Annual report pursuant to Section 13 and 15(d)

Investments in Unconsolidated Affiliates

v3.20.4
Investments in Unconsolidated Affiliates
12 Months Ended
Dec. 31, 2020
Investments in Unconsolidated Affiliates  
Investments in Unconsolidated Affiliates

(16)  Investments in Unconsolidated Affiliates

(a)

Summary of Investments in Unconsolidated Affiliates

Investment in Antero Midstream Partners

Prior to the closing of the Transactions, AMGP did not consolidate Antero Midstream Partners, and AMGP’s share of Antero Midstream Partners’ earnings as a result of AMGP’s ownership of the IDRs was accounted for using the equity method of accounting. AMGP recognized distributions earned from Antero Midstream Partners as “Equity in earnings of unconsolidated affiliates” on its statement of operations in the period in which they were earned and were allocated to AMGP’s capital account. AMGP’s long-term interest in the IDRs on the balance sheet was recorded in “Investment in unconsolidated affiliates.” The ownership of the general partner interests and IDRs did not provide AMGP with any claim to the assets of AMGP other than the balance in its Antero Midstream Partners capital account. Income related to the IDRs was recognized as earned and increased AMGP’s capital account and equity investment. When these distributions were paid to AMGP, they reduced its capital account and its equity investment in Antero Midstream Partners. As a result of the Transactions, Antero Midstream Corporation assumed financial control of Antero Midstream Partners and Antero Midstream Partners is now consolidated (see Note 3—Business Combination).

Investment in Stonewall and MarkWest Joint Venture

The Company has a 15% equity interest in a gathering system of Stonewall, which operates a 67-mile pipeline on which Antero Resources is an anchor shipper.

The Company has a 50% equity interest in the Joint Venture to develop processing and fractionation assets with MarkWest, a wholly owned subsidiary of MPLX, LP. The Joint Venture was formed to develop processing and fractionation assets in Appalachia. MarkWest operates the Joint Venture assets, which consist of processing plants in West Virginia and a one-third interest in two MarkWest fractionators in Ohio.

The Company’s net income (loss) includes its proportionate share of the net income of the Joint Venture and Stonewall. When the Company records its proportionate share of net income, it increases equity income in the consolidated statements of operations and comprehensive income and the carrying value of that investment on its balance sheet. When distributions on the

Company’s proportionate share of net income are received, they are recorded as reductions to the carrying value of the investment on the balance sheet and are classified as cash inflows from operating activities in accordance with the nature of the approach under FASB ASC Topic 230, Statement of Cash Flows. The Company uses the equity method of accounting to account for its investments in Stonewall and the Joint Venture because it exercises significant influence, but not control, over the entities. The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as its ownership interest, representation on the applicable board of directors and participation in policy-making decisions of Stonewall and the Joint Venture.

The following table is a reconciliation of the Company’s investments in these unconsolidated affiliates:

Antero

Total Investment

Midstream

MarkWest

in Unconsolidated

(in thousands)

    

Partners LP

    

Stonewall

    

Joint Venture

    

Affiliates

Balance at December 31, 2018

$

43,492

43,492

Distributions from unconsolidated affiliates

(43,492)

(43,492)

Balance at March 12, 2019

Investments in unconsolidated affiliates acquired from Antero Midstream Partners

142,071

426,214

568,285

Additional Investments

154,359

154,359

Equity in earnings of unconsolidated affiliates (1)

4,117

47,198

51,315

Distributions from unconsolidated affiliates

(5,730)

(58,590)

(64,320)

Balance at December 31, 2019

140,458

569,181

709,639

Additional investments

25,267

25,267

Equity in earnings of unconsolidated affiliates (1)

6,924

79,506

86,430

Distributions from unconsolidated affiliates

(9,750)

(89,108)

(98,858)

Balance at December 31, 2020

$

137,632

584,846

722,478

(1)

As adjusted for the amortization of the difference between the cost of the equity investments in Stonewall and the Joint Venture and the amount of the underlying equity in the net assets of Stonewall and the Joint Venture as of the closing date of the Transaction.

(b)Summarized Financial Information of Unconsolidated Affiliates

The following tables present summarized financial information for the Company’s investments in unconsolidated affiliates.

Combined Balance Sheets

December 31,

(in thousands)

    

2019

2020

Current assets

$

61,641

85,386

Noncurrent assets

1,660,401

1,652,196

Total assets

$

1,722,042

1,737,582

Current liabilities

$

33,912

9,242

Noncurrent liabilities

5,521

5,225

Noncontrolling interest

175,021

169,218

Partners' capital

1,507,588

1,553,897

Total liabilities and partners' capital

$

1,722,042

1,737,582

Statements of Combined Operations

Year Ended December 31,

(in thousands)

    

2018

    

2019

    

2020

Revenues

$

189,222

254,868

321,880

Operating expenses

75,250

105,218

122,660

Income from operations

113,972

149,650

199,220

Net income attributable to unconsolidated affiliates, including noncontrolling interest

123,635

173,265

230,564

Net income attributable to unconsolidated affiliates

131,626

181,448

238,991