Antero Midstream (AM) 15 Feb 242023 Q4 Earnings call transcript

Greetings, and welcome to the Antero Midstream Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Justin Agnew, Director of Finance and Investor Relations for Antero Midstream. Thank you.

You may begin.

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

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

call the President and Midstream; Antero on Joining Director Paul and I'll Midstream. With Brendan CFO are of of me Chairman, CEO Kennedy, that, Paul. and turn today of Rady, CFO Antero Michael Antero Antero Resources the Midstream; Antero to of call Resources and Krueger, over

everyone. XXXX, record will results, Resources, customer, XXXX. in and capital highlight good comments, success the my of operational and capital and XXXX discuss and primary EBITDA on Brendan financial also Success Antero strategy. I Justin, Midstream Slide Antero generated an long-term allocation our Antero capital comments Midstream's my capital. IPO. I start invested company of at XX% will efficiency titled, guidance budget XXXX XXXX or In then discuss AR. the Thanks, morning, our will A a since the I'll IPO Decade In #X XXXX since $XXX outlook of million and our return we and our on

premier the in world-class by operational development EBITDA into operators Resources, grown a XXXX, IPO America. an XX% visibility AM's since Additionally, This North of is in one Antero the of it success growth assets, has is the who compound impressive the E&P testament plans to and has annual rate.

EBITDA This capital we as a capital based in is -- our $X.XX XXXX are budget ROIC the as and program XXXX, of AR. expected well capital maintenance midpoint to our increases. as EBITDA of program generate to teens declines to at ahead high Looking on a billion guiding later

let's Slide expenditures capital Capital budget by range of at Now to our XXXX capital $XXX guidance dive XXXX. were which half turning XX% to Unparalleled was titled, our XXXX, a lower and #X million, AM's reduction compared into Flexibility. the

Looking ahead liquids-rich capital, in million corridor. to $XXX all million of invested substantially $XXX is have the to of which we midstream XXXX, budgeted Marcellus

below budget is flat This side development year-over-year in to changes our target the of budget by the our segment. and of flexibility decrease depicts capital previous breakout The plans. this illustrates midpoint, of At compared capital right the capital XXXX the the XXXX. a to the XX% in represents of page

see, the year-over-year. we by can of of you capacity our will declined add reuse compression As capital This completion savings, and quarter. second the in what relocation cubic compressor Peak and station compression which Grays driven our XXX million our is feet call compression,

which in budget XX% expects it basis, during blending and its build-out. second the In and Antero's to the water liquids-rich noting approximately a year levels midstream activity summer invest XX% third addition, result capital lower favorable worth delivery XXXX full main in capital the are of the a pipeline for artery declined to is AM as water modestly and quarterly Shale. On that Marcellus in a more of infrastructure freshwater of months, quarters completion

the natural XX% capital have of drilling the peer its efficiency production, completion titled, Pricing Based of depth AR. of of natural achieved of with group. Mcf lowest peer AR operational important is quality operational gas the Customer the AM's the capital case each AR, measure quality tremendous the of with AR In and at in depicts This foundations the on relative group compares operations. I'll relative the average left-hand shares of ability $X.XX Liquids company. chart titled, provides of Mcf. Efficient along will side X-year The for capital-efficient the capital per such below its The Most One expected comparing flexible XXXX, AM's of Capital XXXX long-term efficiency inventories is Improvement. budgets inventory, approach X per peer production page on of and Slide XX% year-to-year -- is unit and finish visibility per of investment the and to propane comments of asset on to Slide from efficiencies gas Benefiting when just the the my and XXXX average. #X the equivalent. This

the result the of have XX to to propane has maintenance stable compared prices end gas derived produce improvement, incremental due gas the pricing X-year combined In about at return natural tightened prices for declined To driven average XXXX per from $XX fall a AR and a NGLs. at change weather, in months, underpins CX+ the its bullish October. risen the propane to AR of as winter propane the million productivity each and WTI, reduced high CX+ from than XX% range stocks inventories by XX% since to of value decline million with from development put plan few have sentiment turn than uplift a call moved flow Mont to AM's in barrels I'll liquids, the AR's NGLs. Pricing prices supports producers. market the AR X-year strong in guidance. With percent AR a of of offsets levels. that, million that over a inventories As of uniquely impact traditional Brendan. gallon. This capital more increasing average will the free dollar just to barrels the Approximately AR historical on results barrel benefits the cash pricing uplift, NGL exports diversity more dollar $X.XX XXXX today have This as and from revenues were Belvieu since last pricing including approximately XX dry XX% above from of

Thanks, Paul. Highlights. on I will Slide XXXX begin #X my comments titled,

a company a generated was we quarter, $XXX XX% year-over-year. which EBITDA, record fourth million of the increase During

