Altus Midstream Company July 2020 Disclaimer FORWARD LOOKING STATEMENTS The information in this presentation and the oral statements made in connection therewith include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact, included in this presentation regarding Altus Midstream Company's ("Altus Mi ...

Altus Midstream Company (ALTM) Q1 2020 Earnings Conference Call May 7, 2020 2:00 PM ET Company Participants Patrick Cassidy - Director of IR David Bretches - Chairman, CEO & President Ben Rodgers - CFO, Treasurer Conference Call Participants Spiro Dounis - Credit Suisse Operator Ladies and gentlemen, thank you for standing by. And welcome to the Altus Midstream Company First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, the ...

[FORM 10-Q Details](index=1&type=section&id=FORM%2010-Q%20Details) This Quarterly Report on Form 10-Q covers the period ended March 31, 2020, filed by Altus Midstream Company - This is a Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed by Altus Midstream Company (Commission File Number: 001-38048)[1](index=1&type=chunk)[2](index=2&type=chunk) Trading Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Class A common stock, $0.0001 par value | ALTM | Nasdaq Global Select Market | Filer Status | Filer Status | | | :--- | :--- | | Large accelerated filer | ☐ | | Accelerated filer | ☒ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☒ | Shares Outstanding as of April 30, 2020 | Shares Outstanding as of April 30, 2020 | | | :--- | :--- | | Class A common stock | 74,929,305 | | Class C common stock | 250,000,000 | [FORWARD-LOOKING STATEMENTS AND RISK](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20RISK) This section outlines forward-looking statements, emphasizing their inherent risks and uncertainties that could cause actual results to differ materially - This section outlines forward-looking statements based on historical operating trends and forecasts, identifiable by terms like 'may,' 'will,' 'expect,' 'intend,' etc. These statements are subject to various risks and uncertainties that could cause actual results to differ materially[8](index=8&type=chunk) - Key risk factors include: * Scope, duration, and reoccurrence of epidemics or pandemics (e.g., COVID-19) * Market prices of oil, natural gas, and NGLs * Pipeline and gathering system capacity and availability * Production rates, throughput volumes, reserve levels, and development success * Economic and competitive conditions, and availability of capital * Legislative, regulatory, or policy changes, terrorism, or cyberattacks * Impact of environmental, health, and safety regulations * Changes in technology and market-related risks (credit, liquidity, interest rates) - The Company disclaims any duty to update or revise forward-looking statements unless legally required[10](index=10&type=chunk) [GLOSSARY OF TERMS](index=5&type=section&id=GLOSSARY%20OF%20TERMS) This section defines key abbreviations and terms used throughout the report and the oil and natural gas industry - This section provides abbreviations and definitions of terms commonly used in the oil and natural gas industry and within this Quarterly Report on Form 10-Q[13](index=13&type=chunk) - Key terms defined include: * Bbl: One stock tank barrel (42 U.S. gallons) of crude oil, condensate, or NGLs * Bcf: One billion cubic feet of natural gas * Btu: One British thermal unit * NGLs: Natural gas liquids - References to 'Altus' and the 'Company' encompass Altus Midstream Company and its consolidated subsidiaries[13](index=13&type=chunk) [PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents Altus Midstream Company's unaudited consolidated financial statements and related disclosures [ITEM 1. FINANCIAL STATEMENTS](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Altus Midstream Company's unaudited consolidated financial statements and detailed notes for the three months ended March 31, 2020 and 2019 [STATEMENT OF CONSOLIDATED OPERATIONS](index=6&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20OPERATIONS) This statement details the company's revenues, costs, operating income, and net income (loss) for the three months ended March 31, 2020 and 2019 Consolidated Operations Summary | Metric (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Total Revenues | $40,767 | $33,847 | | Total Costs and Expenses | $22,126 | $29,616 | | Operating Income | $18,641 | $4,231 | | Total Other Income (Loss) | $(45,856) | $2,431 | | Net Income (Loss) Before Income Taxes | $(27,488) | $6,154 | | Net Income (Loss) Attributable to Class A Common Shareholders | $(9,853) | $1,100 | | Basic EPS | $(0.13) | $0.01 | | Diluted EPS | $(0.14) | $0.01 | - The company reported a significant **unrealized derivative instrument loss of $61.984 million** in Q1 2020, contributing to the net loss compared to Q1 2019[17](index=17&type=chunk) - **Income from equity method interests** substantially increased to **$16.298 million** in Q1 2020 from **$0.270 million** in Q1 2019[17](index=17&type=chunk) [STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)](index=7&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20COMPREHENSIVE%20INCOME%20%28LOSS%29) This statement presents the company's net income (loss) and other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 Consolidated Comprehensive Income (Loss) | Metric (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Income (Loss) Including Noncontrolling Interests | $(26,792) | $5,728 | | Other Comprehensive Loss, Net of Tax | $(1,184) | — | | Comprehensive Income (Loss) Including Noncontrolling Interests | $(27,976) | $5,728 | | Comprehensive Income (Loss) Attributable to Class A Common Shareholders | $(10,126) | $1,100 | - The company reported a **comprehensive loss of $27.976 million** in Q1 2020, a significant decline from **$5.728 million comprehensive income** in Q1 2019, primarily due to net loss[21](index=21&type=chunk) [CONSOLIDATED BALANCE SHEET](index=8&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) This balance sheet provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2020, and December 31, 2019 Consolidated Balance Sheet Summary | Metric (In thousands) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $37,536 | $31,737 | | Total Property, Plant and Equipment, Net | $208,523 | $205,802 | | Equity Method Interests | $1,336,810 | $1,258,048 | | Total Assets | $1,588,533 | $1,500,854 | | Total Current Liabilities | $12,728 | $33,692 | | Long-Term Debt | $468,000 | $396,000 | | Embedded Derivative | $164,913 | $102,929 | | Total Liabilities | $712,985 | $597,330 | | Redeemable Noncontrolling Interest — Apache limited partner | $231,178 | $701,000 | | Redeemable Noncontrolling Interest — Preferred Unit limited partners | $573,861 | $555,599 | | Total Equity | $70,509 | $(353,075) | - **Total assets increased by $87.679 million** from December 31, 2019, to March 31, 2020, primarily due to higher equity method interests and cash[24](index=24&type=chunk) - **Total liabilities increased by $115.655 million**, largely driven by higher long-term debt and embedded derivative liability[24](index=24&type=chunk) - **Equity shifted from a deficit of $353.075 million to a positive $70.509 million**, influenced by changes in redeemable noncontrolling interests and additional paid-in capital[24](index=24&type=chunk)[25](index=25&type=chunk) [STATEMENT OF CONSOLIDATED CASH FLOWS](index=10&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CASH%20FLOWS) This statement details the company's cash flows from operating, investing, and financing activities for the three months ended March 31, 2020 and 2019 Consolidated Cash Flows Summary | Metric (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $51,538 | $10,054 | | Net Cash Used in Investing Activities | $(97,615) | $(282,551) | | Net Cash Provided by Financing Activities | $59,395 | — | | Net Increase (Decrease) in Cash and Cash Equivalents | $13,318 | $(272,497) | | Cash and Cash Equivalents at End of Period | $19,301 | $177,438 | - **Operating cash flow significantly increased to $51.538 million** in Q1 2020 from **$10.054 million** in Q1 2019, despite a net loss, due to derivative