PartnersCapitalAbstract
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
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Securities registered pursuant to section 12(b) of the Act: | ||||
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
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Emerging Growth Company | |
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The registrant had
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | |||
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. When considering these forward-looking statements, investors should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:
● | Antero Resources Corporation’s (“Antero Resources”) expected production and development plan; |
● | impacts to producer customers of insufficient storage capacity; |
● | our ability to execute our business strategy; |
● | our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; |
● | our ability to realize the anticipated benefits of our investments in unconsolidated affiliates; |
● | natural gas, natural gas liquids (“NGLs”), and oil prices; |
● | impacts of geopolitical events and world health events, including the coronavirus (“COVID-19”) pandemic; |
● | our ability to complete the construction of or purchase new gathering and compression, processing, water handling or other assets on schedule, at the budgeted cost or at all, and the ability of such assets to operate as designed or at expected levels; |
● | our ability to execute our share repurchase program; |
● | competition; |
● | government regulations and changes in laws; |
● | actions taken by third-party producers, operators, processors and transporters; |
● | pending legal or environmental matters; |
● | costs of conducting our operations; |
● | our ability to achieve our greenhouse gas reduction targets and the costs associated therewith; |
● | general economic conditions; |
● | credit markets; |
● | operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; |
● | uncertainty regarding our future operating results; and |
● | our other plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q. |
1
We caution investors that these forward-looking statements are subject to all of the risks and uncertainties incidental to our business, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, environmental risks, Antero Resources’ drilling and completion and other operating risks, regulatory changes or changes in law, the uncertainty inherent in projecting Antero Resources’ future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of world health events (including the COVID-19 pandemic), cybersecurity risks, the state of markets for, and availability of, verified quality carbon offsets and the other risks described or referenced under the heading “1A. Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), which is on file with the Securities and Exchange Commission (“SEC”).
Should one or more of the risks or uncertainties described or referenced in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
2
PART I—FINANCIAL INFORMATION
ANTERO MIDSTREAM CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) | |||||||
December 31, | September 30, | ||||||
| 2021 |
| 2022 |
| |||
Assets | |||||||
Current assets: | |||||||
Accounts receivable–Antero Resources | $ | | | ||||
Accounts receivable–third party | | | |||||
Income tax receivable | | | |||||
Other current assets | | | |||||
Total current assets | | | |||||
Property and equipment, net | | | |||||
Investments in unconsolidated affiliates | | | |||||
Customer relationships | | | |||||
Other assets, net | | | |||||
Total assets | $ | | | ||||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable–Antero Resources | $ | | | ||||
Accounts payable–third party | | | |||||
Accrued liabilities | | | |||||
Other current liabilities | | | |||||
Total current liabilities | | | |||||
Long-term liabilities: | |||||||
Long-term debt | | | |||||
Deferred income tax liability | | | |||||
Other | | | |||||
Total liabilities | | | |||||
Stockholders' Equity: | |||||||
Preferred stock, $ | |||||||
Series A non-voting perpetual preferred stock; | |||||||
Common stock, $ | | | |||||
Additional paid-in capital | | | |||||
Retained earnings (accumulated deficit) | ( | | |||||
Total stockholders' equity | | | |||||
Total liabilities and stockholders' equity | $ | | |
See accompanying notes to unaudited condensed consolidated financial statements.
3
ANTERO MIDSTREAM CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, | |||||||
| 2021 |
| 2022 | ||||
Revenue: |
|
| |||||
Gathering and compression–Antero Resources | $ | | | ||||
Water handling–Antero Resources | | | |||||
Water handling–third party | | | |||||
Amortization of customer relationships | ( | ( | |||||
Total revenue | | | |||||
Operating expenses: | |||||||
Direct operating | | | |||||
General and administrative (including $ | | | |||||
Facility idling | | | |||||
Depreciation | | | |||||
Impairment of property and equipment | | — | |||||
Accretion of asset retirement obligations | | | |||||
Gain on asset sale | — | ( | |||||
Total operating expenses | | | |||||
Operating income | | | |||||
Other income (expense): | |||||||
Interest expense, net | ( | ( | |||||
Equity in earnings of unconsolidated affiliates | | | |||||
Total other expense | ( | ( | |||||
Income before income taxes | | | |||||
Income tax expense | ( | ( | |||||
Net income and comprehensive income | $ | | | ||||
Net income per share–basic | $ | | | ||||
Net income per share–diluted | $ | | | ||||
Weighted average common shares outstanding: | |||||||
Basic | | | |||||
Diluted | | |
See accompanying notes to unaudited condensed consolidated financial statements.
