DENVER, Oct. 28, 2015 /PRNewswire/ -- Antero
Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the
"Partnership") today released its third quarter 2015 financial and
operating results. The relevant financial statements are
included in Antero Midstream's Quarterly Report on Form 10-Q
for the quarter ended September 30,
2015, which has been filed with the Securities and Exchange
Commission.
Highlights for the Third Quarter of 2015:
- Adjusted EBITDA of $55.4
million, a 194% increase compared to the prior year
quarter
- Distributable cash flow of $50.1
million resulting in DCF coverage of 1.38x
- Increased quarterly cash distribution to $0.205 per unit ($0.82/unit annualized), an 8% increase compared
to the second quarter 2015 distribution and 21% increase over the
minimum quarterly distribution
- Low pressure gathering volumes averaged 1,038 MMcf/d, a 95%
increase compared to the prior year quarter and a 8% increase
sequentially
- High pressure gathering volumes averaged 1,216 MMcf/d, a
129% increase compared to the prior year quarter and a 2% increase
sequentially
- Compression volumes averaged 435 MMcf/d, a 275% increase
compared to the prior year quarter and a 4% decrease
sequentially
- Completed $1.05 billion
acquisition of water business from Antero Resources
- Strong liquidity position of $1.0
billion
Recent Developments
Distribution for the Third Quarter of 2015
The Board of Directors of Antero Resources Midstream Management
LLC, the general partner of the Partnership, declared a cash
distribution of $0.205 per unit
($0.82 per unit annualized) for the
third quarter of 2015. The distribution represents an 8%
increase quarter-over-quarter and the Partnership's third
consecutive quarterly distribution increase since its initial
public offering in November 2014.
The distribution will be payable on November 30, 2015 to unitholders of record as of
November 11, 2015.
Water Business Acquisition Closed
On September 24, 2015, the
Partnership announced the completion of the $1.05 billion water business acquisition from
Antero Resources Corporation ("Antero Resources"). In
connection with the transaction, the Partnership paid Antero
Resources $552 million in cash and
issued 23,886,421 common units. The net proceeds of
$242 million from the Partnership's
private placement of 12,898,000 common units were also paid to
Antero Resources and the 23,886,421 of common units initially
issued to Antero Resources were reduced by the 12,898,000 common
units issued in the private placement, reducing the common units
issued to Antero Resources to 10,998,421.
Third Quarter 2015 Financial Results
The following reflects results for Antero Midstream for the
three and nine months ended September 30,
2015, and predecessor results for the three and nine months
ended September 30, 2014. In
addition, Antero Midstream's recent acquisition of Antero
Resources' integrated water business was accounted for as a
transfer of entities under common control. As a result, the
Partnership recast its condensed combined consolidated
financial statements to retrospectively reflect the integrated
water business as if the assets and liabilities were owned for all
past periods presented. Beginning in the third quarter of
2015, and as a result of the acquisition, Antero Midstream will
report its results through two business segments, Gathering and
Compression and Water Handling. To facilitate
comparison and discussion for third quarter 2015 distributable cash
flow the results below are only for the Gathering and
Compression segment operations. For a reconciliation of net
income to Adjusted EBITDA and distributable cash flow, please read
"Non-GAAP Financial Measures." For operating results
associated with the Water Handling segment and its contribution to
the recast condensed combined consolidated financial statements
contained in Antero Midstream's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2015,
please read "Non-GAAP Financial Measures."
Low pressure gathering volumes for the third quarter of 2015
averaged 1,038 MMcf/d, a 95% increase from the third quarter of
2014 and an 8% increase from the second quarter of 2015. High
pressure gathering volumes for the third quarter of 2015 averaged
1,216 MMcf/d, a 129% increase from the third quarter of 2014 and a
2% increase from the second quarter of 2015. Compression
volumes for the third quarter of 2015 averaged 435 MMcf/d, a 275%
increase from the third quarter of 2014 and a 4% decrease from the
second quarter of 2015. Condensate gathering volumes averaged
2,856 Bbl/d during the quarter, a 143% increase from the third
quarter of 2014 and in line with the second quarter of 2015.
Volumetric growth was driven by production growth from Antero
Resources.
|
|
Three months
ended
September
30,
|
|
|
|
Nine months
ended
September
30,
|
|
|
Average Daily
Throughput:
|
|
2014
|
|
2015
|
|
%
Change
|
|
2014
|
|
2015
|
|
%
Change
|
Low pressure gathering
(MMcf/d)
|
|
531
|
|
1,038
|
|
95%
|
|
417
|
|
980
|
|
135%
|
High pressure
gathering (MMcf/d)
|
|
531
|
|
1,216
|
|
129%
|
|
309
|
|
1,183
|
|
283%
|
Compression
(MMcf/d)
|
|
116
|
|
435
|
|
275%
|
|
65
|
|
416
|
|
540%
|
Condensate gathering
(Bbl/d)
|
|
1,174
|
|
2,856
|
|
143%
|
|
1,374
|
|
2,751
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and Compression revenue for the third quarter of 2015
was $59.3 million as compared to
$26.3 million for the prior year
quarter, driven primarily by increased throughput volumes across
Antero Midstream's systems. Gathering and Compression direct
operating expenses were a $3.2
million credit, driven by an $8.4
million reduction in the estimated property tax liability
accrued for in prior periods and a slight decrease in other
operating expenses during the quarter. Gathering and
Compression general and administrative expenses totaled
$11.3 million, including $4.2 million of non-cash equity-based
compensation. Total cash and non-cash operating expenses were
$23.2 million, including $15.1 million of depreciation.
