DENVER, Feb. 13, 2018 /PRNewswire/ — Antero Midstream Partners LP (NYSE: AM) (“Antero Midstream” or the “Partnership”) and Antero Midstream GP LP (NYSE: AMGP) (“AMGP”) today released their fourth quarter and full year 2017 financial and operating results.  The relevant consolidated financial statements are included in Antero Midstream’s and AMGP’s Annual Reports on Form 10-K for the year ended December 31, 2017, which have been filed with the Securities and Exchange Commission.

Antero Midstream Partners, LP Logo (PRNewsFoto/Antero Midstream Partners, LP)

Antero Midstream Fourth Quarter 2017 Highlights Include:

  • GAAP net income decreased by 13% to $64 million, or $0.22 per limited partner unit compared to the prior year quarter
  • Adjusted net income increased by 19% to $88 million, or $0.34 per limited partner unit compared to the prior year quarter
  • Adjusted EBITDA increased by 13% to $142 million compared to the prior year quarter
  • Distributable Cash Flow (“DCF”) increased by 14% to $117 million resulting in DCF coverage of 1.3x
  • Distributions were $0.365/unit, a 30% increase compared to the prior year quarter and the Partnership’s twelfth consecutive distribution increase since the November 2014 IPO
  • Antero Midstream’s corporate debt ratings have improved to Ba2/BB+/BBB- (Moody’s/S&P/Fitch)

Antero Midstream Full Year 2017 Highlights Include:

  • GAAP net income increased by 30% to $307 million, or $1.28 per limited partner unit compared to the prior year
  • Adjusted net income increased by 40% to $331 million, or $1.40 per limited partner unit compared to the prior year
  • Adjusted EBITDA increased by 31% to $529 million compared to the prior year
  • Distributable Cash Flow increased by 19% to $421 million resulting in DCF coverage of 1.3x
  • Debt to trailing twelve months Adjusted EBITDA was 2.3x with $1.0 billion of liquidity

Antero Midstream GP LP Fourth Quarter 2017 Highlights Include:

  • Distributions increased to $0.075/share, a 27% increase sequentially and the second consecutive distribution increase since the May 2017 IPO
  • Long-term distribution per share targets from 2018 through 2020 were increased by 20%, as compared to previously provided targets, due to the announced reduction in the U.S. federal corporate tax rate from 35% to 21%

Commenting on the 2017 results and outlook for Antero Midstream, Paul Rady, Chairman and CEO said, “Antero Midstream had another successful year executing its organic growth strategy and expanding its operations downstream into processing and fractionation.  We expect to continue this momentum into 2018 having recently brought online the Sherwood 9 processing plant, which expands the processing and fractionation Joint Venture’s total processing capacity to 600 MMcf/d.  This full midstream value chain strategy positions Antero Midstream to deliver on its attractive, peer-leading, long-term distribution growth targets supported by its five year organic project backlog of $2.7 billion.”

Mr. Rady further added, “Antero Midstream continues to benefit from the improving financial strength of Antero Resources, which has taken significant steps over the last year to improve its balance sheet and free cash flow profile.  Antero Resources is at an inflection point where going forward it is positioned to fully fund its five year development plan with operating cash flow, ultimately de-risking the growth profile of Antero Midstream.”

For a discussion of the non-GAAP financial measures adjusted net income, Adjusted EBITDA, Distributable Cash Flow, and net debt please see “Non-GAAP Financial Measures.”

Antero Midstream Fourth Quarter Financial Results

Low pressure gathering volumes for the fourth quarter of 2017 averaged 1,711 MMcf/d, a 12% increase as compared to the fourth quarter of 2016.  Low pressure gathering volumes were negatively impacted by lower than expected production in the Utica due to the delayed in-service date of the Rover Pipeline.  Compression volumes for the fourth quarter of 2017 averaged 1,355 MMcf/d, a 47% increase as compared to the fourth quarter of 2016 as a result of placing new compression stations in service throughout 2017 totaling approximately 600 MMcf/d of incremental capacity.  High pressure gathering volumes for the fourth quarter of 2017 averaged 1,842 MMcf/d, a 28% increase from the fourth quarter of 2016.  High pressure gathering volumes were in excess of low pressure gathering volumes due to Antero Resources’ temporary use of an Antero Midstream owned high pressure line to avoid downstream pipeline constraints. The increase in gathering and compression volumes was driven by production growth from Antero Resources in Antero Midstream’s area of dedication.  Fresh water delivery volumes averaged 149 MBbl/d during the quarter, in line with the fourth quarter of 2016.

Gross processing volumes from our processing and fractionation joint venture with MarkWest (a wholly-owned subsidiary of MPLX) (the “Joint Venture”), averaged 425 MMcf/d, for the fourth quarter of 2017, an increase of 16% compared to the third quarter of 2017.  Gross Joint Venture fractionation volumes averaged 9,096 Bbl/d, a 41% increase sequentially.