loss adjustments and equity distributions[27](index=27&type=chunk) - **Investing activities used $97.615 million** in Q1 2020, a decrease from **$282.551 million** in Q1 2019, primarily due to lower capital expenditures[27](index=27&type=chunk) - **Financing activities provided $59.395 million** in Q1 2020, mainly from revolving credit facility proceeds, compared to no financing cash in Q1 2019[27](index=27&type=chunk) [STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS](index=12&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CHANGES%20IN%20EQUITY%20AND%20NONCONTROLLING%20INTERESTS) This statement outlines changes in the company's equity and noncontrolling interests for the three months ended March 31, 2020 - **Total equity increased from a deficit of $353.075 million** at December 31, 2019, to **$70.509 million** at March 31, 2020[29](index=29&type=chunk) - The change was significantly influenced by a **$433.710 million increase in additional paid-in capital** from noncontrolling interest redemption value changes, offsetting net loss[29](index=29&type=chunk) Consolidated Changes in Equity and Noncontrolling Interests | Metric (In thousands) | December 31, 2019 | March 31, 2020 | | :--- | :--- | :--- | | Redeemable Noncontrolling Interest — Preferred Unit Limited Partners | $555,599 | $573,861 | | Redeemable Noncontrolling Interest — Apache Limited Partner | $701,000 | $231,178 | | Additional Paid-in Capital | $39,792 | $473,502 | | Accumulated Deficit | $(392,633) | $(402,486) | | Total Equity | $(353,075) | $70,509 | [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section details the significant accounting policies used in preparing the consolidated financial statements, including those for redeemable noncontrolling interests and equity method investments - Consolidated financial statements adhere to GAAP, reflecting Altus Midstream LP's operations in Permian Basin gas gathering, processing, transmission, and pipeline equity interests[33](index=33&type=chunk)[35](index=35&type=chunk)[40](index=40&type=chunk) - Altus Midstream Company consolidates Altus Midstream LP as the primary beneficiary of a Variable Interest Entity[41](index=41&type=chunk)[44](index=44&type=chunk) - Key accounting policies include: * **Redeemable Noncontrolling Interest — Apache Limited Partner:** Recorded at the higher of initial fair value plus accumulated earnings/losses or redemption value (based on Class A Common Stock fair market value) * **Redeemable Noncontrolling Interest — Preferred Unit Limited Partners:** Classified as temporary equity, with certain embedded redemption features bifurcated and measured at fair value as a long-term liability embedded derivative * **Equity Method Interests:** Accounted for when significant influence exists, carried at acquisition cost adjusted for proportionate share of net income/losses and distributions * **Fair Value Measurements:** Utilizes a hierarchy (Level 1, 2, 3) for valuation techniques (market, income, cost approach) - The Company eliminated a one-month reporting lag for equity method interests effective October 1, 2019, with no material retrospective impact[58](index=58&type=chunk)[59](index=59&type=chunk) - Recently adopted accounting standards (ASU 2016-13 and ASU 2019-12) had no material impact on Q1 2020 financial statements[60](index=60&type=chunk)[61](index=61&type=chunk) [2. TRANSACTIONS WITH AFFILIATES](index=16&type=section&id=2.%20TRANSACTIONS%20WITH%20AFFILIATES) This section describes Altus Midstream's significant transactions and agreements with its affiliate, Apache Corporation, its primary customer and service provider - Altus Midstream's sole significant customer is Apache Corporation, receiving fee-based midstream services for its Alpine High acreage[62](index=62&type=chunk)[63](index=63&type=chunk) Affiliate Transactions: Expenses | Expense Type (In millions) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Operations and Maintenance (to related parties) | $1.4 | $2.9 | | General and Administrative (to related parties) | $2.0 | $1.6 | - Under the COMA with Apache, Altus pays annual fees for operational, maintenance, and management services, increasing from **$5.0 million in 2020 to $9.0 million annually** thereafter[65](index=65&type=chunk) - Altus incurred **$0.3 million** in Q1 2020 and **$0.2 million** in Q1 2019 for an operating lease with Apache for facilities[69](index=69&type=chunk) [3. REVENUE RECOGNITION](index=17&type=section&id=3.%20REVENUE%20RECOGNITION) This section explains the company's revenue recognition policies for fee-based midstream services provided to Apache Corporation - The Company generates revenue from fee-based contracts with Apache for midstream services based on volumes processed[71](index=71&type=chunk)[72](index=72&type=chunk) Midstream Services Revenue — Affiliate | Service Type (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Gas gathering and compression | $5,720 | $3,613 | | Gas processing | $29,896 | $25,286 | | Transmission | $4,175 | $4,853 | | NGL transmission | $826 | $95 | | Other | $150 | — | | **Total Midstream Services Revenue — Affiliate** | **$40,767** | **$33,847** | - Revenue is recognized over time using the output method, as performance directly corresponds to customer value and transaction price is resolved[73](index=73&type=chunk) - **Revenue receivables from Apache totaled $11.7 million** as of March 31, 2020, a decrease from **$15.5 million** at December 31, 2019[74](index=74&type=chunk) [4. PROPERTY, PLANT AND EQUIPMENT](index=18&type=section&id=4.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) This section details the company's property, plant, and equipment, including capital spending and impairment considerations Property, Plant and Equipment, Net | Asset Category (In thousands) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Gathering, processing and transmission systems and facilities | $205,629 | $198,133 | | Construction in progress | $3,327 | $5,443 | | Other property and equipment | $3,984 | $3,694 | | Total Property, Plant and Equipment | $212,940 | $207,270 | | Less: Accumulated depreciation and amortization | $(4,417) | $(1,468) | | **Total Property, Plant and Equipment, Net** | **$208,523** | **$205,802** | - **Capital spending on gathering, processing, and transmission systems was approximately $7.1 million** in Q1 2020[78](index=78&type=chunk) - No impairments were recorded in Q1 2020 or Q1 2019, following a **$1.3 billion impairment in Q4 2019** due to expected throughput reductions[79](index=79&type=chunk) - The Company completed the purchase of power generators in Q1 2020, previously under lease[78](index=78&type=chunk) [5. DEBT AND FINANCING COSTS](index=19&type=section&id=5.%20DEBT%20AND%20FINANCING%20COSTS) This section outlines the company's revolving credit facility, outstanding debt, and associated financing costs and covenants - Altus Midstream has an **$800.0 million revolving credit facility** maturing in November 2023, with **$468.0 million outstanding** as of March 31, 2020[81](index=81&type=chunk)[88](index=88&type=chunk) - The unsecured facility has variable interest rates (base rate or LIBOR plus margin) and a quarterly facility fee[82](index=82&type=chunk)[83](index=83&type=chunk) - The Amended Credit Agreement includes restrictive covenants, with the **Leverage Ratio less than 4.00:1.00** as of March 31, 2020[84](index=84&type=chunk) Interest and Financing Costs | Metric (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Interest income | $7 | $2,161 | | Interest expense | $3,358 | $709 | | Capitalized interest | $(3,358) | $(394) | | Financing costs, net of capitalized interest | $273 | $508 | [6. OTHER CURRENT LIABILITIES](index=20&type=section&id=6.