Adjusted EBITDA of $55.4 million
for the third quarter of 2015 was 194% higher than the prior year
quarter, due to increased throughput and associated revenue.
Gathering and Compression cash interest expense was
$1.0 million and maintenance capital
expenditures totaled $4.2 million,
resulting in distributable cash flow ("DCF") of $50.1 million.
Reconciliation of
Net Income to Adjusted EBITDA and DCF (Dollars in
thousands):
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net income
|
|
$
|
34,290
|
|
$
|
42,648
|
|
$
|
71,977
|
|
$
|
110,097
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
2,455
|
|
|
2,044
|
|
|
4,121
|
|
|
5,266
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-water acquisition
net income attributed to
parent
|
|
|
(29,211)
|
|
|
(7,841)
|
|
|
(66,859)
|
|
|
(40,193)
|
|
Pre-water acquisition
interest expense attributed to
parent
|
|
|
(522)
|
|
|
(770)
|
|
|
(988)
|
|
|
(2,326)
|
|
Pre-water acquisition
operating income attributed to parent
|
|
|
(29,733)
|
|
|
(8,611)
|
|
|
(67,847)
|
|
|
(42,519)
|
|
Operating income -
attributable to partnership
|
|
$
|
7,012
|
|
$
|
36,081
|
|
$
|
8,251
|
|
$
|
72,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense -
attributable to Partnership
|
|
|
10,227
|
|
|
15,076
|
|
|
24,991
|
|
|
44,748
|
Equity-based
compensation expense - attributable to Partnership
|
|
|
1,562
|
|
|
4,205
|
|
|
5,365
|
|
|
14,218
|
Adjusted
EBITDA
|
|
$
|
18,801
|
|
$
|
55,362
|
|
$
|
38,607
|
|
$
|
131,810
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest paid -
attributable to Partnership
|
|
|
|
|
|
(1,038)
|
|
|
|
|
|
(2,215)
|
Maintenance capital
expenditures
|
|
|
|
|
|
(4,214)
|
|
|
|
|
|
(10,001)
|
Distributable cash
flow
|
|
|
|
|
$
|
50,110
|
|
|
|
|
$
|
119,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
declared
|
|
|
|
|
$
|
36,333
|
|
|
|
|
$
|
92,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DCF coverage
ratio
|
|
|
|
|
|
1.38x
|
|
|
|
|
|
1.29x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Guidance
As previously disclosed, Antero Midstream expects to generate
Adjusted EBITDA of $180 million to $190
million and distributable cash flow of $160 million to $170 million during the year
ending December 31, 2015, while
delivering year over year distribution growth of 28% to 30%.
Financial guidance assumes contribution from the water
business subsequent to the acquisition.
Antero Midstream
Financial Guidance
|
|
Year Ending
December 31, 2015
|
|
|
|
Adjusted EBITDA
($MM)
|
|
$180 –
$190
|
Distributable Cash
Flow ($MM)
|
|
$160 –
$170
|
Year Over Year
Distribution Growth(1)
|
|
28% – 30%
|
DCF Coverage
Ratio
|
|
> 1.2x
|
|
|
|
Low Pressure Gathering
Capital ($MM)
|
|
$90 – $95
|
High Pressure
Gathering Capital ($MM)
|
|
$70 – $75
|
Compression Capital
($MM)
|
|
$165 –
$170
|
Condensate Gathering
Capital ($MM)
|
|
$5 – $5
|
Water Handling &
Treatment Capital ($MM)
|
|
$80 – $90
|
Maintenance Capital
($MM)
|
|
$15 – $15
|
Total Antero Midstream
Capital Budget ($MM)
|
|
$425 –
$450
|
|
|
1)
|
Year over year
distribution growth reflects the expected distribution in the
fourth quarter of 2015 vs. the minimum quarterly distribution
("MQD") of $0.17/unit (not full year 2015 distributions vs. the
annualized MQD)
|
Third Quarter 2015 Capital Spending
During the three months ended September
30, 2015, capital expenditures associated with the Gathering
and Compression segment totaled $83
million, including $55 million
invested in the Marcellus and $28
million invested in the Utica. Gathering and
Compression capital expenditures were primarily related to the
build-out of midstream infrastructure to support Antero Resources'
development program. Additionally, Antero Midstream invested
$29 million in the acquired water
delivery assets during the quarter(2). Antero
Midstream expects to fund the remaining 2015 capital expenditures
including those for its new Water Handling segment with borrowings
under its credit facility.
