Antero Midstream (AM) 27 Jul 232023 Q2 Earnings call transcript

Greetings and welcome to the Antero Midstream Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr.

Finance. of Director Agnew, Justin Thank you. go Please ahead.

highlights, and for us morning, few Q&A. going and for up open We'll joining Midstream's Second minutes operating financial the you Antero through then Quarter for a we'll it Good spend thank and Investor Call. Conference

website separate during also would earnings that be reviewed our call call. direct where we the homepage you presentation I www.anteromidstream.com, to have today's to of like at provided a will

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

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

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

terrific Thanks both have then my XXXX. building the that quarter put upon Justin. the XXXX I of financial track achieve guidance. walk and us comments efficiencies our delivered will operational Midstream generated quarter Brendan to In results will the and the AR. capital Antero first another through in on momentum AM discuss at

Drilling I'll continued second a slide on my X Completion AR number After quarter. start at Efficiencies success AR. record-breaking titled operationally, comments quarter the first and has during

and XX XXXX, the per to day. portion shown the a XXXX. a of over improvement left AR compared top to compared completed stages As second This on the XX% page, quarter during XX% improvement is over

the improvement during XXXX increase quarter Drill-outs X,XXX to which X% and in well horizontal the of each success. plugs reflect the to to compared a a factors stage two averaged drilling times at as exhibited the of sales. shown day page. portion a the number XX% compared takes to out per Drill-outs, of compared the feet and second are bottom process XXXX XXXX. shorter place of pad to complete AR drill These it have of resulted cycle the the days times the XX% for cycle in same These

to which and better to equate acreage ability Shorter RECEIVABLES, position capital cycle to at ACCOUNT returns the efficiency AM. times consistently develop dedicated its drives

Now, page utilization half compression X organically green result number our rates Compression capacity, The a the built have slide capacity high of just-in-time investment capital move we titled and and Processing as illustrates top compression in including Utilization. compression let's to consistently blue. Historically, acquired our of maintained philosophy. in Optimizing

day, have development. over underutilized acquisitions future The increased Bcf a capital capacity efficient by one recent capacity our including will support compression that

XXXX Importantly, a valued our basis. in on PDP-only acquisitions we

on of upside development any the reuse systems So or underutilized is for assets AM.

The the shale. capacity our bottom of Marcellus processing the joint half in venture illustrates page,

processing XXX% liquids-rich the was During shale. utilized, X.X our in of second capacity quarter as Bcf Marcellus growth of the day result a JV a

providing approximately run runway generally can we for processing nameplate reminder, a capacity growth. As additional above XX%

the is effort coordinated of with Antero aspects Antero planning One under-recognized the of Midstream's business Resources. model

this Chicago will For example, for two the AR. provide pricing pads later drilling overall manage in winter AR and infrastructure the Utica This year. shale will Ohio, attractive in help months be

our in on on X. efforts slide for relocation These relocation capital compression touch wanted Lastly, capital. result peer-leading capacity and to I invested on AM efforts returns savings number

in underutilized compressor units Castle support to successfully to station compressor four we XXXX, our growth During relocated Peak area. that

our in colored the of over we the to relocating Grays the process station, Peak blue. East Given now the station that eight success relocation Mountain of in on remaining are units

in placed will XXXX. This station be online

we the additional this page, in picture As recently portion station. the on will the the you for right-hand units can that foundations to of poured be see the top relocated

and AM capital Mountain, targets. our relocated of resulting a confidence from million initial In and both Grays East in outlook station achieving Peak be This displaying units the the summary, day us efficiencies long-term capacity. gives incredible cubic XXXX. in AR Eight of XX supports XXX a units and operational stable in at will feet are

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

Success I'll number by Growth. Paul. Operational slide start Earnings Thanks my comments Drives briefly results year-over-year the titled X, highlighting on

gathering the quarter increased compression XX% and pressure by the quarter. During volumes respectively, year compared prior and XX% second low to