%20OTHER%20CURRENT%20LIABILITIES) This section details the composition and changes in the company's other current liabilities as of March 31, 2020, and December 31, 2019 Other Current Liabilities | Liability (In thousands) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Accrued capital costs | $4,817 | $17,035 | | Accrued taxes other than income | $3,733 | $689 | | Accrued operations and maintenance expense | $1,380 | $1,520 | | Accrued professional and consulting fees | $1,288 | $158 | | Accrued incentive compensation | $376 | $1,425 | | Accrued finance lease liability | — | $1,989 | | Other | $1,134 | $1,109 | | **Total Other Current Liabilities** | **$12,728** | **$23,925** | - **Total other current liabilities decreased by $11.197 million** from December 31, 2019, to March 31, 2020, mainly due to reduced accrued capital costs and expired finance lease liability[90](index=90&type=chunk) [7. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's contractual obligations, legal proceedings, and environmental compliance, noting no material adverse effects - The Company records loss contingency accruals when probable and estimable, with no such accruals as of March 31, 2020, or December 31, 2019[91](index=91&type=chunk) - Management believes existing litigation or claims are unlikely to materially adversely affect the Company's financial position or results of operations[92](index=92&type=chunk) - The Company is subject to environmental regulations but is unaware of any material environmental claims as of March 31, 2020[93](index=93&type=chunk) - Key contractual obligations include: * Fee-based midstream services agreements with Apache (no minimum volume commitments) * COMA with Apache for G&A support services, with fixed annual fees * Lease Agreement with Apache for facilities * Quarterly distributions to Preferred Unit holders * Pro-rata funding of future capital expenditures for equity method pipeline projects [8. EQUITY METHOD INTERESTS](index=22&type=section&id=8.%20EQUITY%20METHOD%20INTERESTS) This section details the company's equity interests in Permian Basin pipeline entities, including ownership, contributions, distributions, and equity income - As of March 31, 2020, Altus Midstream Company held equity interests in four Permian Basin long-haul pipeline entities, exercising significant influence[99](index=99&type=chunk) Equity Method Interests Summary | Equity Method Interest | Ownership | Amount (March 31, 2020, in thousands) | Amount (December 31, 2019, in thousands) | | :--- | :--- | :--- | :--- | | Gulf Coast Express Pipeline LLC | 16.0% | $289,541 | $291,628 | | EPIC Crude Holdings, LP | 15.0% | $175,549 | $163,199 | | Permian Highway Pipeline LLC | 26.7% | $380,800 | $310,421 | | Breviloba, LLC (Shin Oak NGL Pipeline) | 33.0% | $490,920 | $492,800 | | **Total** | | **$1,336,810** | **$1,258,048** | - **Total equity method interests increased by $78.762 million** from December 31, 2019, to March 31, 2020, primarily due to contributions and equity income[99](index=99&type=chunk)[100](index=100&type=chunk) Equity Method Interests Activity | Activity (In thousands) | Gulf Coast Express Pipeline LLC | EPIC Crude Holdings, LP | Permian Highway Pipeline LLC | Breviloba, LLC | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2019 | $291,628 | $163,199 | $310,421 | $492,800 | $1,258,048 | | Contributions | $919 | $15,000 | $66,908 | — | $82,827 | | Distributions | $(13,462) | — | — | $(9,075) | $(22,537) | | Equity income (loss), net | $10,456 | $(1,466) | $113 | $7,195 | $16,298 | | Balance at March 31, 2020 | $289,541 | $175,549 | $380,800 | $490,920 | $1,336,810 | [9. EQUITY](index=23&type=section&id=9.%20EQUITY) This section describes the company's equity structure, including Apache's redeemable noncontrolling interest and the Series A Cumulative Redeemable Preferred Units - Apache holds **250,000,000 Altus Midstream Common Units (approximately 76.9% of total)**, classified as a redeemable noncontrolling interest, redeemable for Class A Common Stock or cash[104](index=104&type=chunk) - The redeemable noncontrolling interest for Apache was **$231.2 million** at March 31, 2020, lower than **$701.0 million** at December 31, 2019[105](index=105&type=chunk) - Series A Cumulative Redeemable Preferred Units, issued in June 2019, are exchangeable for Class A Common Stock or redeemable by Altus Midstream[107](index=107&type=chunk) [10. SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS](index=24&type=section&id=10.%20SERIES%20A%20CUMULATIVE%20REDEEMABLE%20PREFERRED%20UNITS) This section details the issuance, classification, and fair value measurement of the Series A Cumulative Redeemable Preferred Units and their embedded derivative - On June 12, 2019, Altus Midstream issued **625,000 Series A Cumulative Redeemable Preferred Units** at **$1,000 per unit**, raising **$625.0 million gross** and **$611.2 million net proceeds**[108](index=108&type=chunk) - Preferred Units are classified as redeemable noncontrolling interest, with embedded redemption features bifurcated and measured at fair value as a long-term liability[109](index=109&type=chunk)[111](index=111&type=chunk) Preferred Units Transaction Price Allocation | Metric (In thousands) | June 12, 2019 | | :--- | :--- | | Transaction price, gross | $625,000 | | Issue discount | $(3,675) | | Transaction costs to other third parties | $(10,076) | | **Transaction price, net** | **$611,249** | | Allocated to Redeemable noncontrolling interest - Preferred Units | $516,790 | | Allocated to Long-term liability: Embedded derivative | $94,459 | - As of March 31, 2020, the redeemable noncontrolling interest for Preferred Units was **$573.861 million**, with an embedded derivative liability of **$164.913 million**[114](index=114&type=chunk) - Altus Midstream elected to pay the Q1 2020 Preferred Units distribution in-kind, issuing **11,363 additional PIK Units** on May 15, 2020[114](index=114&type=chunk) [11. INCOME TAXES](index=26&type=section&id=11.%20INCOME%20TAXES) This section discusses the company's income tax status, tax benefits, and the impact of accounting standard changes on its effective tax rate - Altus Midstream Company is subject to U.S. federal and Texas margin tax, while Altus Midstream LP passes federal taxable income to partners[117](index=117&type=chunk) - In Q1 2020, the Company recorded a **current income tax benefit of $0.7 million** from a net operating loss carryback claim under the CARES Act[118](index=118&type=chunk) - The effective income tax rate in Q1 2020 was impacted by the NOL carryback and increased valuation allowance, differing from Q1 2019[119](index=119&type=chunk) - Early adoption of ASU 2019-12 in Q1 2020 had no material impact[120](index=120&type=chunk) [12. NET INCOME (LOSS) PER SHARE](index=26&type=section&id=12.%20NET%20INCOME%20%28LOSS%29%20PER%20SHARE) This section details the calculation of basic and diluted net income (loss) per share, including the treatment of various equity instruments - Basic net income (loss) per share is calculated using net income available to Class A common shareholders and weighted average shares outstanding, excluding Class C Common Stock[122](index=122&type=chunk) - The 'if-converted method' is used for diluted EPS to account for potential dilution from various equity instruments, while the treasury stock method applies to warrants[123](index=123&type=chunk) Net Income (Loss) Per Share | Metric (In thousands, except per share data) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Basic:** | | | | Net income (loss) attributable to Class A common shareholders | $(9,853) | $1,100 | | Basic Weighted Average Shares | 74,929 | 74,929 | | Basic EPS | $(0.13) | $0.01 | | **Diluted:** | | | | Net income (loss) attributable to Class A common shareholders | $(45,054) | $4,625 | | Diluted Weighted Average Shares | 324,929 | 324,929 | | Diluted EPS | $(0.14) | $0.01 | - Diluted EPS excludes anti-dilutive Preferred Units exchange and outstanding warrants, and Apache earn-out consideration due to unfulfilled issuance conditions[126](index=126&type=chunk) [13. FAIR VALUE MEASUREMENTS](index=27&type=section&id=13.