Annual report pursuant to Section 13 and 15(d)

Partnership Equity and Distributions

v3.3.1.900
Partnership Equity and Distributions
12 Months Ended
Dec. 31, 2015
Partnership Equity and Distributions  
Partnership Equity and Distributions

(6)  Partnership Equity and Distributions

 

Our Minimum Quarterly Distribution

 

Our partnership agreement provides for a minimum quarterly distribution of $0.17 per unit for each quarter, or $0.68 per unit on an annualized basis.

 

Our partnership agreement generally provides that we distribute cash each quarter during the subordination period in the following manner:

 

·

first, to the holders of common units, until each common unit has received the minimum quarterly distribution of $0.17 plus any arrearages from prior quarters;

 

·

second, to the holders of subordinated units, until each subordinated unit has received the minimum quarterly distribution of $0.17; and

 

·

third, to the holders of common units and subordinated units pro rata until each has received a distribution of $0.1955.

 

If cash distributions to our unitholders exceed $0.1955 per common unit and subordinated unit in any quarter, our unitholders and our general partner, as the holder of our incentive distribution rights (“IDRs”), will receive distributions according to the following percentage allocations:

 

 

 

 

 

 

 

 

 

Marginal Percentage

 

 

 

Interest in

 

 

 

Distributions

 

 

 

 

 

General Partner

 

Total Quarterly Distribution

 

 

 

(as holder of

 

Target Amount

    

Unitholders

    

IDRs)

 

above $0.1955 up to $0.2125

    

85

%  

15

%

above $0.2125 up to $0.2550

 

75

%  

25

%

above $0.2550

 

50

%  

50

%

 

General Partner Interest

 

Our general partner owns a non‑economic general partner interest in us, which does not entitle it to receive cash distributions. However, our general partner owns the IDRs and may in the future own common units or other equity interests in us and will be entitled to receive distributions on any such interests.

 

Subordinated Units

 

Antero owns all of our subordinated units. The principal difference between our common units and subordinated units is that, for any quarter during the subordination period, holders of the subordinated units are not entitled to receive any distribution from operating surplus until the common units have received the minimum quarterly distribution from operating surplus for such quarter plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages. When the subordination period ends, all of the subordinated units will convert into an equal number of common units. The subordination period will end on the first business day after we have earned and paid at least $0.68 (the minimum quarterly distribution on an annualized basis) on each outstanding common unit and subordinated unit for each of three consecutive, non-overlapping four-quarter periods ending on or after September 30, 2017 and there are no outstanding arrearages on our common units.

 

To the extent we do not pay the minimum quarterly distribution on our common units, our common unitholders will not be entitled to receive such arrearage payments in the future except during the subordination period. To the extent we have cash available for distribution from operating surplus in any future quarter during the subordination period in excess of the amount necessary to pay the minimum quarterly distribution to holders of our common units, we will use this excess cash to pay any distribution arrearages on common units related to prior quarters before any cash distribution is made to holders of subordinated units.

 

Cash Distributions

 

On January 13, 2016, we announced that the board of directors of our general partner declared a cash distribution of $0.22 per unit for the quarter ended December 31, 2015. The distribution will be payable on February 29, 2016 to unitholders of record as of February 15, 2016.

The following table details all distributions paid or declared as of the date of this filing (in thousands, except per unit data):  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

Limited Partners

 

 

 

 

 

 

 

 

 

 

Quarter
and
Year

    

Record Date

    

Distribution Date

    

Common
unitholders

    

Subordinated
unitholders

    

General
partner
(IDRs)

    

Total

  

  

Distributions
per limited
partner unit

Q4 2014

 

February 13, 2015

 

February 27, 2015

 

$

7,161

 

$

7,161

 

$

 -

 

$

14,322

 

 

$

0.0943

Q1 2015

 

May 13, 2015

 

May 27, 2015

 

$

13,669

 

$

13,669

 

$

 -

 

$

27,338

 

 

$

0.1800

Q2 2015

 

August 13, 2015

 