$XX organic growth cash and strategy cash after dividends free result free financial during success. flow million Midstream's Antero achievements $XXX direct million before a quarter. flow and dividends the operational were of generated These of also We of

and During the throughput XX%, Midstream. Both pressure quarter, respectively, set XX% year. compression for fourth compared volumes and company increased Antero low to measures records by last gathering

the of was $XXX cash a before XXXX mentioned, As is compared XXXX leverage year dividends and XX% of year reduce declining debt Paul dividends $XXX were flow and $XXX to to utilized cash in flow $XXX million after absolute above increase XX% was EBITDA and our cash our range. at approximately million at $XXX resulted and million, full guidance respectively. XXXX. X.Xx XXXX. million, in updated guidance company Full range records free free after at flow to million $XXX to This year-end nearly top initial Free million by

Now turning let's Slide outlook XXXX titled #X, Capital by our XXXX to EBITDA Increasing discuss Declining. and

midpoint of is LP For adjustments at by AR fixed or billion expiration throughput in of growth, fee with the low rebates EBITDA XXXX, we growth $X growth over X% guidance. driven gathering primarily the our the fees. to EBITDA forecasting XXXX inflation of The are and flat to single-digit annual

is million free growth allows we of capital a dividends capital XX% XXXX decrease at forecasting $XXX to XXXX. represents in the the generate EBITDA of million As us This second double a guidance, and the with of our flow $XXX and XXXX. digits increase also investment row are XX% year or a over which Paul cash midpoint illustrates from discussed earlier, declining significant leverage to operational our by after plan compared assets. This of

of $X.XX return of to attractive at target right. on the which our our left Starting at illustrates with we strategy. The cash on XXXX capital and midpoint yield first are today's uses the blocking economic top, supports return maintaining in our capital on dividend, interest $XXX foundation The plan sources stable discretionary allocation an #X of to allocated payments Slide we by of the interest shareholders. remaining the from reduction highly on share leverage and allocation tackling that this towards debt capital capital are XXXX, price. reduction forecasting capital strategy year next In Xx issuance of our will our for debt investments is at achieve the XXXX. flow million be per XX% the to lower share guidance X% the year-over-year represents January and is senior savings a successful note in which levels driven absolute and peer-leading

to new $XXX the utilize our cash repurchases flow open to our share Thereafter, way reducing million and efficient the value most any to we structure excess further plan for is program. under capital share opportunistic We debt debt to both repurchase equity and balanced of market approach shareholders. reduction components accrue the this believe

on my Delivering comments #XX, Slide I'll Outlook. on X-year titled, finish

a debt accretive sizable transition us after last and the to bolt-on execute and sustainable million now acquisitions announce several absolute leverage, repurchase flow free over share Our cash dividends years program. allowed $XXX has to reduce

through on environment, track despite Antero commodity previously X-year the volatile from ahead, to its remains achieve XXXX XXXX. disclosed Looking price Midstream targets

$XXX economic flow organic billion continue is after project to to expected to free capital billion highly $X.X $X.X to cash high dividends. of and invested return teens Our generate on drive of backlog $X billion million

AM repurchase repurchases represents XXXX. This flow will approximately XXXX value for our XXXX with shareholders. $XXX XX% cash maximize and its million order our of $X opportunistic through program from flexible allow remaining our dividends to share our Excluding after actual program results, share of dividend to stable in supplement billion free

and to profile capital part strong Importantly, be maintain this an debt sheet, of risk-adjusted balance flexibility ultimately highest The capital the allocation reduction integral to shareholders. derisk our strategy provide is for business. our strategy will allocation continue to of goal balanced overall provide a our return

both In for summary, XXXX year AM, fantastic and a was financially. operationally

flow, of that delivering We expanding XXXX point free plan discussing in and inflection now beyond. cash and have been we our are on

strength, investment to as to combined questions. midstream mid-cap one universe. With that, AM industry, avenues in the the domestic capital take return of positions operator, most only ready we not are but to Our sheet unique balance multiple investment the shareholders, opportunities, in with

Instructions] comes Jeremy Chase. [Operator Tonet line Our JPMorgan question of with from the first

guess, a to dive volumes? into also AR's changes I going maybe and XXXX. bit expectations into partnerships, could working little guess, and in to want 'XX. overall want in, just as on guess, guess, on I there it for I I I to, drilling I interest And the dive what relates means trajectory more volume AR forward like the just that activity AM what it 'XX look for Looking for impact in, to

we'd came partnership its production, overall about out side, talked as adjustments million well, as think, on being with AM. And which about noted, the maintenance in year-over-year. AM. the flat prepared at remarks, drilling $XX with $XX mean down partnership, it, which have at fee AR with then another, the away, guidance, we QL. is I rebates then I again, CPI $XX have is expect overall we flat; rolling do was volumes and more the which million million, capital gas to Again, But increase call volumes AR plan AR the slightly. Yes. drilling

outlook, So its that's AR EBITDA drives think on then well on XXXX again, was, 'XX. the call maintenance as levels. outlook in capital on X% which what And I talked

to that And level. again, so well in AM service XXXX is maintenance capital positioned, at AR