%20FAIR%20VALUE%20MEASUREMENTS) This section describes the company's fair value measurements for financial assets and liabilities, particularly the embedded derivative related to Preferred Units - The Company's recurring fair value measurements include cash, receivables, Apache accounts, and the Preferred Units embedded derivative liability[127](index=127&type=chunk) - The embedded derivative liability, bifurcated from Preferred Units, is measured at fair value using an income approach (Black-Karasinski model) based on interest rates and dividend yields[128](index=128&type=chunk) - An **unrealized loss of $62.0 million** was recognized in Q1 2020 for this derivative liability, primarily due to COVID-19 macroeconomic factors[128](index=128&type=chunk) Level 3 Fair Value Measurement | Level 3 Fair Value Measurement (In thousands) | Fair Value at March 31, 2020 | Valuation Technique | Significant Unobservable Inputs | Range/Value | | :--- | :--- | :--- | :--- | :--- | | Preferred Units Embedded Derivative | $164,913 | Option Model | Altus Midstream Company's Imputed Interest Rate | 19.17-26.02% | | | | | Interest Rate Volatility | 33.22% | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Altus Midstream's financial condition, operational results, and liquidity for Q1 2020, highlighting COVID-19 impacts and strategic focus [Overview](index=28&type=section&id=Overview) This overview describes Altus Midstream's assets, operations, and strategic focus, acknowledging the impact of the COVID-19 pandemic on the energy industry - Altus Midstream owns Permian Basin gas gathering, processing, and transmission assets servicing Apache's Alpine High production, plus equity interests in four pipelines[132](index=132&type=chunk) - The Company's assets include **182 miles of natural gas gathering pipelines**, **46 miles of residue gas pipelines**, **38 miles of NGL pipelines**, and three **200 MMcf/d cryogenic processing trains**[133](index=133&type=chunk) - Equity Method Interest Pipelines owned as of March 31, 2020: * 16% in Gulf Coast Express Pipeline Project (GCX) * 15% in EPIC crude oil pipeline (EPIC) * ~26.7% in Permian Highway Pipeline (PHP) * 33% in Shin Oak NGL Pipeline - The COVID-19 pandemic significantly impacted the global economy and energy industry, causing historic oil price declines and natural gas throughput uncertainty[134](index=134&type=chunk) - Altus focuses on increasing third-party processing, has no upcoming debt maturities, and expects to be **cash flow positive by Q1 2021**[135](index=135&type=chunk) [Altus Midstream Operational Metrics](index=29&type=section&id=Altus%20Midstream%20Operational%20Metrics) This section defines key operational metrics, including throughput volumes, revenues, costs, and Adjusted EBITDA, used to assess the company's performance - The Company assesses performance using throughput volumes, associated revenues, costs, and Adjusted EBITDA[137](index=137&type=chunk) - Revenues are primarily driven by natural gas volumes processed under fee-based agreements with Apache, with future volumes dependent on production and third-party contracts[137](index=137&type=chunk) - Costs and expenses: * **Operations and maintenance:** Primarily direct labor, supervision, power, repair, and equipment rentals, impacted by commodity prices * **Depreciation and accretion:** Based on estimated useful lives and asset retirement obligations, expected to increase with infrastructure costs * **General and administrative (G&A):** Indirect costs and overhead, including fees paid to Apache under the COMA for administrative services * **Taxes other than income:** Primarily ad valorem taxes on midstream assets - **Adjusted EBITDA**, a non-GAAP measure, increased to **$46.542 million** in Q1 2020 from **$12.109 million** in Q1 2019, reflecting improved operating performance[146](index=146&type=chunk)[150](index=150&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the three months ended March 31, 2020, compared to the prior year, explaining key revenue and expense drivers Results of Operations Summary | Metric (In thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Midstream services — affiliate revenue | $40,767 | $33,847 | | Operations and maintenance | $10,591 | $16,399 | | General and administrative | $4,178 | $2,991 | | Depreciation and accretion | $3,914 | $7,651 | | Taxes other than income | $3,443 | $2,575 | | Operating Income | $18,641 | $4,231 | | Unrealized derivative instrument loss | $(61,984) | — | | Income from equity method interests, net | $16,298 | $270 | | Net Income (Loss) Before Income Taxes | $(27,488) | $6,154 | | Adjusted EBITDA | $46,542 | $12,109 | | Average throughput volumes of natural gas (MMcf/d) | 577 | 564 | | Average volumes of natural gas processed (MMcf/d) | 572 | 564 | - **Midstream services revenue increased by $6.9 million (20.4%) to $40.8 million** in Q1 2020, driven by higher rich natural gas throughput from new cryogenic processing trains[153](index=153&type=chunk)[154](index=154&type=chunk) - Costs and Expenses changes (Q1 2020 vs. Q1 2019): * **Operations and maintenance:** Decreased by $5.8 million (35.4%) due to increased operational efficiency from transitioning to the centralized Diamond cryogenic complex * **General and administrative:** Increased by $1.2 million (39.7%) due to higher audit/consulting fees, employee-related costs, severance, and insurance * **Depreciation and accretion:** Decreased by $3.8 million (49.7%) due to impairments recorded in late 2019 * **Taxes other than income:** Increased by $0.9 million (35.3%) due to higher ad valorem taxes from completed cryogenic plants - Other Income (Loss) and Financing Costs changes (Q1 2020 vs. Q1 2019): * **Unrealized derivative instrument loss:** $62.0 million loss in Q1 2020 (vs. none in Q1 2019) due to fair value changes in the embedded derivative related to Preferred Units, influenced by macroeconomic factors * **Income from equity method interests:** Increased by $16.0 million to $16.3 million, primarily from GCX and Shin Oak pipelines being in service * **Interest income:** Decreased by $2.2 million due to lower cash and cash equivalents * **Financing costs, net of capitalized interest:** Decreased by $0.2 million due to the expiration of a finance lease obligation, partially offset by higher amortization of fees on increased credit facility drawdowns - The Company recognized a **current income tax benefit of $0.7 million** in Q1 2020 from a net operating loss carryback claim under the CARES Act[165](index=165&type=chunk) - **Net loss before income taxes was $27.5 million** in Q1 2020, a **$33.6 million decrease** from Q1 2019, primarily due to the **$62.0 million unrealized derivative loss**; **Adjusted EBITDA increased by $34.4 million**[167](index=167&type=chunk) [Capital Resources and Liquidity](index=36&type=section&id=Capital%20Resources%20and%20Liquidity) This section discusses the company's capital allocation, liquidity position, and future funding plans, including the impact of its revolving credit facility and Preferred Units - Primary capital uses have been for asset construction and Equity Method Interest Pipelines, with 2020 capital primarily funding pipeline equity contributions[169](index=169&type=chunk) - The Company expects to be **cash flow positive by Q1 2021**, with operating cash flows exceeding capital expenditures, supported by reduced capital and equity distributions[170](index=170&type=chunk) - **Capital spending for midstream infrastructure assets decreased significantly to $19.0 million** in Q1 2020 from **$164.5 million** in Q1 2019, with 2020 focused on maintenance[172](index=172&type=chunk) - **Cash contributions to Equity Method Interest Pipelines were $82.8 million** in Q1 2020, down from **$118.0 million** in Q1 2019, with sufficient resources for remaining PHP construction[173](index=173&type=chunk) Cash Flow Summary | Cash Flow Item (In thousands) | For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Sources of cash and cash equivalents:** | | | | Proceeds from revolving credit facility | $72,000 | — | | Proceeds from sale of assets | $6,096 | — | | Capital distributions from equity method interests | $1,552 | — | | Net cash provided by operating activities | $51,538 | $10,054 | | **Total Sources** | **$131,186** | **$10,054** | | **Uses of cash and cash equivalents:** | | | | Capital expenditures | $(19,096) | $(164,518) | | Contributions to and acquisition of equity method interests | $(82,827) | $(118,033) | | Finance lease payments | $(11,789) | — | | Deferred facility fees | $(816) | — | | Other | $(3,340) | — | | **Total Uses** | **$(117,868)** | **$(282,551)** | | **Increase (decrease) in cash and cash equivalents** | **$13,318** | **$(272,497)** | Liquidity Metrics | Liquidity Metric (In thousands) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $19,301 | $5,983 | | Total debt | $468,000 | $405,767 | | Available committed borrowing capacity | $332,000 | $404,000 | - The Company's **$800.0 million revolving credit facility** has **$468.0 million outstanding** and **$332.0 million available** as of March 31, 2020, maturing in November 2023[179](index=179&type=chunk) - Preferred Units and Amended Credit Agreement terms restrict distributions, potentially impacting funds available to partners[183](index=183&type=chunk) - Altus Midstream was in compliance with the Amended Credit Agreement terms as of March 31, 2020[184](index=184&type=chunk) - The **$611.2 million net proceeds** from Preferred Unit issuance in June 2019 funded capital contributions to Equity Method Interest Pipelines and repaid revolving credit facility debt[186](index=186&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details Altus Midstream's exposure to commodity price, interest rate, and credit risks, continuously monitored amidst COVID-19 volatility [Commodity Price Risk](index=40&type=section&id=Commodity%20Price%20Risk) This section discusses the company's limited direct exposure to commodity price fluctuations and its indirect exposure through customer production decisions - The Company's fee-based midstream service agreements limit direct commodity price exposure to oil, natural gas, or NGLs[189](index=189&type=chunk) - Indirect exposure arises from Apache and third-party customer production decisions, influenced by commodity prices[189](index=189&type=chunk) - Commodity price fluctuations indirectly impact operating costs such as power, fuel, labor, and equipment rentals[190](index=190&type=chunk) [Interest Rate Risk](index=40&type=section&id=Interest%20Rate%20Risk) This section describes the company's exposure to interest rate fluctuations due to its variable-rate revolving credit facility - With **$468.0 million drawn** on its variable-rate revolving credit facility as of March 31, 2020, Altus faces increased interest expense if short-term rates rise[191](index=191&type=chunk) - A **1.0 percent increase in interest rates** would have increased consolidated interest expense by approximately **$1.2 million** for Q1 2020[191](index=191&type=chunk) - The Company currently has no interest rate derivative instruments but monitors exposure and may utilize them in the future[191](index=191&type=chunk) [Credit Risk](index=40&type=section&id=Credit%20Risk) This section outlines the company's credit risk exposure from nonpayment or nonperformance by Apache or other customers - Altus is subject to credit risk from nonpayment, nonperformance, insolvency, or liquidation by Apache or potential third-party customers[192](index=192&type=chunk) - An increase in such events could adversely affect the Company's results of operations[192](index=192&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of disclosure controls and procedures as of March 31, 2020, with no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=41&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - The CEO and CFO concluded that disclosure controls and procedures were **effective as of March 31, 2020**[194](index=194&type=chunk) - These controls ensure timely recording, processing, summarizing, and reporting of required information for disclosure decisions[194](index=194&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section states that no material changes occurred in the company's internal control over financial reporting during the first quarter of 2020 - No material changes occurred in the Company's internal controls over financial reporting during Q1 2020[196](index=196&type=chunk) - This includes no material changes related to the COVID-19 pandemic or the transition to a remote working environment[196](index=196&type=chunk) [PART II — OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section confirms Altus Midstream Company is unaware of any pending or threatened legal proceedings against it - The Company is not aware of any pending or threatened legal proceedings against it[199](index=199&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section emphasizes that existing risk factors are amplified by the COVID-19 pandemic, posing significant threats to the Company's business and financial condition - All risk factors from the Annual Report on Form 10-K may be amplified by the COVID-19 pandemic and its unpredictable consequences[200](index=200&type=chunk) - The COVID-19 pandemic adversely impacted the global economy, commodity demand and prices, potentially materially affecting the Company's business and financial condition[201](index=201&type=chunk) - Operational risks include reliance on Apache's workforce, with potential disruptions from quarantines, illnesses, or governmental restrictions impacting facility and IT access[202](index=202&type=chunk) - The Company's ability to utilize net operating losses (NOLs) and other tax attributes may be limited by an 'ownership change' under Section 382[204](index=204&type=chunk) [ITEM 6. EXHIBITS](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including key agreements, corporate documents, and financial statements - Key exhibits include: * Contribution Agreement (Exhibit 2.1) * Second Amended and Restated Certificate of Incorporation (Exhibit 3.1) * Second Amendment to Credit Agreement (Exhibit 10.1) * Certifications of Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1) * Inline XBRL financial statements and taxonomy documents (Exhibits 101, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104) [SIGNATURES](index=44&type=section&id=SIGNATURES) This section provides the signatures of the principal financial and accounting officers, certifying the accuracy of the report - The report was signed on May 7, 2020, by Ben C. Rodgers (CFO and Treasurer) and Rebecca A. Hoyt (SVP, Chief Accounting Officer, and Controller)[209](index=209&type=chunk)[210](index=210&type=chunk)

Company Overview - Altus Midstream is a pure-play, Permian to Gulf Coast midstream C-corp with interests in premier JV pipelines and state-of-the-art gathering and processing assets[7] - Apache Corporation holds approximately 79% ownership in Altus Midstream, with public investors holding the remaining approximately 21%[7] Joint Venture Pipelines - Altus Midstream has equity method interests in four joint venture pipeline projects: Gulf Coast Express (GCX), EPIC Crude, Permian Highway, and Shin Oak[10] - Altus owns 16% of GCX[10], ~27% of PHP[14], 33% of Shin Oak[10], and 15% of EPIC Crude[10] - The Permian Highway Pipeline (PHP) is expected to be in service in 1Q21 with a capacity of 2.1 Bcf/d[11, 14] - The EPIC Crude Pipeline has a current capacity of approximately 590 MBPD[16] Gathering & Processing - Altus Midstream has 600 MMcf/d of rich gas processing capacity from three cryo trains[19] - The company also has 400 MMcf/d of lean gas treating/compression capacity[19] Financials - The company expects 2020 Adjusted EBITDA of $150 – 190 million, with 55-65% attributable to JV pipeline projects[23] - 2020 Distributable Cash Flow is projected to be in the range of $80 – 100 million[23] - 2020 Growth Capital Investments are expected to be $300 – 360 million, with over 95% attributable to JV pipes[23]

Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from ________ to ________ Commission file number 001-38048 Altus Midstream Company (Exact name of registrant as specified in its charter) Delaware 81-4675947 (State or ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Altus Midstream Company's unaudited consolidated financial statements for Q3 and nine months ended September 30, 2019, detailing operations, balance sheet, cash flows, and key accounting notes [Statement of Consolidated Operations](index=6&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20OPERATIONS) For Q3 2019, revenues increased to **$34.0 million**, but a **$9.3 million** impairment and higher costs led to a **$6.6 million** operating loss and **$4.9 million** net loss for Class A shareholders Consolidated Operations Summary (Q3 2019 vs Q3 2018) | Metric | Three Months Ended Sep 30, 2019 (in millions) | Three Months Ended Sep 30, 2018 (in millions) | | :--- | :--- | :--- | | **Total Revenues** | $34.009 | $25.437 | | **Total Costs and Expenses** | $40.592 | $25.153 | | **Operating Income (Loss)** | ($6.583) | $0.284 | | **Net Loss Attributable to Class A Shareholders** | ($4.864) | $19.208 | | **Basic EPS** | ($0.06) | $0.09 | - The company recorded a **$9.3 million** impairment charge in Q3 2019, which was not present in the prior year, significantly contributing to the operating loss[17](index=17&type=chunk) - For the nine months ended September 30, 2019, revenues nearly doubled to **$92.0 million** from **$50.1 million** in the prior year period, though the company still posted a net loss attributable to Class A shareholders of **$6.1 million**[17](index=17&type=chunk) [Consolidated Balance Sheet](index=9&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) Total assets grew to **$2.66 billion** by September 30, 2019, driven by **$1.09 billion** in equity method interests, funded by new debt and preferred units, while cash decreased significantly Key Balance Sheet Items (As of Sep 30, 2019 vs Dec 31, 2018) | Account | Sep 30, 2019 (in millions) | Dec 31, 2018 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $2.594 | $449.935 | | Property, Plant and Equipment, net | $1,443.050 | $1,226.897 | | Equity method interests | $1,094.564 | $91.100 | | **Total Assets** | **$2,661.835** | **$1,857.319** | | Long-Term Debt | $235.000 | $0 | | Redeemable noncontrolling interest - Preferred Units | $538.413 | $0 | | **Total Liabilities, Noncontrolling Interests, and Equity** | **$2,661.835** | **$1,857.319** | [Statement of Consolidated Cash Flows](index=11&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CASH%20FLOWS) For the first nine months of 2019, operating activities generated **$39.4 million**, but **$1.315 billion** was used in investing, primarily for pipeline projects, resulting in a **$447.3 million** net cash decrease Cash Flow Summary (Nine Months Ended Sep 30, 2019) | Cash Flow Category | Amount (in millions) | | :--- | :--- | | Net Cash Provided by Operating Activities | $39.436 | | Net Cash Used in Investing Activities | ($1,315.047) | | Net Cash Provided by Financing Activities | $828.270 | | **Net Decrease in Cash and Cash Equivalents** | **($447.341)** | - Major uses of cash in investing activities included **$307.0 million** in capital expenditures and **$1.008 billion** for acquisitions and contributions to equity method interests (pipelines)[28](index=28&type=chunk) - Financing activities were driven by **$611.2 million** in net proceeds from redeemable preferred units and **$235.0 million** from the revolving credit facility[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail significant accounting policies, including reliance on Apache, terms of new financing, a **$9.3 million** asset impairment, and substantial investments in four long-haul pipeline projects - The company's operations consist of one reportable segment focused on gas gathering, processing, and transmission assets in the Permian Basin, with Apache Corporation being its sole customer for all periods presented[41](index=41&type=chunk)[81](index=81&type=chunk) - In Q3 2019, the company cancelled construction on a compressor station, resulting in a **$9.3 million** impairment charge and the reclassification of **$18.1 million** in components to 'assets held for sale'[97](index=97&type=chunk) - As of September 30, 2019, the company had exercised four of its five Pipeline Options, resulting in equity method interests totaling **$1.09 billion** in entities like Gulf Coast Express, EPIC Crude, Permian Highway, and Breviloba (Shin Oak)[117](index=117&type=chunk)[118](index=118&type=chunk) - On June 12, 2019, Altus Midstream issued **625,000** Series A Cumulative Redeemable Preferred Units for net proceeds of approximately **$611.2 million**, carrying a **7%** distribution rate and classified as temporary equity[132](index=132&type=chunk)[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2019 financial performance, noting revenue growth from increased throughput, a net loss due to impairment, and significant capital deployment for pipeline investments [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q3 2019 midstream revenue increased by **$8.6 million** to **$34.0 million** due to higher throughput, but total costs rose to **$40.6 million** due to a **$9.3 million** impairment and increased depreciation Key Performance Metrics (Q3 2019 vs Q3 2018) | Metric | Three Months Ended Sep 30, 2019 (in millions) | Three Months Ended Sep 30, 2018 (in millions) | | :--- | :--- | :--- | | **Midstream Services Revenue** | $34.009 | $25.437 | | **Operations and Maintenance** | $13.063 | $16.579 | | **Impairments** | $9.338 | $0 | | **Operating Income (Loss)** | ($6.583) | $0.284 | | **Adjusted EBITDA** | $17.816 | $5.767 | - The increase in Q3 revenue was primarily driven by higher throughput of rich natural gas volumes, which added approximately **$7.8 million**[174](index=174&type=chunk) - A **$9.3 million** impairment charge was recorded in Q3 2019 related to the cancellation of construction on a planned compressor station[180](index=180&type=chunk)[186](index=186&type=chunk) [Capital Resources and Liquidity](index=42&type=section&id=Capital%20Resources%20and%20Liquidity) Liquidity dramatically changed in Q1-Q3 2019, with **$611.2 million** from preferred units and **$235.0 million** from credit facility funding significant capital expenditures, including a **$442 million** investment in the Shin Oak NGL pipeline Liquidity Summary (As of Sep 30, 2019) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $2.594 | | Total debt | $252.562 | | Available committed borrowing capacity | $415.000 | - In Q3 2019, the company exercised its fourth Pipeline Option, acquiring a **33%** interest in the Shin Oak NGL pipeline for approximately **$442 million**[200](index=200&type=chunk) - Primary sources of cash for the nine months ended Sep 30, 2019 were **$611.2 million** from the issuance of Preferred Units and **$235.0 million** from the revolving credit facility[205](index=205&type=chunk)[215](index=215&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company identifies its primary market risks as indirect commodity price risk and direct credit risk, with revenue sensitivity to Apache's production volumes and concentrated credit exposure - The company has indirect exposure to commodity price risk, as adverse price changes could affect Apache's economic decisions to develop and produce, which in turn impacts Altus's service volumes and revenues[223](index=223&type=chunk) - Credit risk is concentrated with its primary customer, Apache Corporation, and any potential future third-party customers[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[226](index=226&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[228](index=228&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is not aware of any pending or threatened legal proceedings as of the filing date of this quarterly report - As of the filing of the Form 10-Q, the company is not aware of any pending or threatened legal proceedings[231](index=231&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20RISK%20FACTORS) There have been no material changes to the company's risk factors since its 2018 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since its 2018 Annual Report on Form 10-K[232](index=232&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including officer certifications and financial data in Inline XBRL format - Key exhibits filed include certifications by the Principal Executive Officer and Principal Financial Officer as required by SEC rules[234](index=234&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 001-38048 Altus Midstream Company (Exact name of registrant as specified in its charter) (State or other jurisdi ...