4
ANTERO MIDSTREAM CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(In thousands, except per share amounts)
Nine Months Ended September 30, | |||||||
| 2021 |
| 2022 |
| |||
Revenue: |
|
| |||||
Gathering and compression–Antero Resources | $ | | | ||||
Water handling–Antero Resources | | | |||||
Water handling–third party | | | |||||
Amortization of customer relationships | ( | ( | |||||
Total revenue | | | |||||
Operating expenses: | |||||||
Direct operating | | | |||||
General and administrative (including $ | | | |||||
Facility idling | | | |||||
Depreciation | | | |||||
Impairment of property and equipment | | | |||||
Accretion of asset retirement obligations | | | |||||
Loss on settlement of asset retirement obligations | — | | |||||
Loss (gain) on asset sale | | ( | |||||
Total operating expenses | | | |||||
Operating income | | | |||||
Other income (expense): | |||||||
Interest expense, net | ( | ( | |||||
Equity in earnings of unconsolidated affiliates | | | |||||
Loss on early extinguishment of debt | ( | — | |||||
Total other expense | ( | ( | |||||
Income before income taxes | | | |||||
Income tax expense | ( | ( | |||||
Net income and comprehensive income | $ | | | ||||
Net income per share–basic | $ | | | ||||
Net income per share–diluted | $ | | | ||||
Weighted average common shares outstanding: | |||||||
Basic | | | |||||
Diluted | | |
See accompanying notes to unaudited condensed consolidated financial statements.
5
ANTERO MIDSTREAM CORPORATION
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands)
Retained | |||||||||||||||||||
Additional | Earnings | ||||||||||||||||||
Preferred | Common Stock | Paid-In | (Accumulated | Total | |||||||||||||||
Stock | Shares | Amount | Capital | Deficit) | Equity | ||||||||||||||
Balance at December 31, 2020 |
| $ | — | |
| $ | |
| |
| ( |
| | ||||||
Dividends to stockholders | — | — | — | ( | — | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at March 31, 2021 | — | | | | ( | | |||||||||||||
Dividends to stockholders | — | — | — | ( | — | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at June 30, 2021 | — | | | | ( | | |||||||||||||
Dividends to stockholders | — | — | — | ( | — | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at September 30, 2021 | $ | — | | $ | | | ( | | |||||||||||
Balance at December 31, 2021 |
| $ | — | | $ | | | ( |
| | |||||||||
Dividends to stockholders | — | — | — | ( | — | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at March 31, 2022 | — | | | | ( | | |||||||||||||
Dividends to stockholders | — | — | — | ( | — | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at June 30, 2022 | — | | | | | | |||||||||||||
Dividends to stockholders | — | — | — | ( | ( | ( | |||||||||||||
Equity-based compensation | — | — | — | | — | | |||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes | — | | — | ( | — | ( | |||||||||||||
Net income and comprehensive income | — | — | — | — | | | |||||||||||||
Balance at September 30, 2022 | $ | — | | $ | | | | |
See accompanying notes to unaudited condensed consolidated financial statements.