August 27, 2015

 

$

14,429

 

$

14,429

 

$

 -

 

$

28,858

 

 

$

0.1900

Q3 2015

 

November 11, 2015

 

November 30, 2015

 

$

20,470

 

$

15,568

 

$

295

 

$

36,333

 

 

$

0.2050

*

 

November 12, 2015

 

November 20, 2015

 

$

397

 

$

 -

 

$

 -

 

$

397

 

 

$

*

 

 

Total 2015

 

 

 

$

56,126

 

$

50,827

 

$

295

 

$

107,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 2015

 

February 15, 2016

 

February 29, 2016

 

$

22,049

 

$

16,707

 

$

969

 

$

39,725

 

 

$

0.2200

*Distribution equivalent rights on units that vested related to limited partner common units.

Net Income Per Limited Partner Unit

(7)  Net Income Per Limited Partner Unit

 

The Partnership’s net income is attributed to the general partner and limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to the general partner. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions, by the weighted average number of outstanding limited partner units during the period.

 

We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

 

We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are attributed to the general partner and limited partners in accordance with the contractual terms of the partnership agreement under the two-class method.

 

Basic earnings per unit is computed by dividing net earnings attributable to unitholders by the weighted average number of units outstanding during each period. Diluted net income per limited partner unit reflects the potential dilution that could occur if agreements to issue common units, such as awards under long-term incentive plans, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method. Earnings per common unit assuming dilution for the year ended December 31, 2015 was calculated based on the diluted weighted average number of units outstanding of 82,585,508, including 47,669 dilutive units attributable to non-vested restricted unit and phantom unit awards. For the year ended December 31, 2015, 2,139,319 non-vested phantom unit and restricted unit awards were anti-dilutive and therefore excluded from the calculation of diluted earnings per unit.

 

The Partnership’s calculation of net income per common and subordinated unit for the periods indicated is as follows (in thousands, except per unit data):  

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2013

    

2014

    

2015

 

 

 

Net income

 

$

2,015

  

$

127,875

  

$

159,105

Less:

 

 

 

 

 

 

 

 

 

Pre-IPO net income attributed to parent

 

 

(2,015)

 

 

(98,219)

 

 

 —

Pre-Water Acquisition net income attributed to parent

 

 

 —

 

 

(22,234)

 

 

(40,193)

General partner interest in net income attributable to incentive distribution rights

 

 

 —

 

 

 —

 

 

(1,264)

Limited partner interest in net income

 

$

 —

  

$

7,422

 

$

117,648

 

 

 

 

 

 

 

 

 

 

Net income allocable to common units - basic and diluted

 

$

 —

 

$

3,711

 

$

62,421

Net income allocable to subordinated units - basic and diluted

 

 

 —

 

 

3,711

 

 

55,227

Limited partner interest in net income - basic and diluted

 

$

 —

 

$

7,422

 

$

117,648

 

 

 

 

 

 

 

 

 

 

Net income per limited partner unit - basic

 

 

 

 

 

 

 

 

 

Common units

 

$

 —

 

$

0.05

 

$

0.76

Subordinated units

 

$

 —

 

$

0.05

 

$

0.73

 

 

 

 

 

 

 

 

 

 

Net income per limited partner unit - diluted

 

 

 

 

 

 

 

 

 

Common units

 

$

 —

 

$

0.05

 

$

0.76

Subordinated units

 

$

 —

 

$

0.05

 

$

0.73

 

 

 

 

 

 

 

 

 

 

Weighted average limited partner units  outstanding - basic

 

 

 

 

 

 

 

 

 

Common units

 

 

 —

 

 

75,941

 

 

82,538

Subordinated units

 

 

 —

 

 

75,941

 

 

75,941

 

 

 

 

 

 

 

 

 

 

Weighted average limited partner units  outstanding - diluted

 

 

 

 

 

 

 

 

 

Common units

 

 

 —

 

 

75,941

 

 

82,586

Subordinated units

 

 

 —

 

 

75,941

 

 

75,941