Of the low the closed last XX% organic was Crestwood gathering in legacy our volumes approximately year. growth quarter X% the was acquisition assets attributable of that growth, and X% pressure in on to fourth

by year-over-year XX% This quarter $XX quarter. EBITDA double-digit prior driver of year expenditures Capital primary XX%. growth was adjusted of to million from our throughput this the growth the declined

and flow cash the result EBITDA cash straight free free million positive a dividends. this of capital, of after behind cash before quarter of second highest of was dividends increasing dividends $XX free flow flow and after declining fourth generating This the As free flow after first $XXX million dividends quarterly year. of and cash generated quarter we the

and Growth. let's EBITDA year-over-year in to AM, business joint Now gathering on number drivers and move walk titled water compression of fractionation our green, shown is purple, slide shown at EBITDA To XX% in our illustrated the processing is ventures blue. stonewall in are the our EBITDA growth X, and through

on As and business our $XX flat. compression joint water approximately our and the year-over-year and slide, gathering venture distributions million depicted by business were increased

percentage business, larger larger As increase driven XX% a our which in our and business. continues result EBITDA a by year-over-year to of G&P overall was our be

made business over we up second and from of this EBITDA continues XXXX, quarter grow. of several growing cash flow that next approximately the gathering the as processing see years our towards XX% the business to In and our XX%

payback to of pad improve. connect XX% at cycle a just business continue AR still the EBITDA, particularly This times up making water short While has our highest investment as the the our capital our overall of of is some economics. period of function project

AM All my on slide comments Boxes. number titled X Checking finish I'll the

incredibly and first The XXXX successful for half has been of AM. financially operationally both

expanded high-visibility Over accretive through business our and organically year the we last acquisitions. immediately

and added drive high base have asset additional invested on teens return these as in into peer-leading to acquisitions them integrate synergies. Importantly our our capital we only the

from towards dividends, $XX million transitioning totaled significantly year-end times to our We X.X the to we a year-to-date. free target flow business after best-in-class our allowed of has in of has be debt and X.X This absolute leverage attributes the down cash to in reduce times midstream have to derisked to capital believe these by us which our to checking consistent drive XXXX. return at We company all increase progress times premier position the as boxes shareholders three AM generate future.

business to dividends over and expand, the to leverage cash free EBITDA In year grow, decline. made continues forward to debt summary, while next continues strides drive as to and past leverage we tremendous the reduction. absolute our derisking We simultaneously our our to have look years growth several through continues flow after the

With that questions. are ready operator, take we to

of open UBS. you. questions. The Thank go The is Brian first Instructions] floor for is from ahead. coming Please [Operator now question Reynolds

Hi, Quick guidance to some by to that guidance cracker and day and XXX ethane was explain if of Mcf the question AM whether to production downtime. update? could this But everyone. per XQ noise Antero that on good no curious was impact you the Thanks. families. It seemed captured be some between its if afternoon, raised is seems EBITDA quarterly AM's I in and AR around some just related like

probably gross equivalent in production the with Good a drives EBITDA your what Overall they But the guide net wellhead its for increase first quarter. volumes, aware, on did to Brian. was basis. increasing. AM as which AM question, guidance comments you're comfortable AR

being to they risk another the an so ethane further, And with on wanted update quarter providing guidance. volumes wait before

that the So, it and fact will AR positive also no AM maintained say those that about volumes for I the higher change. talked did be higher at Overall, XXXX to is sense in volumes. guide would

information of AM's I drive a XXXX So think piece that that is volumes. new would

Great. just a XXXX. Super helpful. on then capital just into return And opportunities follow-up to

AM. read which the You AR to have upgrade a through investment potential at level, could

that of expected think to as come trends as works could Thanks. maturities the of those return about three impact year? So, leverage and curious of how kind we -- that is just times next AM refinancing potentially XXXX to below bond that potential XXXX capital

at a attributes think for got sheet couple you've No, the AM, Yes. we I look of balance there. as

and declining that get own then level, ratings. with combined momentum balance improve To sheet upgraded with the the should AM as overall reduction rating. for And leverage credit And three gets have AR to You its automatically be AR the leverage mentioned then at credit will have, the the the which times you AM. the upgraded. you investment would positive extent profile

watch be the as they market the we'll bonds in terms on we'll patient opportunistic to those refinancing continue and be come So, bonds of due.