6
ANTERO MIDSTREAM CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30, | |||||||
| 2021 |
| 2022 |
| |||
Cash flows provided by (used in) operating activities: |
|
|
| ||||
Net income | $ | | | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | | | |||||
Accretion of asset retirement obligations | | | |||||
Impairment | | | |||||
Deferred income tax expense | | | |||||
Equity-based compensation | | | |||||
Equity in earnings of unconsolidated affiliates | ( | ( | |||||
Distributions from unconsolidated affiliates | | | |||||
Amortization of customer relationships | | | |||||
Amortization of deferred financing costs | | | |||||
Settlement of asset retirement obligations | ( | ( | |||||
Loss on settlement of asset retirement obligations | — | | |||||
Loss (gain) on asset sale | | ( | |||||
Loss on early extinguishment of debt | | — | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable–Antero Resources | ( | | |||||
Accounts receivable–third party | | ( | |||||
Income tax receivable | | — | |||||
Other current assets | | | |||||
Accounts payable–Antero Resources | ( | ( | |||||
Accounts payable–third party | | | |||||
Accrued liabilities | ( | ( | |||||
Net cash provided by operating activities | | | |||||
Cash flows provided by (used in) investing activities: | |||||||
Additions to gathering systems and facilities | ( | ( | |||||
Additions to water handling systems | ( | ( | |||||
Investments in unconsolidated affiliates | ( | — | |||||
Return of investment in unconsolidated affiliate | — | | |||||
Cash received in asset sale | | | |||||
Change in other assets | — | ( | |||||
Change in other liabilities | — | ( | |||||
Net cash used in investing activities | ( | ( | |||||
Cash flows provided by (used in) financing activities: | |||||||
Dividends to stockholders | ( | ( | |||||
Dividends to preferred stockholders | ( | ( | |||||
Issuance of senior notes | | — | |||||
Redemption of senior notes | ( | — | |||||
Payments of deferred financing costs | ( | ( | |||||
Borrowings (repayments) on bank credit facilities, net | ( | | |||||
Employee tax withholding for settlement of equity compensation awards | ( | ( | |||||
Other | ( | — | |||||
Net cash used in financing activities | ( | ( | |||||
Net decrease in cash and cash equivalents | ( | — | |||||
Cash and cash equivalents, beginning of period | | — | |||||
Cash and cash equivalents, end of period | $ | — | — | ||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for interest | $ | | | ||||
Cash received during the period for income taxes | $ | | — | ||||
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment | $ | | ( |
See accompanying notes to unaudited condensed consolidated financial statements.
7
ANTERO MIDSTREAM CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
(1) Organization
Antero Midstream Corporation (together with its consolidated subsidiaries, “Antero Midstream,” “AM” or the “Company”) is a growth-oriented midstream company formed to own, operate and develop midstream energy infrastructure primarily to service Antero Resources Corporation (“Antero Resources”) and its production and completion activity in the Appalachian Basin. The Company’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets. Antero Midstream provides midstream services to Antero Resources under long-term contracts. The Company’s corporate headquarters is located in Denver, Colorado.
(2) Summary of Significant Accounting Policies
(a) | Basis of Presentation |
These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information and should be read in the context of the Company’s December 31, 2021 consolidated financial statements and notes thereto for a more complete understanding of the Company’s operations, financial position, and accounting policies. The Company’s December 31, 2021 consolidated financial statements were included in the Company’s 2021 Annual Report on Form 10-K, which was filed with the SEC.
These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, and, accordingly, do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2021 and September 30, 2022, the results of the Company’s operations for the three and nine months ended September 30, 2021 and 2022, and the Company’s cash flows for the nine months ended September 30, 2021 and 2022. The Company has no items of other comprehensive income; therefore, net income is equal to comprehensive income.
Certain costs of doing business incurred and charged to the Company by Antero Resources have been reflected in the accompanying unaudited condensed consolidated financial statements. These costs include general and administrative expenses provided to the Company by Antero Resources in exchange for:
● | business services, such as payroll, accounts payable and facilities management; |
● | corporate services, such as finance and accounting, legal, human resources, investor relations and public and regulatory policy; and |
● | employee compensation, including equity-based compensation. |
Transactions between the Company and Antero Resources have been identified in the unaudited condensed consolidated financial statements (see Note 4—Transactions with Affiliates).
(b) | Principles of Consolidation |
The accompanying unaudited condensed consolidated financial statements include the accounts of Antero Midstream Corporation and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated in the Company’s unaudited condensed consolidated financial statements.