Three Months Ended

December 31,

Average Daily Volumes:

2016

2017

% Change

Low Pressure Gathering (MMcf/d)

1,522

1,711

12%

Compression (MMcf/d)

920

1,355

47%

High Pressure Gathering (MMcf/d)

1,437

1,842

28%

Fresh Water Delivery (MBbl/d)

150

149

(1)%

Gross Joint Venture Processing (MMcf/d)

425

*

Gross Joint Venture Fractionation (Bbl/d)

9,096

*

______________________________

*

Not applicable.  Antero Midstream has a 50% interest in the Joint Venture, which was formed in February 2017.

For the three months ended December 31, 2017, the Partnership reported revenues of $210 million, comprised of $106 million from the Gathering and Processing segment and $104 million from the Water Handling and Treatment segment. Revenues increased 26% compared to the prior year quarter, driven by growth in throughput volumes. Water Handling and Treatment segment revenues include $54 million from wastewater handling and high rate water transfer services provided to Antero Resources, which are billed at cost plus 3%. 

Direct operating expenses for the Gathering and Processing, and Water Handling and Treatment segments were $11 million and $59 million, respectively, for a total of $70 million compared to $37 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $53 million from wastewater handling and high rate water transfer services.  General and administrative expenses including equity-based compensation were $15 million, a $1 million increase compared to the fourth quarter of 2016.  General and administrative expenses excluding equity-based compensation were $8 million during the fourth quarter of 2017, in line with the fourth quarter of 2016.  Total operating expenses were $143 million, including $31 million of depreciation, $23 million of impairment of property and equipment and $4 million of accretion of contingent acquisition consideration.

Net income for the fourth quarter of 2017 was $64 million, a 13% decrease compared to the prior year quarter. The decrease in net income was driven by a $23 million non-cash impairment expense of the condensate pipelines in the Utica that are not expected to be utilized in Antero Midstream’s high-graded infrastructure plan.  Net income per limited partner unit was $0.22 per unit, a 41% decrease compared to the prior year quarter. Adjusted net income was $88 million, a 19% increase compared to the prior year quarter.  Adjusted EBITDA was $142 million, a 13% increase compared to the prior year quarter. The increase in Adjusted EBITDA was primarily driven by increased natural gas throughput volumes and contribution from the Joint Venture. Adjusted EBITDA for the quarter included $10 million in distributions from Stonewall Gathering LLC and the processing and fractionation Joint Venture.  Cash interest paid was $4 million. Cash reserved for bond interest during the quarter increased $9 million and cash reserved for payment of income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $1 million. Maintenance capital expenditures during the quarter totaled $12 million and Distributable Cash Flow was $117 million, resulting in a DCF coverage ratio of 1.3x.

The following table reconciles net income to adjusted net income, Adjusted EBITDA and Distributable Cash Flow as used in this release (in thousands):

Three months ended

Years ended

December 31,

December 31,

2016

2017

2016

2017

Net income

$

73,351

$

64,155

$

236,703

$

307,315

Impairment of property and equipment

23,431

23,431

Adjusted net income

$

73,351

$

87,586

$

236,703

$

330,746

Interest expense

9,008

10,395

21,893

37,557

Depreciation expense

25,761

30,958

99,861

119,562

Accretion of contingent acquisition consideration

6,105

3,804

16,489

13,476

Equity-based compensation

6,683

6,847

26,049

27,283

Equity in earnings of unconsolidated affiliates

1,542

(7,307)

(485)

(20,194)

Distributions from unconsolidated affiliates

7,702

10,075

7,702

20,195

Gain on asset sale

(3,859)

(3,859)

Adjusted EBITDA

$

126,293

$

142,358

$

404,353

$

528,625

Interest paid

(1,743)

(4,136)

(13,494)

(46,666)

Decrease (increase) in cash reserved for bond interest (1)

(10,481)

(8,734)

(10,481)

291

Income tax withholding upon vesting of Antero Midstream Partners LP equity-based compensation awards(2)

(2,636)

(514)

(5,636)

(5,945)

Cash distribution to be received from unconsolidated affiliate

(2,998)

Maintenance capital expenditures(3)

(5,466)

(12,063)

(21,622)

(55,159)

Distributable Cash Flow

$

102,969

$

116,911

$

353,120

$

421,146

Distributions Declared to Antero Midstream Holders

Limited Partners

50,090

68,231

182,559

247,132

Incentive distribution rights

7,543

23,772

16,945

69,720

Total Aggregate Distributions

$

57,633

$

92,003

$

199,504

$

316,852

DCF coverage ratio

1.79x

1.27x

1.78x

1.33x

1)

Cash reserved for bond interest expense on Antero Midstream’s 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15th and September 15th of each year.

