Antero Midstream (AM) 27 Apr 232023 Q1 Earnings call transcript

Greetings, and welcome to the Antero Midstream First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Justin Agnew, Director of Finance and Investor Relations. Thank you.

You may begin.

for call. for thanks quarter Midstream's and conference investor morning, joining Antero us first Good a minutes up spend and We'll few then operating financial we'll highlights, and open it for going Q&A. through the website that like to a to of we've I would reviewed at call during direct where presentation also www.anteromidstream.com, earnings be the you homepage our will separate call. provided today's

reconciliations earnings non-GAAP to press financial also may Please measures. call such GAAP financial measures, most contain regarding the certain including for comparable measure. release to Today's important disclosures our refer

Joining Rady, and me Brendan of and are Antero of on Krueger, the call and Kennedy, Midstream; Michael Chairman, Antero today Paul Resources Antero Midstream; President CEO of Antero and Antero CFO CFO of Director Resources Midstream.

call the Paul. that, I'll over turn to With

Thanks, Justin.

slide completed start the X last over Enhancing to of my Lateral Lengths left-hand on is feet. wells of Economics. illustrates several be the length In page the will expected approximately lengths Increasing wells comments AM XX,XXX lateral average titled The lateral side XXXX, for the completed years. in number increase I

longer year-over-year. and first was quarter, volumes servicing This day additional in freshwater laterals XX% the higher delivery year-over-year. per completion despite two only drove During a wells stages increase

feet. laterals, addition leasing has are revenue there per lengths As well, of XXXX, no improved well Since approximately that of by page, consistent $X.X approximately incremental locations, additional per X.X the for EUR resulted of a required. nearly side incremental million The well in program. AR's increased on of capital assuming lateral every longer shown is X,XXX in on longer AM feet of organic incremental result given the lateral per right-hand average. X,XXX $X connect to laterals economics by have X,XXX This an million Bcf feet

efforts organic over the first drilling XX quarter, more equivalent XX these completions the organic and completed With during well adding the million first invested wells AM replenished locations. on added $XX AR leasing of locations. leasehold, XX quarter, During servicing the

Performance move is at higher that let's Now, the AM. which per Operational day. the highlights slide XX resulted titled day, efforts XX% AR Supported XXXX AR performance average by business, This operational AR. per stages record approximately completion at in than of X X, to slide AM's water averaged number at stages

addition, AR In completion new one record an per crew, incredible from company set achievement. which is a XX of daily day stages

and are AM Importantly, well we water performance on by with very not be continue to which ahead operational has delay at expectations. earnings These of a achievements completions caused seeing since missed throughput or to business well well encouraged acreage. productivity in productivity acquired XXXX. and are AM's This the AM, in helped record system, integrated we drive the possible AM-dedicated only

on liquid slide AR's strategy want Lastly, differentiated X. highlight I to number

been strategy For the low-cost, develop basis. to local Appalachia liquids-rich has AR's last locations avoid in decade, and

particularly on half allows of volatile Appalachia, in AR depicted season. to fairway. gas the and top approximately Appalachia of of LNG AR the its the its sells basis local gas As of XXX% This avoid outside to XX% shoulder the in page,

to the The of contribution illustrates bottom the overall slide half liquids revenues.

As its half revenues of oil. mix, AR's are NGLs from product a almost result of and diversified

AR's strength gas, provides relative liquids in this further for relative the prices Given to support program. development

AM than development in cycles, risk. prior we shorter from While prices be significant downward two expect cycle any this to insulate these gas characteristics

to the guidance allowed first during record performance our us year. and generate quarter operational our increase for summary, the In ranges results

Krueger. Brendan turn call over that, the Brendan? With I to will

briefly start year-over-year I'll my Thanks, X, slide on comments highlighting to results XXXX. Paul. the titled Start by Strong

acquisitions. which quarter the XX%, by prior compared was This This both adjusted throughput full EBITDA and volumes to by to increased allowed from quarter, AM respectively, growth $XXX to driven from prior expenditures infrastructure and XX% projects, During us declined was new in supporting driven growth low-pressure organic by majority of This a bolt-on XXXX record. our of and year-over-year volumetric a XXXX. the compression decline completing Capital first quarter a quarter. core gathering generate increase was XX% $XX year and year X% by year-over-year million its the company growth contribution a million, this quarter. and