(c) | Dividends |
Preferred and common dividends declared are recorded as a reduction of retained earnings to the extent that retained earnings were available at the close of the quarter prior to the dividend declaration date, with any excess recorded as a reduction of additional paid-in capital.
8
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
(d) | Recently Adopted Accounting Standard |
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Simplifying the Accounting for Income Taxes. This ASU removes certain exceptions to the general principles in Accounting Standard Codifications Topic 740, Income Taxes (“ASC 740”), and also simplifies portions of ASC 740 by clarifying and amending existing guidance. It is effective for interim and annual reporting periods after December 15, 2020. The Company adopted this ASU on January 1, 2021, and it did not have a material impact on the Company's consolidated financial statements.
(3) Intangibles
All customer relationships are subject to amortization and are amortized over a weighted average period of
Customer relationships as of December 31, 2021 | $ | | ||
Amortization of customer relationships | ( | |||
Customer relationships as of September 30, 2022 | $ | |
Future amortization expense is as follows (in thousands):
Remainder of year ending December 31, 2022 | $ | | ||
Year ending December 31, 2023 | | |||
Year ending December 31, 2024 | | |||
Year ending December 31, 2025 | | |||
Year ending December 31, 2026 | | |||
Thereafter | | |||
Total | $ | |
(4) Transactions with Affiliates
(a) | Revenues |
Substantially all revenues earned in the three and nine months ended September 30, 2021 and 2022 were earned from Antero Resources, under various agreements for gathering and compression and water handling services. Revenues earned from gathering and compression services consists of lease income.
(b) | Accounts receivable—Antero Resources and Accounts payable—Antero Resources |
Accounts receivable—Antero Resources represents amounts due from Antero Resources, primarily related to gathering and compression services and water handling services. Accounts payable—Antero Resources represents amounts due to Antero Resources for general and administrative and other costs.
(c) | Allocation of Costs Charged by Antero Resources |
The employees supporting the Company’s operations are concurrently employed by Antero Resources and the Company. Direct operating expense includes costs charged to the Company of $
9
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
including certain equity-based compensation. These expenses are charged to the Company based on the nature of the expenses and are apportioned based on a combination of the Company’s proportionate share of gross property and equipment, capital expenditures and labor costs, as applicable. The Company reimburses Antero Resources directly for all general and administrative costs charged to it, except costs attributable to noncash equity-based compensation. For further information on equity-based compensation, see Note 9—Equity-Based Compensation and Cash Awards.
(5) Revenue
All of the Company’s gathering and compression revenues are derived from an operating lease agreement, and all of the Company’s water handling revenues are derived from service contracts with customers. The Company currently earns substantially all of its revenues from Antero Resources.
(a) | Gathering and Compression |
Pursuant to the gathering and compression agreement with Antero Resources, Antero Resources has dedicated substantially all of its current and future acreage in West Virginia, Ohio and Pennsylvania to the Company for gathering and compression services except for acreage subject to third-party commitments or pre-existing dedications. The Company also has an option to gather and compress natural gas produced by Antero Resources on any additional acreage it acquires during the term of the agreement outside of West Virginia, Ohio and Pennsylvania on the same terms and conditions. In December 2019, the Company and Antero Resources agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low pressure gathering fees will be reduced from 2020 through 2023 to the extent Antero Resources achieves certain quarterly volumetric targets during such time. Antero Resources did
Under the gathering and compression agreement, the Company receives a low pressure gathering fee, a high pressure gathering fee and a compression fee, in each case subject to annual Consumer Price Index (“CPI”)-based adjustments, or a cost of service fee, at the Company’s election when such assets are placed in-service. In addition, the agreement stipulates that the Company receives a reimbursement for the actual cost of (i) electricity used at its compressor stations where the compression services are provided based on a compression fee and (ii) operating expenses for all services provided for a cost of service fee.