Got then over buybacks. it. the to And moving

clear, be be how to unfold. that It when wanted that on X lower, I an leverage option like hits on Just would guess, of looks or timing could table. the

see, in guess, how any helpful. that general AR? playing you market timeline thoughts purchases at more look I Just you with out? -- for be or this a And from open would would wondering Just

it just mean, in past, market certainly repurchases, I ownership in latter think No, your think AR stated at -- that open AM. I its enjoys Yes. I we've the point, to be

open And the cash through It was have a flow for So there target XXXX after XXXX. -- $X.XX timing free out and was market on previous at dividends. did midpoint that the billion we repurchases. from

out So that's the now XXXX after taking $X billion results.

next years, million over billion X the $X program. repurchase So share $XXX

of the it's over after of here. of work once to next of leverage free you put that about look So hit that XX% years couple $X flow cash billion that we'd to dividends Xx

Got it.

on And X, then of clear wouldn't should on just be to ahead and sorry, point, the to be table. the right? that start the buybacks materialize buybacks You'd hitting the for wait

We're committed very leverage. that hitting to Xx Yes.

visibility really advantage dislocation like big we and take a we're of extent potentially Xx, So had way pretty to some committed the past, could but on that high before share have you to big repurchases. you in sell of you in go the we the that certainly sort Xx

with from UBS. Brian Our of Reynolds the comes next question line

the Maybe through on the just and commentary, some of of lens to cash. flexibility up use more follow of but buyback

be with a with that But could just curious Over years, kind forward, to looking given seem pretty the perhaps going how few there past it's at, just maybe consistent. few with any out there does been some buybacks. M&A there metrics that accretive the could buybacks? more flexibility Are you're that compete of compete assets

at capital. question, everything just we try on mean invested look Brian. to return the through Yes. of I lens Good

And has about is plan. for has, talked next capital AM couple only visibility calls, so high think into decades the on we've the and of development the years, plan its few the past next benefit that this I not but that it with AR's really

So equity pretty have that of a allows us view our strong to at. trade should what

look bolt-on when at those the to at that. and return we on on stock capital buying our so relative invested we at look could And can acquisitions what expect what acquisitions, we be back return we'd for

generate after and So flow moving just in us bolt-on attractive be acquisitions more toolbox, between think, we'll thoughtful versus dividends to free have debt be tool the versus paydown. we another This could forward. cash certainly further more buybacks that I continue share as allows to

then a the maybe follow-up on sense. guide. Right. EBITDA Makes as And

I million of the in and guide about base of rate it, talked at, kind relief think you you're CPI. the ending where $XXX is call bridge the your the year with

maybe like guide. just does of today, limited activity? I seems your maybe to it outlook of So out be AR mean end of you'll kind this sensitize that if base the point. the of really guide kind towards given you where no the just imply that at lower can end Because like seems high trending came help

Yes.

gain is reduction talked in balance cash XX% COVID. I ARs and AR to I for, the of extent would price gas good guide. prices pulled up the That XX-year the mean as at think further feel low come is the I gas really think strong any think a to AR the the prices about. commodity being and had focus is have around capital pretty strong sheet, over low But provide given point and because end AR's you -- has just generating of activity kind volatile despite with further, about prices liquids guidance be a pulled I the we're free we've end got had. that efficiency even likely fair. back But low your completion. They back environment certainly outside of We capital and flow

today, feel but activity. reflects pretty outlook So good about end the lower potential low the slightly

Our next of the Mackay Goldman question John from with comes line Sachs.

I gas it. is gas we Maybe We one to macro in be, I'm just the of know pretty through but answer to what given U.S. kind to the the we where do there. up so can sure kind pick sit see need right on on of going just side somewhere the talk production roll over now.