Balance Sheet and Liquidity
As of September 30, 2015, Antero
Midstream had $18 million of cash on
its balance sheet and $525 million
drawn on its $1.5 billion revolving
credit facility, resulting in $1.0
billion of available liquidity.
Conference Call
Antero Midstream will hold a call on Thursday, October 29, 2015 at 10:00 am MT to discuss the results. A brief
Q&A session for security analysts will immediately follow the
discussion of the results. To participate in the call, dial
in at 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and
reference "Antero Midstream". A telephone replay of the call
will be available until Friday, November 6,
2015 at 10:00 am MT at
877-870-5176 (U.S.) or 858-384-5517 (International) using the
passcode 10072157.
To access the live webcast and view the related earnings
conference call presentation, visit Antero Midstream's website at
www.anteromidstream.com. The webcast will be archived for
replay on the Partnership's website until Friday, November 6, 2015 at 10:00 am MT.
2)
|
Capital
expenditure referenced does not include water handling capital
invested by Antero Resources prior to the closing date of the drop
down transaction.
|
Presentation
An updated presentation will be posted to the Partnership's
website before the October 29, 2015
conference call. The presentation can be found at
www.anteromidstream.com on the homepage. Information on the
Partnership's website does not constitute a portion of this press
release.
Non-GAAP Financial Measures
As used in this news release, Adjusted EBITDA means net income
plus interest expense, depreciation and amortization expense,
income tax expense (if applicable), and non-cash equity-based
compensation expense, less pre-acquisition income and expenses
attributable to the parent. As used in this news release,
distributable cash flow means Adjusted EBITDA less cash interest
paid and maintenance capital expenditures, during the period,
excluding pre-acquisition amounts attributable to the parent.
Distributable cash flow should not be viewed as indicative of the
actual amount of cash that the Partnership has available for
distributions from operating surplus or that the Partnership plans
to distribute. Adjusted EBITDA and distributable cash flow
are non-GAAP supplemental financial measures that management and
external users of the Partnership's consolidated financial
statements, such as industry analysts, investors, lenders and
rating agencies, use to assess:
- the Partnership's operating performance as compared to other
publicly traded partnerships in the midstream energy industry
without regard to historical cost basis or, in the case of Adjusted
EBITDA, financing methods;
- the ability of the Partnership's assets to generate sufficient
cash flow to make distributions to the Partnership's
unitholders;
- the Partnership's ability to incur and service debt and fund
capital expenditures; and
- the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
The Partnership believes that Adjusted EBITDA and distributable
cash flow provide useful information to investors in assessing the
Partnership's results of operations. Adjusted EBITDA and
distributable cash flow should not be considered as alternatives to
net income, operating income, net cash provided by operating
activities or any other measure of financial performance or
liquidity presented in accordance with GAAP. Adjusted EBITDA
and distributable cash flow have important limitations as
analytical tools because they exclude some items that affect net
income and net cash provided by operating activities.
Additionally, because Adjusted EBITDA and distributable cash
flow may be defined differently by other partnerships in its
industry, the Partnership's definition of Adjusted EBITDA and
distributable cash flow may not be comparable to similarly titled
measures of other partnerships, thereby diminishing their
utility.
The partnership does not provide financial guidance for
projected net income or changes in working capital, and, therefore,
is unable to provide a reconciliation of its Adjusted EBITDA and
distributable cash flow projections to net income, operating
income, or net cash flow provided by operating activities, the most
comparable financial measures calculated in accordance with
GAAP.
The following table represents a reconciliation of our Adjusted
EBITDA and distributable cash flow to the most directly comparable
GAAP financial measures for the periods presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
Reconciliation of
Net Income to Adjusted EBITDA and Distributable Cash
Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
34,290
|
|
$
|
42,648
|
|
$
|
71,977
|
|
$
|
110,097
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
2,455
|
|
|
2,044
|
|
|
4,121
|
|
|
5,266
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-water acquisition
net income attributed to parent
|
|
|
(29,211)
|
|
|
(7,841)
|
|
|
(66,859)
|
|
|
(40,193)
|
|
Pre-water acquisition
interest expense attributed to parent
|
|
|
(522)
|
|
|
(770)
|
|
|
(988)
|
|
|
(2,326)
|
|
Pre-water acquisition
operating income attributed to parent
|
|
|
(29,733)
|
|
|
(8,611)
|
|
|
(67,847)
|
|
|