The Company determined that the gathering and compression agreement is an operating lease as Antero Resources obtains substantially all of the economic benefit of the asset and has the right to direct the use of the asset. The gathering system is an identifiable asset within the gathering and compression agreement, and it consists of underground low pressure pipelines that generally connect and deliver gas from specific well pads to compressor stations to compress the gas before delivery to underground high pressure pipelines that transport the gas to a third-party pipeline, third-party plant or Joint Venture (as defined in Note 13— Investments in Unconsolidated Affiliates) plant. The gathering system is considered a single lease due to the interrelated network of the assets. When a modification to the gathering and compression agreement occurs, the Company reassesses the classification of this lease. The Company accounts for its lease and non-lease components as a single lease component as the lease component is the predominant component. The non-lease components consist of operating, oversight and maintenance of the gathering system, which are performed on time-elapsed measures.
The gathering and compression agreement includes certain fixed fee provisions. If and to the extent Antero Resources requests that the Company construct new low pressure lines, high pressure lines and/or compressor stations, the gathering and compression agreement contains options at the Company’s election for either (i) minimum volume commitments that require Antero Resources to utilize or pay for
10
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
minimum volume commitments and cost of service fees are considered to be in-substance fixed lease payments under the gathering and compression agreement.
The Company recognizes lease income from its minimum volume commitments and cost of service fees under its gathering and compression agreement on a straight-line basis. Additional variable operating lease income is earned when volumes in excess of the minimum commitments are delivered under the contract. The Company recognizes variable lease income when low pressure volumes are delivered to a compressor station, compression volumes are delivered to a high pressure line and high pressure volumes are delivered to a processing plant or transmission pipeline. Minimum volume commitments for high pressure gathering capacity and compression capacity are aggregated such that there is a single minimum volume commitment for the respective service each year. The Company invoices the customer the month after each service is performed, and payment is due in the same month. The Company is not party to any leases that have not commenced.
Minimum future lease cash flows to be received by the Company under the gathering and compression agreement as of September 30, 2022 are as follows (in thousands):
Remainder of year ending December 31, 2022 | $ | | ||
Year ending December 31, 2023 | | |||
Year ending December 31, 2024 | | |||
Year ending December 31, 2025 | | |||
Year ending December 31, 2026 | | |||
Thereafter | | |||
Total | $ | |
(b) | Water Handling |
The Company is party to a water services agreement with Antero Resources, whereby the Company provides certain water handling services to Antero Resources within an area of dedication in defined service areas in West Virginia and Ohio. The initial term of the water services agreement runs to 2035. Upon completion of the initial term in 2035, the water services agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Resources on or before the
The Company satisfies its performance obligations and recognizes revenue when (i) the fresh water volumes have been delivered to the hydration unit of a specified well pad or (ii) other fluid handling services have been completed. The Company invoices the customer the month after water services are performed, and payment is due in the same month. For services contracted through third-party providers, the Company’s performance obligation is satisfied when the service to be performed by the third-party provider has been completed. The Company invoices the customer after the third-party provider billing is received, and payment is due in the same month.
Transaction Price Allocated to Remaining Performance Obligations
The Company’s water service agreement with Antero Resources has a term greater than one year. The Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company’s service contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.
11
ANTERO MIDSTREAM CORPORATION
Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
The remainder of the Company’s water service contracts, which relate to contracts with third parties, are short-term in nature with a contract term of one year or less. Accordingly, the Company is exempt from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of
Contract Balances
Under the Company’s water service contracts, the Company invoices customers after the performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s water service contracts do not give rise to contract assets or liabilities.
(c) | Disaggregation of Revenue |
In the following table, revenue is disaggregated by type of service and type of fee and is identified by the reportable segment to which such revenues relate. For more information on reportable segments, see Note 14—Reportable Segments.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2021 | 2022 | 2021 | 2022 |
| Reportable Segment |
| ||||||||
Type of service | |||||||||||||||
Gathering—low pressure | $ | | | | | Gathering and Processing (1) | |||||||||
Gathering—low pressure rebate | — | ( | — | ( | Gathering and Processing (1) | ||||||||||
Compression | | | | | Gathering and Processing (1) | ||||||||||
Gathering—high pressure | | | | | Gathering and Processing (1) | ||||||||||
Fresh water delivery | | | | | Water Handling | ||||||||||
Other fluid handling | | | | | Water Handling | ||||||||||
Amortization of customer relationships | ( | ( | ( | ( |