This As free a quarter company year million was a outspend cash cash for AM, transitioned and record this declining result down this from $XX flow flow capital, the million was of after increasing we debt. of to generate prior EBITDA and to $XX dividends during quarter. used pay a

we quarter, investing those which free during capital quarters of to second up back the expect we in the look picking remainder of forecast As our to the approximately cash flow quarter. budget fourth before XX% the in result lower year, third we and in

will throughput as adjusted result a my to completion of in well Driven Performance quarter. we in those comments year the first $XXX in From finish freshwater delivery first the accelerated on both freshwater a million it was X, titled productivity. the XXXX. schedule operational Increased back results of to the This I'll budgeted will a volumes Drives EBITDA half higher encouraging $XX and Paul by for that guidance the range our exceptional drive $XXX second result slide and timing Operational delivery by result into acceleration lower volumes million. million slightly modestly the discussed in the remarks, in quarter Guidance an increased perspective, of of his a quarter,

a $XX and before in for quarter today's an to yield the budget of guidance, Truing flow capital $XXX first increase million of to midpoint our the the revising cash $XX XXXX, million EBITDA attractive which up into of and our $XXX gains resulted results, dividends cash deferral to free free reflects at Higher budget we are prices. flow capital million our a one efficiency midpoint continued capital million. capital down XX% lower at

cash XXXX, we This will progress used to leverage free target towards debt throughout times guidance. flow Lastly, in XXXX. cash X for expect million be midpoint our free we flow $XXX the make at as continued dividends of generate of after reduction

by north continue Importantly, expires to year. million, this we of the of dividends $XXX flow XXXX, growth at rebate end expand look as we the free ahead derisked gathering driven as cash expect EBITDA low-pressure to after to

Before a ratings remarks, also already. S&P, from to would Fitch investment-grade would my a received outlook S&P the achieve rating. given I AR positive rating further morning this on investment-grade from a upgrade concluding that like highlight corporate at With BB+ AR status

In strong summary, continues quarter to after quarter. and deliver tackle AM and operations block

by or third-party enhancing acquisitions of strategy our dividends our organic for strategic Our shareholders. integrating growth pay continues to bolt-on business

by high-return projects for ahead, look that decades highly-visible, grow to we our shareholder flow ahead. value we deliver continue will As generated the free cash our

With that, questions. are ready operator, take we to

coming Instructions] the Colton [Operator Our Tudor, Bean of first from question Holt. Pickering, line is with

allocation your on just to I off priorities for wanted start XXXX. capital

heading based hit seems this year target guidance that think leverage roll likely on that next I and year. off mentioned, the it rebate to the of update the you into framework

here that's So as distribution share you debt or can as we further target, reduction, repurchases? achieve might leverage just return you frame sit to today, whether what that priorities your be growth ramping

Yes. No, great question, Colton.

at we where point. look we're to at, that think I we'll certainly XXXX, evaluate as

about is be AR dedicated all in at share we an price were we a talked to it but if are to add certainly share the AM. us. from today We've think would repurchases attractive perspective, price past, inventory, at option which continues to same the I organic

inventory share makes of that inventory attractive to relative just and just at much repurchases to continues look valuation as that length grow, the the of So the price which implied today. more AM you

to top continue the evaluate as So, look closer at stack, but get as be we'll X the we would of out, to that share target. repurchases we times

operations. then Great. to And shifting

bit a result for business, in which OpEx. of new there balance a year? the lower saw QX of view that was specific to anything in gathering as unit the OpEx might Do the you think I run step-up a QX, rate through or

to No. a I heavy that some slid of of We would expect We did that going see our number so consistent some forward. have off. not that into on rate some QX run maintenance come should be compression,

next of from line coming with Marc the question Barclays. Solecitto is Our

EBITDA 'XX next driving you and whether I your revision target the completion carryforward again forward rate perhaps has and could into guidance. into been mentioned you XQ the exit XXXX the comment timing if into year performance wonder all. just of pulled the ultimately leverage So at well upward in on anticipated acceleration the heading or 'XX activity