(42,519)
|
|
Operating income -
attributable to Partnership
|
|
$
|
7,012
|
|
$
|
36,081
|
|
$
|
8,251
|
|
$
|
72,844
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense -
attributable to Partnership
|
|
|
10,227
|
|
|
15,076
|
|
|
24,991
|
|
|
44,748
|
|
Equity-based
compensation expense - attributable to Partnership
|
|
|
1,562
|
|
|
4,205
|
|
|
5,365
|
|
|
14,218
|
|
Adjusted
EBITDA
|
|
$
|
18,801
|
|
$
|
55,362
|
|
$
|
38,607
|
|
$
|
131,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest paid -
attributable to Partnership
|
|
|
|
|
|
(1,038)
|
|
|
|
|
|
(2,215)
|
|
Maintenance capital
expenditures attributable to Partnership
|
|
|
|
|
|
(4,214)
|
|
|
|
|
|
(10,001)
|
|
Distributable cash
flow
|
|
|
|
|
$
|
50,110
|
|
|
|
|
$
|
119,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to Net Cash Provided by Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
18,801
|
|
$
|
55,362
|
|
$
|
38,607
|
|
$
|
131,810
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-water acquisition
net income attributed to parent
|
|
|
29,211
|
|
|
7,841
|
|
|
66,859
|
|
|
40,193
|
|
Pre-water acquisition
depreciation expense attributed to parent
|
|
|
4,390
|
|
|
6,485
|
|
|
10,748
|
|
|
18,767
|
|
Pre-water acquisition
equity based compensation expense attributed to parent
|
|
|
549
|
|
|
1,079
|
|
|
2,027
|
|
|
3,445
|
|
Pre-water acquisition
interest expense attributed to parent
|
|
|
522
|
|
|
770
|
|
|
988
|
|
|
2,326
|
|
Amortization of
deferred financing costs attributed to parent
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
774
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,455)
|
|
|
(2,044)
|
|
|
(4,121)
|
|
|
(5,266)
|
|
Changes in operating
assets and liabilities
|
|
|
(8,258)
|
|
|
(15,311)
|
|
|
(12,612)
|
|
|
7,510
|
|
Net cash provided by
operating activities
|
|
$
|
42,760
|
|
$
|
54,467
|
|
$
|
102,496
|
|
$
|
199,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarized financial information for the Gathering and
Compression and Water Handling segments is shown for the periods
indicated below:
|
Gathering
and
|
|
Water
|
|
Consolidated
|
|
Compression
|
|
Handling
|
|
Total
|
Three months ended
September 30, 2014
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
$
|
26,282
|
|
$
|
42,631
|
|
$
|
68,913
|
Revenue -
third-party
|
|
—
|
|
|
2,671
|
|
|
2,671
|
Total
revenues
|
|
26,282
|
|
|
45,302
|
|
|
71,584
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
3,525
|
|
|
9,054
|
|
|
12,579
|
General and
administrative (before equity-based compensation)
|
|
3,956
|
|
|
1,576
|
|
|
5,532
|
Equity-based
compensation
|
|
1,562
|
|
|
549
|
|
|
2,111
|
Depreciation
|
|
10,227
|
|
|
4,390
|
|
|
14,617
|
Total
|
|
19,270
|
|
|
15,569
|
|
|
34,839
|
Operating
income
|
$
|
7,012
|
|
$
|
29,733
|
|
$
|
36,745
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2015
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
$
|
59,220
|
|
$
|
21,819
|
|
$
|
81,039
|
Revenue -
third-party
|
|
38
|
|
|
627
|
|
|
665
|
Total
revenues
|
|
59,258
|
|
|
22,446
|
|
|
81,704
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
(3,164)
|
|
|
4,773
|
|
|
1,609
|
General and
administrative (before equity-based compensation)
|
|
7,060
|
|
|
1,498
|
|
|
8,558
|
Equity-based
compensation
|
|
4,205
|
|
|
1,079
|
|
|
5,284
|
Depreciation
|
|
15,076
|
|
|
6,485
|
|
|
21,561
|
Total
|
|
23,177
|
|
|
13,835
|
|
|
37,012
|
Operating
income
|
$
|
36,081
|
|
$
|
8,611
|
|
$
|
44,692
|
|
Gathering
and
|
|
Water
|
|
Consolidated
|
|
Compression
|
|
Handling
|
|
Total
|
Nine months ended
September 30, 2014
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
$
|
54,978
|
|
$
|
107,907
|
|
$
|
162,885
|
Revenue -
third-party
|
|
—
|
|
|
2,671
|
|
|
2,671
|
Total
revenues
|
|
54,978
|
|
|
110,578
|
|
|
165,556
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
6,661
|
|
|
25,871
|
|
|
32,532
|
General and
administrative (before equity-based compensation)
|
|
9,710
|
|
|
4,085
|
|
|
13,795
|
Equity-based
compensation
|
|
5,365
|
|
|
2,027
|
|
|
7,392
|
Depreciation
|
|
24,991
|
|
|
10,748
|
|
|
35,739
|
Total
|
|
46,727
|
|
|
42,731
|
|
|
89,458
|
Operating
income
|
$
|
8,251
|
|
$
|
67,847
|
|
$
|
76,098
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2015
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
$
|
168,056
|
|
$
|
86,759
|
|
$
|
254,815
|
Revenue -
third-party
|
|
38
|
|
|
778
|
|
|
816
|
Total
revenues
|
|
168,094
|
|
|
87,537
|
|
|
255,631
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
19,817
|
|
|
19,013
|
|
|
38,830
|
General and
administrative (before equity-based compensation)
|
|
16,467
|
|
|
3,793
|
|
|
20,260
|
Equity-based
compensation
|
|
14,218
|
|
|
3,445
|
|
|
17,663
|
Depreciation
|
|
44,748
|
|
|
18,767
|
|
|
63,515
|
Total
|
|
95,250
|
|
|
45,018
|
|
|
140,268
|
Operating
income
|
$
|
72,844
|
|
$
|
42,519
|
|
$
|
115,363
|
Antero Midstream Partners LP is a limited partnership that
owns, operates and develops midstream gathering and compression
assets located in West Virginia,
Ohio and Pennsylvania, as well as integrated water
assets that primarily service Antero Resources' production located
in the Appalachian Basin in West
Virginia and Ohio.
