DENVER, May 2, 2024
/PRNewswire/ -- Antero Midstream Corporation (NYSE:
AM) ("Antero Midstream" or the "Company") today announced a bolt-on
acquisition of gathering and compression assets in the Marcellus
Shale for $70 million from Summit
Midstream Partners LP (NYSE: SMLP). The transaction closed on
May 1, 2024 with an effective date of
April 1, 2024. In addition, the
Company announced that it has called for redemption all of its
outstanding 7.875% Senior Notes due 2026 (the "2026 Notes") for
redemption on May 16, 2024 (the
"Redemption Date").
Bolt-On Acquisition Highlights and Rationale:
- Estimated to be over 5% accretive to Free Cash Flow after
dividends through 2027
- Increases Antero Midstream's 2024 Adjusted EBITDA and Free
Cash Flow guidance by $15 million and
$10 million, respectively
Paul Rady, Chairman and CEO said,
"This transaction marks our third highly strategic bolt-on
acquisition in Appalachia in the last two years. The compression
and high pressure gathering assets are already interconnected with
Antero Midstream's low pressure gathering system. As a result of
this transaction, Antero Midstream now gathers and compresses
substantially all of Antero Resources' production."
Brendan Krueger, CFO of Antero
Midstream, said "Importantly, we were able to internally finance
this transaction and the anticipated Free Cash Flow after dividends
accretion of the acquisition will continue to position Antero
Midstream to achieve our 3.0x Leverage target in 2024. As a
result, we are well positioned to target incremental return of
capital to shareholders this year."
Marcellus Bolt-On Acquisition
Under the terms of the agreement, Antero Midstream acquired the
compression and high pressure gas gathering system and associated
agreements for $70 million in cash.
The assets acquired include two compressor stations and 48 miles of
high pressure gas gathering pipelines. The acquired assets are
currently connected to Antero Midstream's low pressure gas
gathering system and are not expected to require any material
capital investment.
2024 Guidance Update
Antero Midstream is increasing its 2024 guidance to reflect the
announced acquisition.
The following is a summary of Antero Midstream's updated 2024
guidance ($ in millions):
|
|
Twelve Months Ended
December 31, 2024
|
|
Change vs.
Prior
Guidance
|
|
|
|
|
|
Low
|
|
High
|
|
(At midpoint)
|
|
|
Net Income
|
|
$415
|
|
$455
|
|
+$10
|
Adjusted Net
Income
|
|
470
|
|
510
|
|
+10
|
Adjusted
EBITDA
|
|
1,035
|
|
1,075
|
|
+15
|
Capital
Expenditures
|
|
150
|
|
170
|
|
—
|
Interest
Expense
|
|
190
|
|
200
|
|
+5
|
Free Cash Flow Before
Dividends
|
|
680
|
|
720
|
|
+10
|
Total
Dividends
|
|
435
|
|
435
|
|
—
|
Free Cash Flow After
Dividends
|
|
245
|
|
285
|
|
+10
|
|
|
|
|
|
|
|
For a discussion of the non-GAAP financial measures,
including Adjusted EBITDA, Adjusted Net Income, Leverage, and Free
Cash Flow before and after dividends see "Non-GAAP
Financial Measures and Definitions."
Redemption of 2026 Senior Notes
On May 1, 2024, Antero Midstream
Corporation called for redemption all $531
million of its outstanding 7.875% Senior Notes due 2026
(CUSIP Nos. 03690E AA6 and U0019E AA3) for redemption on the
Redemption Date at a price of 101.969% of the principal thereof,
plus accrued and unpaid interest to, but excluding, the Redemption
Date. The redemption of the 2026 Notes will be funded with
cash on hand and borrowings under Antero Midstream's revolving
credit facility.
This press release is neither an offer to sell or a solicitation
of an offer to buy the 2026 Notes or any other securities and shall
not constitute an offer to sell or a solicitation of an offer to
buy, or a sale of, the 2026 Notes or any other securities in any
jurisdiction in which such offer, solicitation or sale is
unlawful. This press release shall not constitute a notice of
redemption of the 2026 Notes.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses certain non-GAAP financial measures.
Antero Midstream defines Adjusted Net Income as Net Income plus
amortization of customer relationships, loss on early
extinguishment of debt, loss on settlement of asset retirement
obligations and loss (gain) on asset sale, net of tax effect of
reconciling items. Antero Midstream uses Adjusted Net Income to
assess the operating performance of its assets. Antero Midstream
defines Adjusted EBITDA as Net Income plus interest expense, net,
income tax expense, depreciation expense, amortization of customer
relationships, loss on early extinguishment of debt, loss (gain) on
asset sale, accretion of asset retirement obligations, impairment
of property and equipment, loss on settlement of asset retirement
obligations, and equity-based compensation expense, excluding
equity in earnings of unconsolidated affiliates, plus distributions
from unconsolidated affiliates.
Antero Midstream uses Adjusted EBITDA to assess:
- the financial performance of Antero Midstream's assets, without
regard to financing methods, capital structure or historical cost
basis;
- its operating performance and return on capital as compared to
other publicly traded companies in the midstream energy sector,
without regard to financing or capital structure; and
- the viability of acquisitions and other capital expenditure
projects.