Great. and I’ll [indiscernible] it leave Thanks. there

Brian. you, Thank

go you. Tonet JPMorgan. ahead. coming from Thank of Please question next The is Jeremy

for everyone. This on is Elias Jeremy. Jossen Hey,

the -- Just hoping we of the rest completion thinking well about across should in to business, for that guidance cadence how water for a term? should we be how year the near thinking the little get

Yes.

to XX we XX water serviced overall guidance gave think year I the by for was which the business. wells So

wells based it are that in half. when we three XX-ish first the impact. of at that most you'll There You're to completion. -- It see the started two start you on

You'll would that see wells, quarter be the impact that to remainder third XX then the most three in though half. for to and of two that second in of XX water the

to So half XX% the to XX% the XX% be the the in it second completions in year. first and about works out of XX% to of half

over then a know And a $XXX rest know And less. of you I maybe midpoint Thanks. the are kind about guiding helpful. year. million That's of $XXX it. probably CapEx the to to through Got guys little I moving million. of there's

what's on for on the would Any the be spend docket maybe specifics some So more just helpful. color there? Thanks.

Yes.

weather. think -- you with the able better build more you're out to summer levels with invest do line I in in and typically historical months capital

and you higher trend the off So third the being capital then second levels fourth and typically see see quarter quarter. quarter in that

year that how ballpark to capital this the of get put guidance. the of in midpoint I'd terms same So, you in

Thanks. I’ll it leave Great. there.

you. Thank

Thanks.

coming of go is question Ned Baramov Fargo. next Please ahead. The you. Thank from Wells

Thanks afternoon. question. the taking good Hey, for

previous presume any midstream will talk well capital AM. Just provide AM question, some improved can efficiencies the productivity? your AR's on the at too, XXXX XXXX to but program additional I appreciate in building details I CapEx you on result from side on impact about can the and you that

question. it's No, great Yes. a

I leads efficiency have look the side. to lower for of AM well think AR, capital AM, as benefit the needed at program you on which gains connect you at the capital the

lateral average each You continue to per have larger well -- higher feet year. on

capital AM's program. to beneficial that's So

And little reuse. piece past a is talked we've then that on just to related second compression calls bit the

see you'll with talked of XXXX, in So and that more $XX remarks. related savings play prepared benefit reuse that that you're about to incremental that about compression in particularly starting million his to out of Paul see

going forward. So, program about capital excited the

XXXX. XXXX. You again, should fee the with a single And growth as it the away see equates single-digit the fact levels, capital. reminder that you capital higher just the AM at than nice at maintaining side into EBITDA that you to in 'XX rebates AM volume 'XX as production high the on combine AR side, lower move When then is to falling are on

So of to a for as be in declining. great in Good years spot capital forward. strong EBITDA be to we look and consecutive to have AM spot growth

then new compression? it. versus really the CapEx reuse, relocation Got the the of is cost compression building from that And million $XX compression savings of where on -- savings

much Well, it relocating. depends on many how units -- how you're

next that's in something we're million. a talked you'll level that we've of $XX into capacity the Overall, to reuse it. So, million see always number need about evaluating of year, And on $XX ability terms underutilized total compression areas in reuse.

see you'll you'll million and total the $XX update forward. number moving But million us XXXX. in see $XX numbers is So, that of those

of relocating rule a equipment I of can you new guess of equipment? building number thumb, as cost cost provide what's of versus the a the

a So, capacity compression relocating, $XX XXX of million. it saving and we're call day

ratio think I a probably to that's So forward. assume moving fair

helpful. Got you. That’s had. I Very Thank it. all

of Please from Bank next of Our Brody ahead. question is Instructions] go America. [Operator coming Gregg

Good afternoon.

you've think frame could time much if your know clear. it facility Clearwater know do the there's on resolving? appeals is you this us. just if you I was could what Just talk I'm I about you had -- -- -- pretty but for I But you litigation, how disclosures possibilities, curious for it's wondering just wonder how frame the

litigation can't we've outside of disclosed on XX-Q. pending in unfortunately, really what the comment already we the Gregg, Yes,

disclosures our direct just I'll the you for to there. XX-Q So,

I Thanks, guys. appreciate presentation.

Thanks.

this I'd Mr. over turn to time, Thank for closing Agnew floor you. like At the to comments.

joining Thank reach additional to for you conference questions. call. out with Please today's free feel any

concludes Ladies today's your and gentlemen, participation. This thank you event. for

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