2)

Estimate of current period portion of expected cash payment for income tax withholding attributable to vesting of Midstream LTIP equity-based compensation awards to be paid in the fourth quarter.

3)

Maintenance capital expenditures represent the portion of our estimated capital expenditures associated with (i) the connection of new wells to our gathering and processing systems that we believe will be necessary to offset the natural production declines Antero Resources will experience on all of its wells over time, and (ii) water delivery to new wells necessary to maintain the average throughput volume on our systems.

Gathering and Processing Antero Midstream expanded one of its Marcellus compression stations, adding an additional 25 MMcf/d of capacity during the fourth quarter of 2017. Antero Midstream’s total compression capacity at year-end 2017 was 1.7 Bcf/d in the Marcellus and Utica combined, with utilization averaging 81% during the fourth quarter.  Additionally, Antero Midstream connected 35 wells to its gathering system during the quarter.  Antero Resources is currently operating six drilling rigs on Antero Midstream dedicated acreage.

Water Handling and Treatment Antero Midstream’s Marcellus and Utica fresh water delivery systems serviced 32 well completions during the fourth quarter of 2017, a 9% decrease from the prior year quarter.    Antero Resources is currently operating five completion crews on Antero Midstream dedicated acreage. Antero Midstream continued the commissioning process for the Antero Clearwater Facility during the fourth quarter of 2017.

Balance Sheet and Liquidity

As of December 31, 2017, Antero Midstream had $8 million in cash and $555 million drawn on its $1.5 billion bank credit facility, resulting in approximately $1.0 billion of liquidity.  Antero Midstream’s total debt and net debt to trailing twelve months Adjusted EBITDA was 2.3x as of December 31, 2017.  For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.”

Commenting on the balance sheet and credit strength, Michael Kennedy, CFO of Antero Midstream said, “Since its inception, Antero Midstream’s strategy has always been to maintain a conservative leverage profile and strong distribution coverage.  This is supported by the financial strength of our sponsor, long-term fee-based contracts and our just-in-time capital investment strategy.  Recently, both Antero Resources and Antero Midstream were recently given a BBB- investment grade rating from Fitch and received an upgrade to BB+ from S&P Global.  This further speaks to the Partnership’s conservative financial profile and the confidence around the new five year infrastructure plan.”   

Capital Investments

Capital expenditures, excluding investments in the processing and fractionation joint venture, were $143 million in the fourth quarter of 2017 as compared to $126 million in the fourth quarter of 2016.  Capital invested in gathering systems and related facilities was $91 million and capital invested in water handling and treatment assets was $52 million, including $26 million invested in the Antero Clearwater Facility.  Investments in unconsolidated affiliates for the Joint Venture were $18 million during the quarter.

AMGP Fourth Quarter 2017 Financial Results

AMGP’s equity in earnings from Antero Midstream Partners, which reflects the cash distributions from Antero Midstream, was $24 million for the fourth quarter of 2017.  Net income for the fourth quarter of 2017 was $6 million.  AMGP’s cash distributions from Antero Midstream were $23 million for fourth quarter of 2017, net of $1 million of cash reserved for distributions on Series B units. General and administrative expenses were $0.3 million, provision for income taxes was $9 million, and tax benefit of cash reserved for distributions to Series B units was $0.4 million, resulting in cash available for distribution of $14 million.

The following table reconciles cash distributions from Antero Midstream and AMGP cash distribution per common share as presented in this release (in thousands):

Three Months
Ended
December 31, 2017

Cash distributions from Antero Midstream Partners LP

$

23,772

Cash reserved for distributions to Series B units of IDR LLC

(963)

Cash distributions to Antero Midstream GP LP

$

22,809

General and administrative expenses

(279)

Provision for income taxes

(8,924)

Tax benefit of cash reserved for distributions to Series B units of IDR LLC

369

Cash available for distribution

$

13,975

DCF coverage ratio

1.0x

Common shares outstanding

186,182

Cash distribution per common share

$

0.075

Conference Call

A joint conference call for Antero Midstream and AMGP is scheduled on Wednesday, February 14, 2018 at 10:00 am MT to discuss the quarterly and full year results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in at 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference “Antero Midstream”.  A telephone replay of the call will be available until Wednesday, February 21, 2018 at 10:00 am MT at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) using the passcode 10114473.

Presentation

To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream’s website at www.anteromidstream.com or AMGP’s website at www.anteromidstreamgp.com.  The webcast will be archived for replay on Antero Midstream’s website and AMGP’s website until Wednesday, February 21, 2018 at 10:00 am MT.  Information on Antero Midstream’s website and AMGP’s website does not constitute a portion of this press release.