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 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.
Although the Partnership believes that the plans, intentions
and expectations reflected in or suggested by the forward-looking
statements are reasonable, there is no assurance that these plans,
intentions or expectations will be achieved. Therefore,
actual outcomes and results could materially differ from what is
expressed, implied or forecasted in such statements.
The Partnership cautions 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 our
control, incident to the gathering and compression and water
handling business. 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, 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, 2014 and "Item 1A. Risk Factors" in
Antero Midstream's Quarterly Report on Form 10-Q for the quarterly
period ended September 30,
2015.
For more information, contact Michael
Kennedy – VP Finance, at (303) 357-6782 or
mkennedy@anteroresources.com.
ANTERO MIDSTREAM
PARTNERS LP
|
Condensed Combined
Consolidated Balance Sheets
|
December 31, 2014, and September
30, 2015
|
(Unaudited)
|
(In thousands,
except unit counts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
September
30,
|
|
|
2014
|
|
2015
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
230,192
|
|
$
|
17,510
|
Accounts
receivable–affiliate
|
|
|
31,563
|
|
|
42,188
|
Accounts
receivable–third party
|
|
|
5,574
|
|
|
664
|
Prepaid
expenses
|
|
|
518
|
|
|
62
|
Total current
assets
|
|
|
267,847
|
|
|
60,424
|
Property and
equipment:
|
|
|
|
|
|
|
Gathering and
compressions systems
|
|
|
1,180,707
|
|
|
1,431,850
|
Water handling
systems
|
|
|
421,012
|
|
|
517,518
|
Less accumulated
depreciation
|
|
|
(70,124)
|
|
|
(134,469)
|
Property and
equipment, net
|
|
|
1,531,595
|
|
|
1,814,899
|
Other assets,
net
|
|
|
17,168
|
|
|
7,468
|
Total
assets
|
|
$
|
1,816,610
|
|
$
|
1,882,791
|
|
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
13,021
|
|
$
|
22,668
|
Accounts
payable–affiliate
|
|
|
1,380
|
|
|
3,560
|
Accrued capital
expenditures
|
|
|
49,974
|
|
|
62,679
|
Accrued ad valorem
tax
|
|
|
5,862
|
|
|
5,924
|
Accrued
liabilities
|
|
|
9,254
|
|
|
7,919
|
Other current
liabilities
|
|
|
357
|
|
|
131
|
Total current
liabilities
|
|
|
79,848
|
|
|
102,881
|
Long-term
liabilities
|
|
|
|
|
|
|
Long-term
debt
|
|
|
115,000
|
|
|
525,000
|
Contingent acquisition
consideration
|
|
|
—
|
|
|
174,716
|
Other
|
|
|
859
|
|
|
514
|
Total
liabilities
|
|
|
195,707
|
|
|
803,111
|
Contingencies
|
|
|
|
|
|
|
Partners'
capital:
|
|
|
|
|
|
|
Common units - public
(58,922,054 units issued and outstanding)
|
|
|
1,090,037
|
|
|
1,334,265
|
Common units - Antero
(40,929,378 units issued and outstanding)
|
|
|
71,665
|
|
|
45,721
|
Subordinated units
(75,940,957 units issued and outstanding)
|
|
|
180,757
|
|
|
(300,601)
|
General
partner
|
|
|
—
|
|
|
295
|
Total partners'
capital
|
|
|
1,342,459
|
|
|
1,079,680
|
Parent net
investment
|
|
|
278,444
|
|
|
—
|
Total
capital
|
|
|
1,620,903
|
|
|
1,079,680
|
Total liabilities and
partners' capital
|
|
$
|
1,816,610
|
|
$
|
1,882,791
|
ANTERO MIDSTREAM
PARTNERS LP
|
Three Months Ended
September 30, 2014, and 2015
|
Condensed Combined
Consolidated Statements of Operations and Comprehensive
Income
|
(Unaudited)
|
(In thousands,
except unit counts and per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2015
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Gathering and
compression–affiliate
|
|
$
|
26,282
|
|
$
|
59,220
|
Water
handling–affiliate
|
|
|
42,631
|
|
|
21,819
|
Gathering and
compression–third party
|
|
|
—
|
|
|
38
|
Water handling–third
party
|
|
|
2,671
|
|
|
627
|
Total
revenue
|
|
|
71,584
|
|
|
81,704
|
Operating
expenses:
|
|
|
|
|
|
