outspend and in by levels, dividend three Under drilling XXXX. profile in leverage ROIC to $X.XX in

questions. circumstances, these summary, fund any believe In AM in class portion dividends, of we to not peer we've after corporate best to does balance Given operator, to With opportunities. growth, allows that check flow a C-Corp positive governance, these payments boxes strong debt its a with enhanced to plan this decided sheet. ROIC, take reallocate cash attractive free add and sheet that so out balance or AM Midstream dividend to the to leverage a leading be we're EBITDA ready

Operator

be we'll time, question-and-answer [Operator this At a you. conducting Thank Instructions]. session.

with Shneur question. your first from Please comes Gershuni Our state question UBS.

Shneur Gershuni

Hi, afternoon, everyone. good

cut I'm the reduction. Just you start-off decision a you wondering the just scenarios dividend can if it we how the with arrived can different you us through if board you the and that wondering to. around at shared that level walk with

of you're Just not considerations I'm to seems cover But is nature the sit fully different cut the to process goal surgical, I CapEx not need why just the us to you've to But cut I because of in of appreciate say much sort you it borrowing leverage where dividends. level faster? terms fund want think we this or for decision your comfortable the curious what we there year. prudent walk and was the CapEx Alternatively, don't and more just goals of through kind if about the headed. of and can sort choice to it kind thought with XX% level? making get of too

Paul Rady

of and board every we of and end was such dividends ultimately the day free at the alternative payment I set you that have The course flow mean considered thanks. the dividends Yes, capital. of positive the after to cash stated, plan

in years $XXX that up if next a it's spitting years the $XXX another the three, -- that out. you drilling million road a capital of get we road, surge for EBITDA down so because partnership. a So drill once But bit of four million or you out have the couple of ends down

a So venture very so it's a of lot for sense. it AM, made profitable

mean for already position, calibration back couple strong return we're And of this drive it X.X for is I felt if flow times of shareholders to appropriate feel leverage, the room anyway. well amount. further out, this we didn't we distribute recalibrate, down time the and is slashing care a overnight us same So you then, you once out, you an need capital get And for right take the model the more when next there our cash delever while by want at at the like years it. to of positioned free get into dividend.

So place a was right to we spot be. thought it $X.XX was the sweet that

Shneur Gershuni

chose. point buy in Okay. being return a point shares where at at I the you the actually back And future think you was capital, can about you some talk word

shares down fact mean, Or is at there like significantly right at it sit is Given back sort oscillate shares and of trading the as potentially do interim these reallocation in obviously stock between now, following plan is looking also? your stage of the you're the the sort today. as sort and well opportunistic the of you levels? -- buying I not

Paul Rady

was past We $X, $X.XX always No, we'll opportunistic. I shares back And, XX just in million past. be bought we years. at been have of under think the couple the over

that's paid-off very we right. well, So opportunistic, will and be

So the we surprised shares, I us wouldn't to see they be back that buy think if like shares aren't should. performing

extended a million which that already So of plan, we've which we the million that, $XXX of go. so it's have that's plan. of to And plan repurchase $XXX utilized $XXX we -- reason then we

plan. out there. So that live It's is a

Shneur Gershuni

AM to want nature incremental dividend see would you're to that the you talked Okay. about get achieve is capacities up had spend you targeting Like CapEx. is has the there's And capacity filling that this, AR now AR you to to would we that concern that it characterize ROIC on to you that point, million and in and that almost to does, incremental quick the that don't capital? however ourselves have fixed road fund or step-up? that a fact we you're the again kind above its it an expanding becoming then question, you is the maybe of that Or variable of have $XX AR drilling the Slide it more potential potentially require to an follow-up it, do XX, XX% What like drilling XX%. another down are odds, about that and probabilities, partnership in up chances,

Paul Rady

to was transportation. lowest dividend. in one-time the And upside, at said the spot, it sweet on a Well, was if But in be terms just of like deal we'll AR I variability; it's it's in one, followed time. not increasing the the over this level, here, think variable firm number of -- a from we AR, you dividend fill-up terms

to So sort on capital, unutilized wants firm for a need and drilling days. these it's pay address the one-off to burden it what fill stay in that a was to at future, of or I not -- because don't of to it's AR's market maintenance a see AR continue transportation, another concern partnership that's

was with level at it for stay So good that markets flat address third-party to a the wedge AR, in maintenance to participation production way a fill capital, and of production.