[Preliminary Information](index=3&type=section&id=Preliminary%20Information) This section provides essential introductory details, including forward-looking statement disclaimers, risk factors, and a glossary of industry-specific terms [Forward-Looking Statements and Risk](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk) This section outlines the nature of forward-looking statements and lists important factors that could cause actual results to differ materially from expectations - The report includes 'forward-looking statements' based on historical operating trends, production, and growth forecasts of Apache Corporation's Alpine High field development[9](index=9&type=chunk) - Important factors that could cause actual results to differ materially include market prices of oil, natural gas, and NGLs; pipeline and gathering system capacity; production rates; economic and competitive conditions; availability of capital; and legislative, regulatory, or policy changes[10](index=10&type=chunk)[11](index=11&type=chunk) [Glossary of Terms](index=5&type=section&id=Glossary%20of%20Terms) This section defines key abbreviations and terms used in the oil and natural gas industry, noting the name change of Alpine High Entities to Altus Midstream - Effective February 14, 2019, each of the Alpine High Entities' names were changed to replace 'Alpine High' with 'Altus Midstream'[14](index=14&type=chunk) - Key terms defined include Bbl (barrel), Bcf (billion cubic feet), Btu (British thermal unit), Field, Formation, MBbl (thousand barrels), Mcf (thousand cubic feet), MMcf (million cubic feet), and NGLs (natural gas liquids)[15](index=15&type=chunk) [PART I — FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements, management's discussion and analysis, and disclosures on market risk and controls [ITEM 1. FINANCIAL STATEMENTS](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Altus Midstream Company's unaudited consolidated financial statements, including statements of operations, balance sheet, cash flows, and equity - The consolidated financial statements are unaudited and prepared in accordance with GAAP, with certain information and disclosures omitted as permitted by SEC rules[34](index=34&type=chunk) - Altus Midstream Company operates through its consolidated subsidiaries, owning gas gathering, processing, and transmission assets in the Permian Basin and equity interests in five Permian Basin pipelines[36](index=36&type=chunk)[131](index=131&type=chunk) [Statement of Consolidated Operations](index=6&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20OPERATIONS) This statement details the company's revenues, costs, operating income, and net income for the three months ended March 31, 2019 and 2018 | Metric | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Total Revenues | $33,847 | $12,099 | +$21,748 | | Total Costs and Expenses | $29,616 | $19,669 | +$9,947 | | Operating Income (Loss) | $4,231 | $(7,570) | +$11,801 | | Net Income (Loss) including NCI | $5,728 | $(12,607) | +$18,335 | | Net Income (Loss) Attributable to Class A Common Shareholders | $1,100 | $(12,607) | +$13,707 | | Basic EPS | $0.01 | $(0.09) | +$0.10 | | Diluted EPS | $0.01 | $(0.09) | +$0.10 | [Consolidated Balance Sheet](index=7&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) This balance sheet provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2019, and December 31, 2018 | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change | | :----------------------------------- | :-------------------------------- | :--------------------------------- | :----- | | Total Current Assets | $226,042 | $468,030 | $(241,988) | | Property, Plant and Equipment, net | $1,359,733 | $1,226,897 | +$132,836 | | Total Assets | $1,868,008 | $1,857,319 | +$10,689 | | Total Current Liabilities | $101,046 | $98,521 | +$2,525 | | Total Liabilities | $135,494 | $130,533 | +$4,961 | | Redeemable Noncontrolling Interest | $1,504,500 | $1,940,500 | $(436,000) | | Total Equity | $228,014 | $(213,714) | +$441,728 | [Statement of Consolidated Cash Flows](index=9&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CASH%20FLOWS) This statement outlines the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2019 | Metric | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Cash Provided by Operating Activities | $10,054 | $0 | | Net Cash Used in Investing Activities | $(282,551) | $0 | | Net Decrease in Cash and Cash Equivalents | $(272,497) | $0 | | Cash and Cash Equivalents at End of Period | $177,438 | $0 | - Capital expenditures for the three months ended March 31, 2019, were **$164.5 million**, and contributions to equity method interests totaled **$66.2 million**, with an additional **$51.8 million** for the acquisition of an equity method interest[27](index=27&type=chunk) [Statement of Consolidated Changes in Equity and Noncontrolling Interest](index=10&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CHANGES%20IN%20EQUITY%20AND%20NONCONTROLLING%20INTEREST) This statement details changes in the company's equity and redeemable noncontrolling interest from December 31, 2018, to March 31, 2019 | Metric | Balance at Dec 31, 2018 (in thousands) | Net Income (in thousands) | Change in Redemption Value of NCI (in thousands) | Balance at Mar 31, 2019 (in thousands) | | :----------------------------------- | :------------------------------------- | :------------------------ | :----------------------------------------------- | :------------------------------------- | | Redeemable Noncontrolling Interest | $1,940,500 | $4,628 | $(440,628) | $1,504,500 | | Total Equity | $(213,714) | $1,100 | $440,628 | $228,014 | [Notes to Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, transactions, and specific accounts [Note 1. Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the company's accounting policies, including consolidation principles, VIE treatment, reverse recapitalization, and new lease accounting standards - Altus Midstream Company consolidates Altus Midstream because it is the primary beneficiary of this variable interest entity (VIE), having the power to direct its activities and the right to receive benefits or absorb losses[42](index=42&type=chunk)[45](index=45&type=chunk) - The Business Combination was accounted for as a **reverse recapitalization**, treating Altus Midstream Company as the acquired company for financial reporting purposes, with the historical operations of the Altus Midstream Entities deemed those of the Company[46](index=46&type=chunk)[47](index=47&type=chunk) - The Company adopted ASU 2016-02, 'Leases (Topic 842),' on January 1, 2019, recognizing right-of-use (ROU) assets and lease liabilities for most operating leases[53](index=53&type=chunk) | Lease Type | Weighted Average Remaining Lease Term | Weighted Average Discount Rate | | :--------------- | :------------------------------------ | :----------------------------- | | Operating Leases | 3.4 years | 4.2% | | Finance Lease | 0.8 years | 4.2% | [Note 2. Recapitalization Transaction](index=15&type=section&id=Note%202.%20RECAPITALIZATION%20TRANSACTION) This note describes the Business Combination where KAAC acquired Altus Midstream Entities, resulting in Altus Midstream Company holding a 23.1% controlling interest - On November 9, 2018, KAAC acquired the entire equity interests of the Altus Midstream Entities and Pipeline Options from Apache, referred to as the Business Combination[64](index=64&type=chunk)[69](index=69&type=chunk) - Following the Business Combination, Altus Midstream Company holds an approximate **23.1% controlling interest** in Altus Midstream, and Apache holds the remaining **76.9% noncontrolling interest**[65](index=65&type=chunk) - Apache is the largest single holder of the Company's voting common stock, comprising **100% of newly-created Class C Common Stock** and approximately **9.8% of economic Class A Common Stock**[66](index=66&type=chunk) [Note 3. Transactions with Affiliates](index=16&type=section&id=Note%203.%20TRANSACTIONS%20WITH%20AFFILIATES) This note outlines significant related-party transactions with Apache Corporation, which serves as the company's sole customer and primary service provider - Apache Corporation is the Company's only customer for midstream services revenue, which includes gas gathering, compression, processing, and transportation[75](index=75&type=chunk) - The Company has no employees and contracts with Apache for operational, maintenance, and management services under the COMA, incurring G&A and operations and maintenance expenses[77](index=77&type=chunk)[80](index=80&type=chunk) | Expense Type | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | | :--------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Operations and maintenance | $2,900 | $2,300 | | General and administrative | $1,600 | $1,600 | [Note 4. Revenue Recognition](index=18&type=section&id=Note%204.