Investor Access to 2017 10-K

Pursuant to Section 203.01 of the New York Stock Exchange Listed Company Manual, Antero Midstream and AMGP today announced that their respective Annual Reports on Form 10-K (the “10-Ks”) for the fiscal year ended December 31, 2017, were filed with the Securities and Exchange Commission on February 13, 2018. A copy of Antero Midstream’s 10-K, which includes the Partnership’s complete audited financial statements, may be found on Antero Midstream’s website, www.anteromidstream.com, by selecting the “Investor Relations” tab, then “SEC Filings.” A copy of AMGP’s 10-K, which includes AMGP’s complete audited financial statements, may be found on AMGP’s website, www.anteromidstreamgp.com, by selecting the “Investor Relations” tab, then “SEC Filings.” Antero Midstream unitholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream Partners LP, 1615 Wynkoop Street, Denver, Colorado, 80202 AMGP’s shareholders may receive hard copies of these documents free of charge by sending a written request to Antero Midstream GP LP, 1615 Wynkoop Street, Denver, Colorado, 80202.

Non-GAAP Financial Measures and Definitions

Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership’s performance.  Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, impairment expense, accretion of contingent acquisition consideration, equity-based compensation expense, excluding equity in earnings of unconsolidated affiliates and including cash distributions from unconsolidated affiliates.

Antero Midstream uses Adjusted EBITDA to assess:

  • the financial performance of the Partnership’s assets, without regard to financing methods in the case of Adjusted EBITDA, capital structure or historical cost basis;
  • its operating performance and return on capital as compared to other publicly traded partnerships in the midstream energy sector, without regard to financing or capital structure; and
  • the viability of acquisitions and other capital expenditure projects.

The Partnership defines Distributable Cash Flow as Adjusted EBITDA less interest paid, income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid.  Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders.  Distributable Cash Flow does not reflect changes in working capital balances.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures.  The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income.  The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income.  Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA.  You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP.  Antero Midstream’s definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.

The Partnership defines adjusted net income as net income plus impairment expense. The Partnership believes that adjusted net income is useful to investors in evaluating operational trends of the Partnership and its performance relative to other partnerships. Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance.

The Partnership defines consolidated net debt as consolidated total debt less cash and cash equivalents. Antero Midstream views consolidated net debt as an important indicator in evaluating the Partnership’s financial leverage.

The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):

December 31,

2017

Bank credit facility

$

555,000

5.375% AM senior notes due 2024

650,000

Net unamortized debt issuance costs

(9,000)

Consolidated total debt

$

1,196,000

Cash and cash equivalents

(8,363)

Consolidated net debt

$

1,187,637

Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets as well as integrated water assets that primarily service Antero Resources Corporation’s properties located in West Virginia and Ohio. Holders of Antero Midstream common units will receive a Schedule K-1 with respect to distributions received on the common units.

AMGP is a Delaware limited partnership that has elected to be classified as an entity taxable as a corporation for U.S. federal income tax purposes.  Holders of AMGP common shares will receive a Form 1099 with respect to distributions received on the common shares.  AMGP owns the general partner of Antero Midstream and indirectly owns the incentive distribution rights in Antero Midstream.

This release includes “forward-looking statements” within the meaning of federal securities laws.  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership’s and AMGP’s control.  All statements, other than historical facts included in this release, are forward-looking statements.  All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions.  Although the Partnership and AMGP each believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved.  For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release.  Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.  Nothing in this release is intended to constitute guidance with respect to Antero Resources.

Antero Midstream and AMGP caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership’s and AMGP’s control, incident to the gathering and processing and fresh water and waste water treatment businesses.  These risks include, but are not limited to, Antero Resources’ expected future growth, Antero Resources’ ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership’s business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under “Risk Factors” in Antero Midstream’s Annual Report on Form 10-K for the year ended December 31, 2017.

For more information, contact Michael Kennedy – CFO of Antero Midstream and AMGP at (303) 357-6782 or mkennedy@anteroresources.com.