|
Direct
operating
|
|
|
12,579
|
|
|
1,609
|
General and
administrative (including $2,111 and $5,284 of equity-based
compensation in 2014 and 2015, respectively)
|
|
|
7,643
|
|
|
13,842
|
Depreciation
|
|
|
14,617
|
|
|
21,561
|
Total operating
expenses
|
|
|
34,839
|
|
|
37,012
|
Operating
income
|
|
|
36,745
|
|
|
44,692
|
Interest
expense
|
|
|
2,455
|
|
|
2,044
|
Net income and
comprehensive income
|
|
$
|
34,290
|
|
$
|
42,648
|
|
|
|
|
|
|
|
Less pre-water
acquisition net income attributed to parent
|
|
|
|
|
|
(7,841)
|
Less general partner's
interest in net income
|
|
|
|
|
|
(295)
|
Limited partners'
interest in net income
|
|
|
|
|
$
|
34,512
|
Net income per limited
partner unit:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
$
|
0.23
|
Subordinated
units
|
|
|
|
|
$
|
0.22
|
Diluted:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
$
|
0.23
|
Subordinated
units
|
|
|
|
|
$
|
0.22
|
Weighted average
number of limited partner units outstanding:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
|
78,018,037
|
Subordinated
units
|
|
|
|
|
|
75,940,957
|
Diluted:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
|
78,034,156
|
Subordinated
units
|
|
|
|
|
|
75,940,957
|
ANTERO MIDSTREAM
PARTNERS LP
|
Condensed Combined
Consolidated Statements of Operations and Comprehensive
Income
|
Nine Months Ended
September 30, 2014, and 2015
|
(Unaudited)
|
(In thousands, except
unit counts and per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2015
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Gathering and
compression–affiliate
|
|
$
|
54,978
|
|
$
|
168,056
|
Water
handling–affiliate
|
|
|
107,907
|
|
|
86,759
|
Gathering and
compression–third party
|
|
|
—
|
|
|
38
|
Water handling–third
party
|
|
|
2,671
|
|
|
778
|
Total
revenue
|
|
|
165,556
|
|
|
255,631
|
Operating
expenses:
|
|
|
|
|
|
|
Direct
operating
|
|
|
32,532
|
|
|
38,830
|
General and
administrative (including $7,392 and $17,663 of equity-based
compensation in 2014 and 2015, respectively)
|
|
|
21,187
|
|
|
37,923
|
Depreciation
|
|
|
35,739
|
|
|
63,515
|
Total operating
expenses
|
|
|
89,458
|
|
|
140,268
|
Operating
income
|
|
|
76,098
|
|
|
115,363
|
Interest
expense
|
|
|
4,121
|
|
|
5,266
|
Net income and
comprehensive income
|
|
$
|
71,977
|
|
$
|
110,097
|
|
|
|
|
|
|
|
Less pre-water
acquisition net income attributed to parent
|
|
|
|
|
|
(40,193)
|
Less general partner's
interest in net income
|
|
|
|
|
|
(295)
|
Limited partners'
interest in net income
|
|
|
|
|
$
|
69,609
|
Net income per limited
partner unit:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
$
|
0.46
|
Subordinated
units
|
|
|
|
|
$
|
0.45
|
Diluted:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
$
|
0.46
|
Subordinated
units
|
|
|
|
|
$
|
0.45
|
Weighted average
number of limited partner units outstanding:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
|
76,640,925
|
Subordinated
units
|
|
|
|
|
|
75,940,957
|
Diluted:
|
|
|
|
|
|
|
Common
units
|
|
|
|
|
|
76,657,439
|
Subordinated
units
|
|
|
|
|
|
75,940,957
|
ANTERO MIDSTREAM
PARTNERS LP
|
Condensed Combined
Consolidated Statements of Cash Flows
|
Nine Months Ended
September 30, 2014, and 2015
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2015
|
Cash flows provided
by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
71,977
|
|
$
|
110,097
|
Adjustment to reconcile
net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
35,739
|
|
|
63,515
|
Equity-based
compensation
|
|
|
7,392
|
|
|
17,663
|
Amortization of
deferred financing costs
|
|
|
—
|
|
|
774
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable–affiliate
|
|
|
(20,715)
|
|
|
1,963
|
Accounts
receivable–third party
|
|
|
(860)
|
|
|
4,910
|
Prepaid
expenses
|
|
|
(16)
|
|
|
457
|
Accounts