So no a one-off I would consider as that transaction.

Michael Kennedy

million adding flow of of out. Yes, very EBITDA in basis the and million projects and that ultimately, I'd free don't have year an add, we're an annual I incremental three also it's on rates drilling JV years,. the is cash return. $XXX high about investing We're actual that over of five And $XXX know then concerned, additional in

for very it's JV. entered a So AM drilling happy and very that attractive this opportunity into we're AR

Paul Rady

the So, growth looking right, I'll X% leverage cash in at actually going you matrix, manageable your chambers down flow out top many just not X.X growth over there. free positive. have because say, of we're growth and have very EBITDA time, call it And

So it the really checks all boxes.

Shneur Gershuni

I get all trying be thinking to totally thinking almost the different, it. how understand, it. just about was you're to I tree on Bayesian of how a Yes, we're like about putting -- it it

nature, there kind we in a today. is that were no to that here that is paraphrase? basically conclusion reason could commodity And something see was the would the you -- fair some of larger road tide given there be consider surgical or scenario tide specific. recap there targeting a another fact result a that down So in Is it's the or environment

Paul Rady

well exciting, said absolutely. Yes, I think that's that's

Shneur Gershuni

much, Thank and perfect. guys. Appreciate stay you very safe. color the Okay,

Paul Rady

you, Shneur. Thank

Operator

you. Thank

comes Our state question. Tonet Please with question from Jeremy your next JPMorgan.

James Kirby

on James Jeremy. is This Hey, good for guys. morning,

still that $XX $XXX just call the the of the taking from back have kind following-up you doing remain savings. it about this Do expect savings math all million you of to you flat incremental out dividend paying to million ended and the reduction at guys XXXX down X.X he expect leverage to year debt to go on you Just XXXX? asked, with the that CapEx, that do questions Shneur’s for

Paul Rady

a down ticked allocation was amounts shares amounts it we some would have Actually that may also have that repurchase those of for pay debt bit. yes, for But little been opportunistic. down dividend, pay

James Kirby

through any when And for second cash become XXXX, that? remind you Okay, taxes within a us to is expect the and cash there tax to enough. can guidance just fair cash question, if flow a you payer, consideration for free

Paul Rady

cash five-year Yes, we're that period. not over taxpayer a

Operator

comes MacKay John Sachs. Our Please from your next Goldman from question state question.

John MacKay

Hey, appreciate thanks I cash your wanted time. follow-up, for to just and free flow outlook longer-term for EBITDA.

wondering, you the those or a talk numbers, either about risks can Just downside? little to upside, maybe bit you. Thank the the to

Michael Kennedy

Well, in And cetera. has its just that AM accelerating are gathering, and terms steadfast right. the types spending, been or it can LP these whether compression, or you It's think it's I historically, water, look capital been of at projects; mean, HP generation of the gathering, I returns. projects same doing. we've of et

it's doing, just type the we're been So forward. them we've pulling of that same projects

in of of So or outlook. variability in variance that we returns very feel and lack the good about terms

Paul Rady

them. outside below by just the year-end, saw for coming EBITDA already maintenance is there AR, way Just capital leverage program debt near-term down to maturities a or times two and is

drilling those much So from -- I think there's from that partnership. not downside in

you saw past, AR as continually, volumes performed and and as very speaks well. year well, on this So years as

John MacKay

Any that? steps point right now. on that what will follow-up they of mostly seems to that thoughts remaining probably liquidity on with done new stake management want with my do last that, AR Maybe you. thank fair, That's AM like be might and kind

Paul Rady

the and there. real stream, mean, any is the free backward a cash, strip, cash AR even much shift enjoy shares. strip forward going change AM there's this continues dividend hour flow stake at year need so sell so aided AR at no current I [ph] to no, no that generating that to

Operator

Thank you. [Operator Instructions].