ANTERO MIDSTREAM PARTNERS LP

Consolidated Balance Sheets

December 31, 2016 and 2017

 (In thousands) 

December 31,

2016

2017

Assets

Current assets:

Cash and cash equivalents

$

14,042

8,363

Accounts receivable–Antero Resources

64,139

110,182

Accounts receivable–third party

1,240

1,170

Prepaid expenses

529

670

  Total current assets

79,950

120,385

Property and equipment, net

2,195,879

2,605,602

Investments in unconsolidated affiliates

68,299

303,302

Other assets, net

5,767

12,920

Total assets

$

2,349,895

3,042,209

 

Liabilities and Partners’ Capital

Current liabilities:

Accounts payable

$

16,979

8,642

Accounts payable–Antero Resources

3,193

6,459

Accrued liabilities

61,641

106,006

Other current liabilities

200

209

  Total current liabilities

82,013

121,316

Long-term liabilities:

Long-term debt

849,914

1,196,000

Contingent acquisition consideration

194,538

208,014

Other

620

410

  Total liabilities

1,127,085

1,525,740

Partners’ capital:

Common unitholders – public (70,020 units and 88,059 units issued and outstanding at December 31, 2016 and 2017, respectively)

1,458,410

1,708,379

Common unitholder – Antero Resources (32,929 units and 98,870 units issued and outstanding at December 31, 2016 and 2017, respectively)

26,820

(215,682)

Subordinated unitholder – Antero Resources (75,941 issued and outstanding at December 31, 2016)

(269,963)

General partner

7,543

23,772

  Total partners’ capital

1,222,810

1,516,469

  Total liabilities and partners’ capital

$

2,349,895

3,042,209

 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Statements of Operations and Comprehensive Income

Three Months Ended December 31, 2016 and 2017

(In thousands, except per unit amounts)

Three Months Ended

December 31,

2016

2017

Revenue:

Gathering and compression–Antero Resources

$

84,312

105,527

Water handling and treatment–Antero Resources

78,517

104,805

Gathering and compression–third party

166

Gain on sale of assets

3,859

  Total revenue

166,854

210,332

Operating expenses:

Direct operating

36,636

69,646

General and administrative (including $6,683 and $6,847 of equity-based compensation in 2016 and 2017, respectively)

14,451

15,250

Impairment of property and equipment

23,431

Depreciation

25,761

30,958

Accretion of contingent acquisition consideration

6,105

3,804

  Total operating expenses

82,953

143,089

  Operating income

83,901

67,243

Interest expense, net

(9,008)

(10,395)

Equity in earnings of unconsolidated affiliates

(1,542)

7,307

Net income and comprehensive income

73,351

64,155

Net income attributable to incentive distribution rights

(7,557)

(23,772)

  Limited partners’ interest in net income

$

65,794

40,383

  Net income per limited partner unit – basic and diluted

$

0.37

0.22

  Weighted average limited partner units outstanding – basic

177,851

186,788

  Weighted average limited partner units outstanding – diluted

178,195

187,122

 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Statements of Operations and Comprehensive Income

Year Ended December 31, 2016 and 2017

(In thousands, except per unit amounts)

Year Ended December 31,

2016

2017

Revenue:

Gathering and compression–Antero Resources

$

303,250

396,202

Water handling and treatment–Antero Resources

282,267

376,031

Gathering and compression–third party

835

264

Gain on sale of assets

3,859

  Total revenue

590,211

772,497

Operating expenses:

Direct operating

161,587

232,538

General and administrative (including $26,049 and $27,283 of equity-based compensation in 2016 and 2017, respectively)

54,163

58,812

Impairment of property and equipment

23,431

Depreciation

99,861

119,562

Accretion of contingent acquisition consideration

16,489

13,476

  Total operating expenses

332,100

447,819

  Operating income

258,111

324,678

Interest expense, net

(21,893)

(37,557)

Equity in earnings of unconsolidated affiliates

485

20,194

Net income and comprehensive income

236,703

307,315

Net income attributable to incentive distribution rights

(16,944)

(69,720)

  Limited partners’ interest in net income

$

219,759

237,595

  Net income per limited partner unit – basic and diluted

$

1.24

1.28

  Weighted average limited partner units outstanding – basic

176,647

185,630

  Weighted average limited partner units outstanding – diluted

176,801

186,083

 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Results of Segment Operations

Three Months Ended December 31, 2016 and 2017

 (In thousands) 

Water

Gathering and

Handling and

Consolidated

Processing

Treatment

Total

Three months ended December 31, 2016

Revenues:

Revenue – Antero Resources

$

84,312

78,517

162,829

Revenue – third-party

166

166

Gain on sale of assets

3,859

3,859

Total revenues

88,337

78,517

166,854

Operating expenses:

Direct operating

7,531

29,105

36,636

General and administrative (before equity-based compensation)

5,265

2,503

7,768

Equity-based compensation

4,812

1,871

6,683

Depreciation

17,837

7,924

25,761

Accretion of contingent acquisition consideration

6,105

6,105

Total expenses

35,445

47,508

82,953

Operating income

$

52,892

31,009

83,901

Segment and consolidated Adjusted EBITDA

$

79,384

46,909

126,293

Three months ended December 31, 2017

Revenues:

Revenue – Antero Resources

$

105,527

104,805

210,332

Total revenues

105,527

104,805

210,332

Operating expenses:

Direct operating

10,655

58,991

69,646

General and administrative (before equity-based compensation)

5,365

3,038

8,403

Equity-based compensation

4,793

2,054

6,847

Impairment of property and equipment

23,431

23,431

Depreciation

22,599

8,359

30,958

Accretion of contingent acquisition consideration

3,804

3,804

Total expenses

66,843

76,246

143,089

Operating income

$

38,684

28,559

67,243

Segment and consolidated Adjusted EBITDA

$

99,582

42,776

142,358

 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Results of Segment Operations

Year Ended December 31, 2016 and 2017

 (In thousands) 

Water

Gathering and

Handling and

Consolidated

Processing

Treatment

Total

Year ended December 31, 2016

Revenues:

Revenue – Antero Resources

$

303,250

282,267

585,517

Revenue – third-party

835

835

Gain on sale of assets

3,859

3,859

Total revenues

307,944

282,267

590,211

Operating expenses:

Direct operating

27,289

134,298

161,587

General and administrative (before equity-based compensation)

20,118

7,996

28,114

Equity-based compensation

19,714

6,335

26,049

Depreciation

69,962

29,899

99,861

Accretion of contingent acquisition consideration

16,489

16,489

Total expenses

137,083

195,017

332,100

Operating income

$

170,861

87,250

258,111

Segment and consolidated Adjusted EBITDA

$

264,380

139,973

404,353

Year ended December 31, 2017

Revenues:

Revenue – Antero Resources

$

396,202

376,031

772,233

Revenue – third-party

264

264

Total revenues

396,466

376,031

772,497

Operating expenses:

Direct operating

39,251

193,287

232,538

General and administrative (before equity-based compensation)

20,607

10,922

31,529

Equity-based compensation

19,730

7,553

27,283

Impairment of property and equipment

23,431

23,431

Depreciation

86,372

33,190

119,562

Accretion of contingent acquisition consideration

13,476

13,476

Total expenses

189,391

258,428

447,819

Operating income

$

207,075

117,603

324,678

Segment and consolidated Adjusted EBITDA

$

356,803

171,822

528,625

 

ANTERO MIDSTREAM PARTNERS LP

Selected Operating Data

Three Months Ended December 31, 2016 and 2017

(In thousands)

Amount of

Three Months Ended December 31,

Increase

Percentage

2016

2017

(Decrease)

Change

($ in thousands, except average realized fees)

Revenue:

Revenue – Antero Resources

$

162,829

210,332

47,503

29

%

Revenue – third-party

166

(166)

*

Gain on sale of assets

3,859

(3,859)

*

Total revenue

166,854

210,332

43,478

26

%

Operating expenses:

Direct operating

36,636

69,646

33,010

90

%

General and administrative (before equity-based compensation)

7,768

8,403

635

8

%

Equity-based compensation

6,683

6,847

164

2

%

Impairment of property and equipment

23,431

23,431

*

Depreciation

25,761

30,958

5,197

20

%

Accretion of contingent acquisition consideration

6,105

3,804

(2,301)

(38)

%

Total operating expenses

82,953

143,089

60,136

72

%

  Operating income

83,901

67,243

(16,658)

(20)

%

Interest expense

(9,008)

(10,395)

(1,387)

15

%

Equity in earnings of unconsolidated affiliates

(1,542)

7,307

8,849

574

%

  Net income

$

73,351

64,155

(9,196)

(13)

%

Adjusted EBITDA

$

126,293

142,358

16,065

13

%

Operating Data:

Gathering—low pressure (MMcf)

140,052

157,373

17,321

12

%

Gathering—high pressure (MMcf)

132,206

169,464

37,258

28

%

Compression (MMcf)

84,654

124,654

40,000

47

%

Fresh water delivery (MBbl)

13,771

13,745

(26)

*

Wastewater handling (MBbl)

2,981

4,227

1,246

42

%

Wells serviced by fresh water delivery

35

32

(3)

(9)

%

Gathering—low pressure (MMcf/d)

1,522

1,711

189

12

%

Gathering—high pressure (MMcf/d)

1,437

1,842

405

28

%

Compression (MMcf/d)

920

1,355

435

47

%

Fresh water delivery (MBbl/d)

150

149

(1)

(1)

%

Wastewater handling (MBbl/d)

32

46

14

44

%

Average realized fees:

Average gathering—low pressure fee ($/Mcf)

$

0.31

0.32

0.01

3

%

Average gathering—high pressure fee ($/Mcf)

$

0.19

0.19

*

Average compression fee ($/Mcf)

$

0.19

0.19

*

Average fresh water delivery fee ($/Bbl)

$

3.68

3.71

0.03

1

%

Joint Venture Operating Data:

Processing – Joint Venture (MMcf)

39,124

39,124

*

Fractionation – Joint Venture (MBbl)

837

837

*

Processing – Joint Venture (MMcf/d)

425

425

*

Fractionation – Joint Venture (MBbl/d)

9

9

*

________________________

*

Not meaningful or applicable.