payable
|
|
|
1,750
|
|
|
673
|
Accounts
payable–affiliate
|
|
|
—
|
|
|
781
|
Accrued ad valorem
tax
|
|
|
3,376
|
|
|
62
|
Accrued
liabilities
|
|
|
3,853
|
|
|
(1,336)
|
Net cash provided by
operating activities
|
|
|
102,496
|
|
|
199,559
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Additions to gathering
and compression systems
|
|
|
(428,036)
|
|
|
(282,826)
|
Additions to water
handling systems
|
|
|
(159,097)
|
|
|
(53,086)
|
Acquired water
handling assets
|
|
|
—
|
|
|
(28,560)
|
Change in working
capital of affiliate related to property and equipment
|
|
|
—
|
|
|
40,277
|
Change in other
assets
|
|
|
(6,761)
|
|
|
10,883
|
Net cash used in
investing activities
|
|
|
(593,894)
|
|
|
(313,312)
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
Deemed distribution
from parent, net
|
|
|
(5,491)
|
|
|
(43,723)
|
Water
Acquisition
|
|
|
—
|
|
|
(633,457)
|
Distributions to
unitholders
|
|
|
—
|
|
|
(70,519)
|
Proceeds from issuance
of common units to public, net
|
|
|
—
|
|
|
240,972
|
Borrowings on credit
facilities, net
|
|
|
500,000
|
|
|
410,000
|
Payments of deferred
financing costs
|
|
|
—
|
|
|
(1,956)
|
Other
|
|
|
(330)
|
|
|
(246)
|
Payments of IPO
related costs
|
|
|
(2,781)
|
|
|
—
|
Net cash provided by
(used in) financing activities
|
|
|
491,398
|
|
|
(98,929)
|
Net decrease in cash
and cash equivalents
|
|
|
—
|
|
|
(212,682)
|
Cash and cash
equivalents, beginning of period
|
|
|
—
|
|
|
230,192
|
Cash and cash
equivalents, end of period
|
|
$
|
—
|
|
$
|
17,510
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Cash paid during the
period for interest and commitment fees
|
|
$
|
3,586
|
|
$
|
4,725
|
Supplemental
disclosure of noncash investing activities:
|
|
|
|
|
|
|
Increase in accrued
capital expenditures and accounts payable for property and
equipment
|
|
$
|
76,384
|
|
$
|
21,962
|
The following table sets forth selected operating data for the
three months ended September 30, 2014
compared to the three months ended September
30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Amount of
|
|
Percentage
|
|
|
2014
|
|
2015
|
|
Increase
(Decrease)
|
|
Change
|
|
|
($ in thousands, except average realized fees)
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
|
$
|
68,913
|
|
$
|
81,039
|
|
$
|
12,126
|
|
18
|
%
|
Revenue -
third-party
|
|
|
2,671
|
|
|
665
|
|
|
(2,006)
|
|
(75)
|
%
|
Total
revenues
|
|
|
71,584
|
|
|
81,704
|
|
|
10,120
|
|
14
|
%
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
12,579
|
|
|
1,609
|
|
|
(10,970)
|
|
(87)
|
%
|
General and
administrative (before equity-based compensation)
|
|
|
5,532
|
|
|
8,558
|
|
|
3,026
|
|
55
|
%
|
Equity-based
compensation expense
|
|
|
2,111
|
|
|
5,284
|
|
|
3,173
|
|
150
|
%
|
Depreciation
|
|
|
14,617
|
|
|
21,561
|
|
|
6,944
|
|
48
|
%
|
Total operating
expenses
|
|
|
34,839
|
|
|
37,012
|
|
|
2,173
|
|
6
|
%
|
Operating
income
|
|
|
36,745
|
|
|
44,692
|
|
|
7,947
|
|
22
|
%
|
Interest
expense
|
|
|
2,455
|
|
|
2,044
|
|
|
(411)
|
|
(17)
|
%
|
Net income
|
|
$
|
34,290
|
|
$
|
42,648
|
|
$
|
8,358
|
|
24
|
%
|
Adjusted
EBITDA
|
|
$
|
53,473
|
|
$
|
71,537
|
|
$
|
18,064
|
|
34
|
%
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
48,893
|
|
|
95,471
|
|
|
46,578
|
|
95
|
%
|
Gathering—high pressure
(MMcf)
|
|
|
48,877
|
|
|
111,896
|
|
|
63,019
|
|
129
|
%
|
Compression
(MMcf)
|
|
|
10,715
|
|
|
40,063
|
|
|
29,348
|
|
274
|
%
|
Condensate gathering
(MBbl)
|
|
|
108
|
|
|
263
|
|
|
155
|
|
144
|
%
|
Fresh water
distribution (MBbl)
|
|
|
12,865
|
|
|
6,168
|
|
|
(6,697)
|
|
(52)
|
%
|
Wells serviced by water
distribution
|
|
|
53
|
|
|
28
|
|
|
(25)
|
|
(47)
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
531
|
|
|
1,038
|
|
|
507
|
|
95
|
%
|
Gathering—high pressure
(MMcf/d)