Antero Midstream defines Free Cash Flow before dividends as
Adjusted EBITDA less interest expense, net and accrual-based
capital expenditures. Capital expenditures include additions to
gathering systems and facilities, additions to water handling
systems, and investments in unconsolidated affiliates. Capital
expenditures exclude acquisitions. Free Cash Flow after dividends
is defined as Free Cash Flow before dividends less accrual-based
dividends declared for the quarter. Antero Midstream uses Free Cash
Flow before and after dividends as a performance metric to compare
the cash generating performance of Antero Midstream from period to
period.
Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow before
and after dividends are non-GAAP financial measures. The GAAP
measure most directly comparable to these measures is Net Income.
Such non-GAAP financial measures should not be considered as
alternatives to the GAAP measures of Net Income and cash flows
provided by (used in) operating activities. The presentations of
such measures are not made in accordance with GAAP and have
important limitations as analytical tools because they include
some, but not all, items that affect Net Income and cash flows
provided by (used in) operating activities. You should not consider
any or all such measures in isolation or as a substitute for
analyses of results as reported under GAAP. Antero Midstream's
definitions of such measures may not be comparable to similarly
titled measures of other companies.
Antero Midstream defines Leverage as Net Debt divided by
Adjusted EBITDA for the last twelve months. Antero Midstream
defines Net Debt as consolidated total debt, excluding unamortized
debt premiums and debt issuance costs, less cash and cash
equivalents. Antero Midstream views Net Debt as an important
indicator in evaluating Antero Midstream's financial leverage. The
GAAP measure most directly comparable to Net Debt is total debt,
excluding unamortized debt premiums and debt issuance costs.
Antero Midstream has not included a reconciliation of Adjusted
Net Income, Adjusted EBITDA and Free Cash Flow before and after
dividends to the nearest GAAP financial measures for 2024 because
it cannot do so without unreasonable effort and any attempt to do
so would be inherently imprecise.
Antero Midstream is able to forecast the following reconciling
items between such measures and Net Income (in millions):
|
|
Twelve Months
Ended
December 31, 2024
|
|
|
Low
|
|
High
|
Depreciation
expense
|
|
$140
|
|
$150
|
Equity based
compensation expense
|
|
40
|
|
45
|
Amortization of
customer relationships
|
|
70
|
|
75
|
Distributions from
unconsolidated affiliates
|
|
130
|
|
140
|
Antero Midstream Corporation is a Delaware corporation that owns, operates and
develops midstream gathering, compression, processing and
fractionation assets located in the Appalachian Basin, as well as
integrated water assets that primarily service Antero Resources
Corporation's properties.
This release includes "forward-looking statements." Such
forward-looking statements are subject to a number of risks and
uncertainties, many of which are not under Antero Midstream's
control. All statements, except for statements of historical fact,
made in this release regarding activities, events or developments
Antero Midstream expects, believes or anticipates will or may occur
in the future, such as statements regarding our strategy, future
operations, financial position, estimated revenues and
losses, projected costs, prospects, plans and objectives of
management, NGL and oil prices, impacts of geopolitical
and world health events, Antero Midstream's ability to execute its
share repurchase program, Antero Midstream's ability to realize the
benefits of the Marcellus bolt-on acquisition, including the
anticipated capital avoidance and synergies, Antero Midstream's
ability to execute its business plan and return capital to its
stockholders, information regarding Antero Midstream's return of
capital policy, information regarding long-term financial and
operating outlooks for Antero Midstream and Antero Resources,
information regarding Antero Resources' expected future growth and
its ability to meet its drilling and development plan and
the participation level of Antero Resources' drilling partner, the
impact on demand for Antero Midstream's services as a result of
incremental production by Antero Resources, and expectations
regarding the amount and timing of litigation awards and statements
regarding the redemption of the 2026 Notes are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. All
forward-looking statements speak only as of the date of this
release. Although Antero Midstream believes that the plans,
intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance
that these plans, intentions or expectations will be achieved.
Therefore, actual outcomes and results could materially differ from
what is expressed, implied or forecast in such statements. Except
as required by law, Antero Midstream expressly disclaims any
obligation to and does not intend to publicly update or revise any
forward-looking statements.
Antero Midstream cautions you that these forward-looking
statements are subject to all of the risks and uncertainties
incident to our business, most of which are difficult to predict
and many of which are beyond Antero Midstream's control. These
risks include, but are not limited to, commodity price volatility,
inflation, supply chain or other disruptions, environmental risks,
Antero Resources' drilling and completion and other operating
risks, regulatory changes or changes in law, the uncertainty
inherent in projecting Antero Resources' future rates of
production, cash flows and access to capital, the timing of
development expenditures, impacts of world health events,
cybersecurity risks, the state of markets for and availability of
verified quality carbon offsets and the other risks described under
the heading "Item 1A. Risk Factors" in Antero Midstream's Annual
Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form
10-Q for the three months ended March 31,
2024.
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SOURCE Antero Midstream Corporation