Just hear a know I that on you impact the but What on us. think for where call any you it see AR high-level to go could thoughts kind of all at hit? your maybe answered of on was little that And again curious bit, AM? kind just would through

AR focus, we front, liquids is AR, question. on the other and should step the mean, as it good Liquids from there driving at let back. and No, the see about Yes. the economics is even out given basins economics volumes me gas so you again, driving declining think, think where X%. I come I if liquids

And extent take significant had an -- production I think so a the side. you gas producers to the that you'd approach, on have AR decline similar in is

challenges, with capital which high producers gas down, today. other areas. And all don't a I focus, should that is you intensity all Those come gas liquid-focus, basins, declines, view dry so faced if have we I the have think high think, essentially

basins allocation to an of across activity. kind expect see we'd gas So

of through season we and that move forward that here. out of the expect producers, come earnings already You've some we'd seen as some with more

I you question. -- guys guess, second look, I appreciate that. And

You forward of guidance a look. the on gave lot guys

into apart I outlook, expect not So your fair? a forward year, of EBITDA too kind anything I'm guess Is Is 'XX, year, through a the outlook, you've generally look to I answer. crux over Or the much, pretty guys -- to guess, hold steady trying you'd last is past forward that steady but of to 'XX that this gave pick kind about is or gotten you didn't CapEx roll there XXXX? pretty kind look This year. special the of 'XX.

change of And said. come the outlook. average would well cash years mean move nothing I flow after as our an remaining can material I That's in to free look think and that there's Yes. XXXX beyond. at and there's to particular and you no terms change that into dividends, in you

something ARs expectations. And over over And of the There's plan certainly time, the to there. on XX out we'd extent of inventory. those expect executing over we're update, we'd -- inventory. got to I So we but XX think plenty changed years continue put

years that about talked on they number think I their was XX the call.

plenty at AR. like I of so said, inventory, And multi-decade inventory

It's material so to 'XX extend another and an out matter impact feel need no change there's the there. the real no So to just that out from not inventory. really put we've did beyond already a just of go years year

[Operator Zack Instructions] next with question Van TPH. Everen from line the of Our comes

on I to volumes, help the declines gas. you want that. total AR had circle like on on production side X% think guys X% mentioned to back through Just me mentioned believe

So clarity around be on keep there just drilling any of a Are on kind system that more would maybe helpful. to contracts? just they Or volumes partnership. based flat just your refresher incentivized

Yes.

drilled drilling during all is So the just the that of reminder, the a partnership year. in wells AR

gross And so with gross gathers gas, wellhead AR gas. AM declining, of course,

not So gross volumes. reflective AR's wellhead net operated of are volumes gas the really

that's which to which which wellhead talked So we is other owners, about. with year-over-year, QL small gross include non-op a wellhead volumes the component what get where volumes, is flat gross and interest operated you

the 'XX, that kind update but forth. was come know this, might sense. Any and and Okay. what you on -- probably lawsuit. when do might cash in just of the with does? through one going makes that And it if it back there Veolia then mispronounce I'll That on I

update No outside XX-K. Yes. we what of the in disclosed

pinpoint of with it So of none to cash in. our on includes comes best Veolia. like there the always guidance regular hard extent cash the that just do terms return evaluate certainly we'll those the we update flow -- to To and no cash what's we extent in out on the flow in, there the comes timing things put free and

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

seems hitting It even after year. continue Xx pay down target debt later you this to your

would like leverage AM? what you is metric at to So the to get ultimate

Yes. I going we're we'd down to than we're I the out saying mean, Xx again, pay I more think Xx. necessarily think don't put the leverage.

just we'll get evaluate we makes get increases. think to we're share between I repurchases, I acquisitions, mean further once think saying evaluate once we we'll point. most what I the that that to dividend level asset sense bolt-on

you if that, or program do As the we no repurchase million why make repurchase But out $XXX get Xx share sit right sense, identified evaluate. to came we'll with next program. here our over continue repurchases leverage of if through need no now. And but it further today, beyond lot to a few target the we certainly you years, share share re-up you'll magic then which and is the that just to

Got impact through share then after repurchases? flows Slide it. Does outlook reflect free And of the XXXX a that quick does cash the clarification for on XX. XXXX dividends,

repurchases. is That share before

after-share you'd have So slightly different repurchases.

may, fewer serviced then wells a looking for drivers And XXXX. some item, if on Understood. for in the Okay. to water be business. that just you're the seems It housekeeping of I

unchanged, now about net-net, and I but volumes math However, lateral indicate be relative in longer thinking that is foot pretty to my this presume I unchanged seems 'XX per total the correctly? is water to essentially Am should XXXX. length much barrels

should be they down. No,

X,XXX was guidance up fewer we about XX and gave the are feet feet. completions So lateral

So you're XXX,XXX feet. about down

part XX% that And to we guidance volumes so gave. about down overall, is the which XX% of are

our gentlemen, floor to comments. I'll and question-and-answer session. Mr. back Agnew that turn final Ladies concludes for any the

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

call. Thank you. today's conference This concludes

may this for participation. Thank time. at You disconnect your your you lines