|
|
|
531
|
|
|
1,216
|
|
|
685
|
|
129
|
%
|
Compression
(MMcf/d)
|
|
|
116
|
|
|
435
|
|
|
319
|
|
275
|
%
|
Condensate gathering
(MBbl/d)
|
|
|
1
|
|
|
3
|
|
|
2
|
|
200
|
%
|
Fresh water
distribution (MBbl/d)
|
|
|
140
|
|
|
67
|
|
|
(73)
|
|
(52)
|
%
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.31
|
|
$
|
0.31
|
|
$
|
0.00
|
|
2
|
%
|
Average gathering—high
pressure fee - affiliate ($/Mcf)
|
|
$
|
0.18
|
|
$
|
0.19
|
|
$
|
0.01
|
|
2
|
%
|
Average compression fee
($/Mcf)
|
|
$
|
0.18
|
|
$
|
0.19
|
|
$
|
0.01
|
|
2
|
%
|
Average
gathering—condensate fee ($/Bbl)
|
|
$
|
4.08
|
|
$
|
4.16
|
|
$
|
0.08
|
|
2
|
%
|
Average fresh water
distribution fee - affiliate ($/Bbl)
|
|
$
|
3.56
|
|
$
|
3.62
|
|
$
|
0.06
|
|
2
|
%
|
Average fresh water
distribution fee - third party ($/Bbl)
|
|
$
|
3.00
|
|
$
|
4.75
|
|
$
|
1.75
|
|
58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth selected operating data for the
nine months ended September 30, 2014
compared to the nine months ended September
30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
Nine months ended
September 30,
|
|
Increase
|
|
Percentage
|
|
|
2014
|
|
2015
|
|
(Decrease)
|
|
Change
|
|
|
($ in thousands, except average realized fees)
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue -
affiliate
|
|
$
|
162,885
|
|
$
|
254,815
|
|
$
|
91,930
|
|
56
|
%
|
Revenue -
third-party
|
|
|
2,671
|
|
|
816
|
|
|
(1,855)
|
|
(69)
|
%
|
Total
revenue
|
|
|
165,556
|
|
|
255,631
|
|
|
90,075
|
|
54
|
%
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
32,532
|
|
|
38,830
|
|
|
6,298
|
|
19
|
%
|
General and
administrative (before equity-based compensation)
|
|
|
13,795
|
|
|
20,260
|
|
|
6,465
|
|
47
|
%
|
Equity-based
compensation expense
|
|
|
7,392
|
|
|
17,663
|
|
|
10,271
|
|
139
|
%
|
Depreciation
|
|
|
35,739
|
|
|
63,515
|
|
|
27,776
|
|
78
|
%
|
Total operating
expenses
|
|
|
89,458
|
|
|
140,268
|
|
|
50,810
|
|
57
|
%
|
Operating
income
|
|
|
76,098
|
|
|
115,363
|
|
|
39,265
|
|
52
|
%
|
Interest
expense
|
|
|
4,121
|
|
|
5,266
|
|
|
1,145
|
|
28
|
%
|
Net income
|
|
$
|
71,977
|
|
$
|
110,097
|
|
$
|
38,120
|
|
53
|
%
|
Adjusted
EBITDA
|
|
$
|
119,229
|
|
$
|
196,541
|
|
$
|
77,312
|
|
65
|
%
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
113,828
|
|
|
267,442
|
|
|
153,614
|
|
135
|
%
|
Gathering—high pressure
(MMcf)
|
|
|
84,401
|
|
|
322,930
|
|
|
238,529
|
|
284
|
%
|
Compression
(MMcf)
|
|
|
17,710
|
|
|
113,583
|
|
|
95,873
|
|
541
|
%
|
Condensate gathering
(MBbl)
|
|
|
375
|
|
|
751
|
|
|
376
|
|
100
|
%
|
Fresh water
distribution (MBbl)
|
|
|
31,201
|
|
|
24,034
|
|
|
(7,167)
|
|
(23)
|
%
|
Wells serviced by water
distribution
|
|
|
137
|
|
|
89
|
|
|
(48)
|
|
(35)
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
417
|
|
|
980
|
|
|
563
|
|
135
|
%
|
Gathering—high pressure
(MMcf/d)
|
|
|
309
|
|
|
1,183
|
|
|
874
|
|
283
|
%
|
Compression
(MMcf/d)
|
|
|
65
|
|
|
416
|
|
|
351
|
|
540
|
%
|
Condensate gathering
(MBbl/d)
|
|
|
1
|
|
|
3
|
|
|
2
|
|
200
|
%
|
Fresh water
distribution (MBbl/d)
|
|
|
114
|
|
|
88
|
|
|
(26)
|
|
(23)
|
%
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.31
|
|
$
|
0.31
|
|
$
|
0.00
|
|
2
|
%
|
Average gathering—high
pressure fee ($/Mcf)
|
|
$
|
0.18
|
|
$
|
0.19
|
|
$
|
0.01
|
|
2
|
%
|
Average compression fee
($/Mcf)
|
|
$
|
0.18
|
|
$
|
0.19
|
|
$
|
0.01
|
|
2
|
%
|
Average
gathering—condensate fee ($/Bbl)
|
|
$
|
4.08
|
|
$
|
4.16
|
|
$
|
0.08
|
|
2
|
%
|
Average fresh water
distribution fee - affiliate ($/Bbl)
|
|
$
|
3.56
|
|
$
|
3.63
|
|
$
|
0.07
|
|
2
|
%
|
Average fresh water
distribution fee - third party ($/Bbl)
|
|
$
|
3.00
|
|
$
|
4.75
|
|
$
|
1.75
|
|
58
|
%
|
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SOURCE Antero Midstream Partners LP