 


ANTERO MIDSTREAM PARTNERS LP

Selected Operating Data

Year Ended December 31, 2016 and 2017

(In thousands)

Amount of

Year Ended December 31,

Increase

Percentage

2016

2017

(Decrease)

Change

($ in thousands, except average realized fees)

Revenue:

Revenue – Antero Resources

$

585,517

772,233

186,716

32

%

Revenue – third-party

835

264

(571)

(68)

%

Gain on sale of assets

3,859

(3,859)

*

Total revenue

590,211

772,497

182,286

31

%

Operating expenses:

Direct operating

161,587

232,538

70,951

44

%

General and administrative (before equity-based compensation)

28,114

31,529

3,415

12

%

Equity-based compensation

26,049

27,283

1,234

5

%

Impairment of property and equipment

23,431

23,431

*

Depreciation

99,861

119,562

19,701

20

%

Accretion of contingent acquisition consideration

16,489

13,476

(3,013)

(18)

%

Total operating expenses

332,100

447,819

115,719

35

%

  Operating income

258,111

324,678

66,567

26

%

Interest expense

(21,893)

(37,557)

(15,664)

72

%

Equity in earnings of unconsolidated affiliates

485

20,194

19,709

4,064

%

  Net income

$

236,703

307,315

70,612

30

%

Adjusted EBITDA

$

404,353

528,625

124,272

31

%

Operating Data:

Gathering—low pressure (MMcf)

513,390

605,719

92,329

18

%

Gathering—high pressure (MMcf)

481,646

646,054

164,408

34

%

Compression (MMcf)

271,060

436,695

165,635

61

%

Fresh water delivery (MBbl)

45,112

55,892

10,780

24

%

Wastewater handling (MBbl)

10,602

14,549

3,947

37

%

Wells serviced by fresh water delivery

131

142

11

8

%

Gathering—low pressure (MMcf/d)

1,403

1,660

257

18

%

Gathering—high pressure (MMcf/d)

1,316

1,770

454

34

%

Compression (MMcf/d)

741

1,196

455

61

%

Fresh water delivery (MBbl/d)

123

153

30

24

%

Wastewater handling (MBbl/d)

29

40

11

37

%

Average realized fees:

Average gathering—low pressure fee ($/Mcf)

$

0.31

0.32

0.01

3

%

Average gathering—high pressure fee ($/Mcf)

$

0.19

0.19

*

Average compression fee ($/Mcf)

$

0.19

0.19

*

Average fresh water delivery fee ($/Bbl)

$

3.68

3.71

0.03

1

%

Joint Venture Operating Data:

Processing – Joint Venture (MMcf)

97,276

97,276

*

Fractionation – Joint Venture (MBbl)

1,861

1,861

*

Processing – Joint Venture (MMcf/d)

267

267

*

Fractionation – Joint Venture (MBbl/d)

5

5

*

_________________________

*

Not meaningful or applicable.

 

ANTERO MIDSTREAM PARTNERS LP

Consolidated Statements of Cash Flows

Year Ended December 31, 2016 and 2017

 (In thousands)

Year Ended December 31,

2016

2017

Cash flows provided by operating activities:

Net income

$

236,703

307,315

Adjustment to reconcile net income to net cash provided by operating activities:

  Depreciation

99,861

119,562

  Accretion of contingent acquisition consideration

16,489

13,476

  Impairment of property and equipment

23,431

  Equity-based compensation

26,049

27,283

  Equity in earnings of unconsolidated affiliates

(485)

(20,194)

  Distributions from unconsolidated affiliates

7,702

20,195

  Amortization of deferred financing costs

1,814

2,888

  Gain on sale of assets

(3,859)

  Changes in assets and liabilities:

  Accounts receivable–Antero Resources

1,573

(41,043)

  Accounts receivable–third party

1,467

70

  Prepaid expenses

(529)

(141)

  Accounts payable

95

3,003

  Accounts payable–Antero Resources

1,055

3,266

  Accrued liabilities

(9,328)

16,685

  Net cash provided by operating activities

$

378,607

475,796

Cash flows used in investing activities:

Additions to gathering systems and facilities

(228,100)

(346,217)

Additions to water handling and treatment systems

(188,220)

(195,162)

Investments in unconsolidated affiliates

(75,516)

(235,004)

Proceeds from sale of assets

10,000

Change in other assets

3,673

(3,435)

Net cash used in investing activities

$

(478,163)

(779,818)

Cash flows provided by (used in) financing activities:

Deemed distribution to Antero Resources, net

Distributions to Antero Resources

Distributions to unitholders

(182,446)

(283,950)

Issuance of senior notes

650,000

Borrowings (repayments) on bank credit facilities, net

(410,000)

345,000

Issuance of common units, net of offering costs

65,395

248,956

Payments of deferred financing costs

(10,435)

(5,520)

Employee tax withholding for settlement of equity compensation awards

(5,636)

(5,945)

Other

(163)

(198)

Net cash provided by (used in) financing activities

$

106,715

298,343

Net increase (decrease) in cash and cash equivalents

7,159

(5,679)

Cash and cash equivalents, beginning of period

6,883

14,042

Cash and cash equivalents, end of period

$

14,042

8,363

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

13,494

46,666

Supplemental disclosure of noncash investing activities:

Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment

(8,471)

16,338

 

Antero Midstream GP LP

Consolidated Balance Sheets

December 31, 2016 and 2017

 (In thousands, except number of shares and units)

December 31,

2016

2017

Assets

Current assets:

Cash

$

9,609

5,987

Accounts receivable – related party

217

  Total current assets

9,826

5,987

Investment in Antero Midstream Partners LP

7,543

23,772

  Total assets

$

17,369

29,759

Liabilities and Partners’ Capital

Current liabilities:

Accounts payable and accrued liabilities

426

293

Income taxes payable

6,674

13,858

  Total current liabilities

7,100

14,151

Partners’ capital:

Common shareholders – public (186,181,975 shares  issued and outstanding at December 31, 2017)

(19,866)

Antero Resources Midstream Management LLC members’ equity

10,269

IDR LLC Series B units (32,875 vested units issued and outstanding at December 31, 2017)

35,474

  Total partners’ capital

10,269

15,608

      Total liabilities and partners’ capital

$

17,369

29,759

 

Antero Midstream GP LP

Consolidated Statements of Operations and Comprehensive Income

Three Months Ended December 31, 2016 and 2017

 (In thousands, except per share amounts)

Three Months Ended December 31,

2016

2017

Equity in earnings of Antero Midstream Partners LP

$

7,557

23,772

Total income

7,557

23,772

General and administrative expense

425

279

Equity-based compensation

8,662

Total expenses

425

8,941

  Income before income taxes

7,132

14,831

Provision for income taxes

(2,856)

(8,924)

  Net income and comprehensive income

$

4,276

5,907

Net income attributable to Antero Midstream GP LP subsequent to IPO

$

5,907

Net income attributable to Series B units

(784)

  Net income attributable to common shareholders

$

5,123

  Net income per common share – basic and diluted

$

0.03

  Weighted average number of common shares outstanding – basic and diluted

186,181

 

Antero Midstream GP LP

Consolidated Statements of Operations and Comprehensive Income

Years Ended December 31, 2016 and 2017

 (In thousands, except per share amounts)

Year Ended December 31,

2016

2017

Equity in earnings of Antero Midstream Partners LP

$

16,944

69,720

Total income

16,944

69,720

General and administrative expense

814

6,201

Equity-based compensation

34,933

Total expenses

814

41,134

  Income before income taxes

16,130

28,586

Provision for income taxes

(6,419)

(26,261)

  Net income and comprehensive income

$

9,711

2,325

Net income attributable to Antero Midstream GP LP subsequent to IPO

$

7,264

Net income attributable to Series B units

(784)

  Net income attributable to common shareholders

$

6,480

  Net income per common share – basic and diluted

$

0.03

  Weighted average number of common shares outstanding – basic and diluted

186,176

 

Antero Midstream GP LP

Consolidated Statements of Cash Flows

Year Ended December 31, 2016 and 2017

 (In thousands)

Year Ended December 31,

2016

2017

Cash flows provided by operating activities:

Net income

$

9,711

2,325

Adjustment to reconcile net income to net cash provided by operating activities:

  Equity in earnings of Antero Midstream Partners LP

(16,944)

(69,720)

  Distributions received from Antero Midstream Partners LP

10,370

53,491

  Equity-based compensation

34,933

  Deferred income taxes

(368)

Changes in current assets and liabilities:

  Accounts receivable – related party

(217)

  Accounts payable and accrued liabilities

426

(133)

  Income taxes payable

6,559

7,184

  Net cash provided by operating activities

9,537

28,080

Cash flows used in investing activities

Cash flows used in financing activities

Distributions to Antero Resources Investment LLC

(15,691)

Distributions to shareholders

(16,011)

  Net cash used in financing activities

(31,702)

Net increase (decrease) in cash

9,537

(3,622)

Cash, beginning of period

72

9,609

Cash, end of period

$

9,609

5,987

 

 

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SOURCE Antero Midstream Partners LP; Antero Midstream GP LP