I times target Yes. X think mean, XXXX. in that I overall, we still we hit to expect communicated

So no dividends year after change progress this good at expected that that. will We'll on and cash free to make paydown. with debt flow million, all go $XXX the

year-end from XXXX. in nicely that X.X down to at times X you'll our So but still achieve leverage times expect target move

maybe And mean, any before it. I in was I XXXX, it think clarify, there? acceleration later to Got just

Yes.

that acceleration You just may due the and seen we've year quarter increase updated this guidance. see the a to

line the Sibal from Global coming Our Seaport next question is Sunil with of Securities.

then last wanted year. that So, or upon assets is how that the touch gone contributing results. QX acquisitions completed I curious -- to was to the and the how has Crestwood contributed I just you integration

a so to compression those the integrated the No, side, EnLink And gone fully acquisition then in Yes. had roughly acquisitions We quarter. far. standpoint, integration's Crestwood million the from on from two acquisitions, $X contribution terrific a small now. $X and from million

contribution continue we'll look with going and forward. from to assets, nice those So, that

Antero’s much acquisitions? And way business? in volumes. EnLink assets you I changed your these how then, is know remind that third-party handling with all significant any could us Has are

AR we've talked very about, primary nice bolt-on Yes. volume and the customer just so the No change those moving on driving that comfortable the those assets on were there. was with assets, as nice and volume, They given projection all -- forward. acquisitions, sole

of a you're do you number trying Xx regard this one leverage, on kind conceptually? certain then at question kind Xx zero to of you also. I leverage. And with ratings if broader how to curious leverage look we in about when your Understood. was hit Xx think When credit

of the mean, relative others X where I the I if of midstream think would to at landscape, look kind are you at. times ahead certainly you Yes. put leverage pack

with that morning. had talked certainly in agencies. We terms we've think this upgrade AR outlook ratings the the the rating receive conversations did S&P of from about I

rating standpoint, debt road from from as And to continuing so should well. I down reduce the the the there off pay think AM a standpoint

question line of coming is with next Ned Wells the Baramov from Our Fargo.

on One CapEx.

million. light of about XXXX at I potential CapEx lower reductions in $XXX the cost, CapEx and XXXX? maybe backlog could talk the and any that's you the believe lower budget of in materials So, some cumulative through in efficiencies

Yes.

further I seen, lower standpoint, single I that I guided. continue as the we than we'll we where the working right capital certainly every That's build-out compression. of able seen always have been the has to it calls, come think what avoid to year we've in that are being And at that but about the acquisitions in some you've And evaluate. down past helpful did AM, now. efficiencies. on you've of incremental road. But compression don't to from with think change think through compression So, talked lower that a capital reuse we've come five-year and in terms

to as have continue hopefully to time number to assets and So, as forward look we'll move we would down the look we bring over optimize that historically.

day housekeeping X.X per day makes from volumes That question And the of guess, sense. of the the much high-pressure And Marcellus Bcf one or low-pressure the item. I was similar gathering then what in of on high-pressure volumes? Bcf X.XX per How volumes, Crestwood Crestwood? share were

Yes.

so the really a pressure in and the a day Crestwood Crestwood it's to assets. as So, related low about is XXX just compression,

additional appears remarks. back to over I'll the have Mr. no questions Agnew Instructions] floor time, It pass we at for additional any this so concluding [Operator

joining for everybody to call. today's thanks and operator, Thanks,

or questions feel If to feel out. you reach further any -- have follow-ups, free please

today's Ladies We time. you you. this gentlemen, participation, may thank your conclude you for and this teleconference. your at lines Thank does and disconnect