Antero Midstream and AMGP Report Fourth Quarter and Full Year 2017 Financial and Operating Results

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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