Chris comes Barclays. Please Our next questions. from Tillett question state your with

Chris Tillett

on the even to start you speaking, cash Hey being able expect comments taxes? are guys, share any of sort good But do in broadly afternoon. paying there when you to I appreciate tax forecast. the cash the not

Paul Rady

And not don't not no, go in any out that of six, they years, our Yes, seven forecasts. that so timeframe. have it's we here. in It's

Chris Tillett

a through asking, in FT And it what as Okay. follow-up capacity that maybe believe was timeframe. slides, XXXX Shneur to of kind then, hit I the max AR they looks looking like,

next with about, standpoint And envision that? if sort we kind from production partnerships of you Midstream what that further for what or of would ramps said beyond not should marry peak so really I drilling Midstream viewing a you as guys be in kind era the be that or of anticipating CapEx, would

Paul Rady

so. at prices, think with point, companies go some the to don't Antero range. single-digit least higher like in some back I you'll No, At growth, especially see

drilling would will the early that and that And be drills FT. will completions be So read the it XXXX. as driven drilling by I And partnership, also strictly completes last the partnership done. then year after

on So those side. start that volumes will to decline

have to being out grow. but there's to fatigue. room we inventory So in saying for there'll our I local production dependent what be the you markets, of markets that one are and if today. I to there, there mean available think then purpose FT match you're that serve follow local so some growth AR going the And avoid I'm to FT. that don't real our slides some was basis put of we to just by the exactly And see on

we're adding because the some quite partnership, X,XXX they mentioned, in in rigs are, you're that at you're uptick area. only at completing six I going As if a inventory Ohio, rate the of Utica be combined I with really best Southwest prices, AR Marcellus, on premium in you're call, commodity then or wells think the but see in today. on five But that looking the day we'll not and years drilling to where

all prices have higher some need inventory. capacity likely for the that, you some will in of us see plenty who market to premium at back So, going still like also but you'll points, operators

Chris Tillett

Okay.

at a I that necessarily pipeline concern about ton not constraints So of in point guess time?

Paul Rady

at our that FT AR. it growth, too That's chart into in right. hamper mean wouldn't growth of I doesn't that read doesn't much terms

Chris Tillett

Okay.

for share just foot completions, the final assumptions sort you those me, water run to you usage expect long then Okay. well can side, on are what your and And of of laterals? then kind for latest how question XX,XXX

Michael Kennedy

bounty, Yes, being acreage so always just the long or maps And operator it being we nearly contiguous. in the XXX% almost working have XX,XXX seen it you've laterals we a that interest. of foot control of where with a of our benefit; do inventory terms on

Paul Rady

XX barrels foot. of water per

Michael Kennedy

Right little is it current to barrels foot right up our XX formula. is ballast a We're standard doing but now. bit, dry the a mix

Chris Tillett

of at Okay. what And next starting XX the either maybe is I months? to guess is, I was down more those of getting in creep there any risk numbers to XX to

Michael Kennedy

materially. Not

Paul Rady

entire, entire will is of lateral plan length; It be the in terms year feet. five XX,XXX average

efforts, So, far as we've see you can that we that as laterals continue with are land seven, are six, shorter. add on whatever in and to plan got laterals to the our long

grow continue We those, you if that to to will. and add

So some that's for time. where be quite we'll

Michael Kennedy

Yes, the is XX barrels of water our per completion. foot standard

Operator

Our Please question. your next from Fargo. Ned Baramov comes state Wells with question

Ned Baramov

pressure know fee plan, that the that any production taking that, the on to on place, expect potentially goes of to does any in XXXX? agreement then AR I gathering do currently? And you have current questions. the extending the also, term thoughts it incentive fee XXXX low through you for thanks rebates offer Based Hey, are there in

Paul Rady

XXXX and XXXX. the We've are presentation XXXX question in current on slide them the in your Yes, that AR in rebates no forecast got fee there outlines the but and they do fees. a achieve

schematic there's out in does there it and XXXX. a So expire

Ned Baramov

AR's remaining cadence million And the you of the $XXX then CapEx about through the Okay, associated partnership maybe that's talk drilling can of got XXXX? growth expected in XXXX with period it.

Paul Rady

majority XXXX of then XXXX. the it Yes, is a and bit little in

a mid-point of back this million maybe the year’s in $XXX of timeframe bit returns it can beyond and think million than that below, higher then million beyond. XXXX $XXX $XXX and will $XXX XXXX to and million be that kind guidance and to million below you $XXX of now So little XXXX steps

Operator

all Thank Thank today. you. have you. remarks. turn time to closing the for now management That's it back for questions I'll we

Michael Kennedy

call on our thank conference to everyone participating I'd today. like for

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

Operator

great Thank disconnect. you. day. This conference. concludes may parties a today's All Have

Antero Midstream (AM) 18 Feb 212020 Q4 Earnings call transcript