%20REVENUE%20RECOGNITION) This note details the company's revenue recognition policies under ASC 606, disaggregating midstream services revenue by type and recognition over time - The Company adopted Accounting Standard Update (ASU) 2014-09, 'Revenue from Contracts with Customers (ASC 606),' on January 1, 2018[84](index=84&type=chunk) - Revenues are generated from fee-based midstream service agreements with Apache, which have no minimum volume commitments but are underpinned by acreage dedications, and are recognized over time as services are consumed[85](index=85&type=chunk)[86](index=86&type=chunk) | Midstream Service Revenue — Affiliate | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Gas gathering | $3,613 | $609 | +$3,004 | | Gas processing | $25,286 | $7,705 | +$17,581 | | Transmission | $4,853 | $3,785 | +$1,068 | | NGL transmission | $95 | $0 | +$95 | | Total | $33,847 | $12,099 | +$21,748 | [Note 5. Property, Plant and Equipment](index=19&type=section&id=Note%205.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) This note provides a detailed breakdown of the company's property, plant, and equipment, including gathering, processing, and transmission systems, and construction in progress | Asset Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change | | :-------------------------------------------- | :------------------------------ | :------------------------------- | :----- | | Gathering, processing and transmission systems and facilities | $824,687 | $729,585 | +$95,102 | | Construction in progress | $528,837 | $521,609 | +$7,228 | | Finance lease asset | $34,749 | $0 | +$34,749 | | Total property, plant and equipment, net | $1,359,733 | $1,226,897 | +$132,836 | - Construction in progress includes capitalized interest of **$5.4 million** at March 31, 2019, and these costs are excluded from depreciation until assets are placed into productive service[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 6. Debt and Financing Costs](index=19&type=section&id=Note%206.%20DEBT%20AND%20FINANCING%20COSTS) This note describes Altus Midstream's revolving credit facility, including its maturity, interest rate options, restrictive covenants, and components of financing costs - Altus Midstream entered into a **$450.0 million revolving credit facility** in November 2018, maturing in November 2023, with no borrowings or letters of credit outstanding as of March 31, 2019[92](index=92&type=chunk)[168](index=168&type=chunk) - The credit facility contains restrictive covenants, including a debt-to-capital ratio not greater than **30.0%** during the Initial Period, and Altus Midstream was in compliance as of March 31, 2019[95](index=95&type=chunk)[96](index=96&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) | Metric | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Interest income | $2,161 | $0 | | Interest expense | $709 | $2,490 | | Capitalized interest | $(394) | $(2,490) | | Financing costs, net of capitalized interest | $508 | $0 | [Note 7. Other Current Liabilities](index=21&type=section&id=Note%207.%20OTHER%20CURRENT%20LIABILITIES) This note details the company's other current liabilities, including accrued capital costs, operations and maintenance expense, and current operating lease liability | Liability Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :------------------------------------- | :------------------------------ | :------------------------------- | | Accrued capital costs | $63,001 | $80,696 | | Accrued operations and maintenance expense | $2,583 | $2,863 | | Accrued taxes other than income | $2,528 | $69 | | Accrued interest | $493 | $232 | | Current operating lease liability | $586 | $0 | | Other | $2,855 | $1,066 | | Total other current liabilities | $72,046 | $84,926 | [Note 8. Asset Retirement Obligation](index=21&type=section&id=Note%208.%20ASSET%20RETIREMENT%20OBLIGATION) This note describes changes in the company's Asset Retirement Obligation liability, reflecting estimated future costs for dismantlement and site reclamation | Metric | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Asset retirement obligation at Dec 31, 2018 | $29,369 | | Liabilities incurred during the period | $483 | | Accretion expense | $364 | | Asset retirement obligation at Mar 31, 2019 | $30,216 | - ARO reflects the estimated present value of costs for dismantlement, removal, site reclamation, and similar activities associated with the Company's central processing facilities, gathering systems, and pipelines[100](index=100&type=chunk) [Note 9. Commitments and Contingencies](index=22&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's contractual obligations, including midstream service agreements, G&A support services, lease agreements, and future capital expenditures - Altus Midstream has fee-based midstream service agreements with Apache, obligating it to perform services on all volumes produced from dedicated acreage in Alpine High[104](index=104&type=chunk) - Under the COMA with Apache, Altus Midstream will pay fixed annual fees for G&A support services: **$3.0 million for 2019**, **$5.0 million for 2020**, **$7.0 million for 2021**, and **$9.0 million annually thereafter**[105](index=105&type=chunk) - The company has an operating lease agreement with Apache for office and storage facilities in Reeves County, Texas, with an initial term of **four years**[106](index=106&type=chunk) - Exercising Pipeline Options to acquire equity interests in third-party pipeline projects may require funding future capital expenditures for their equity share[107](index=107&type=chunk) [Note 10. Equity Method Interests](index=23&type=section&id=Note%2010.%20EQUITY%20METHOD%20INTERESTS) This note details the company's equity method interests in Permian Basin pipelines, including Gulf Coast Express Pipeline LLC and EPIC Crude Holdings, LP - As of March 31, 2019, the Company owns **15.0% equity method interests** in Gulf Coast Express Pipeline LLC and EPIC Crude Holdings, LP, having exercised two of its five Pipeline Options[110](index=110&type=chunk)[111](index=111&type=chunk) | Equity Method Interest | Balance at Dec 31, 2018 (in thousands) | Acquisitions (in thousands) | Contributions (in thousands) | Income (in thousands) | Balance at Mar 31, 2019 (in thousands) | | :--------------------- | :------------------------------------- | :-------------------------- | :--------------------------- | :-------------------- | :------------------------------------- | | Gulf Coast Express Pipeline LLC | $91,100 | $0 | $66,224 | $270 | $157,594 | | EPIC Crude Holdings, LP | $0 | $51,809 | $0 | $0 | $51,809 | | Total | $91,100 | $51,809 | $66,224 | $270 | $209,403 | [Note 11. Income Taxes](index=23&type=section&id=Note%2011.%20INCOME%20TAXES) This note clarifies the company's income tax structure, deferred tax assets and liabilities, and factors impacting the effective income tax rate - Altus Midstream Company is subject to U.S. federal income tax and Texas Margin tax; Altus Midstream LP is a partnership for federal income tax purposes but records a state income tax provision[113](index=113&type=chunk) - As of March 31, 2019, Altus Midstream Company had a net deferred tax asset of **$67.3 million**, and Altus Midstream LP had a net deferred state income tax liability of **$2.8 million**[113](index=113&type=chunk) - The effective income tax rate for Q1 2019 was primarily impacted by net income attributable to the noncontrolling interest and state income taxes[114](index=114&type=chunk) [Note 12. Equity](index=24&type=section&id=Note%2012.%20EQUITY) This note details the company's equity structure, including Class A and Class C Common Stock, warrants, and the redeemable noncontrolling interest held by Apache - As of March 31, 2019, there were **74,929,305 shares of Class A Common Stock** and **250,000,000 shares of Class C Common Stock** issued and outstanding[116](index=116&type=chunk) - Apache holds **250,000,000 common units**, representing an approximate **76.9% limited partner interest** in Altus Midstream, which is reflected as a redeemable noncontrolling interest valued at **$1.5 billion** as of March 31, 2019[122](index=122&type=chunk)[123](index=123&type=chunk) - Apache has the right to cause Altus Midstream to redeem all or a portion of its common units for Class A Common Stock or an equivalent amount of cash at any time subsequent to May 8, 2019[122](index=122&type=chunk) [Note 13. Net Income (Loss) Per Share](index=25&type=section&id=Note%2013.%20NET%20INCOME%20%28LOSS%29%20PER%20SHARE) This note explains the methodology for calculating basic and diluted net income (loss) per share, including the treatment of Class C Common Stock and warrants - Basic net income (loss) per share is calculated by dividing net income (loss) available to Class A Common shareholders by the weighted average shares outstanding, excluding Class C Common Stock[124](index=124&type=chunk) - The 'if-converted method' is used to determine the potential dilutive effect of exchanges of common units and Class C Common Stock, and earn-out consideration, while the treasury stock method is used for outstanding warrants[125](index=125&type=chunk) | Metric | 3 Months Ended March 31, 2019 | 3 Months Ended March 31, 2018 | | :-------------------------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) attributable to Class A Common shareholders | $1,100 (in thousands) | $(12,607) (in thousands) | | Basic EPS | $0.01 | $(0.09) | | Diluted EPS | $0.01 | $(0.09) | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of Altus Midstream Company's financial condition, operational results, and liquidity, including key performance metrics - Altus Midstream Company owns gas gathering, processing, and transmission assets in the Permian Basin, servicing Apache's Alpine High production, and holds options for equity interests in five Permian Basin pipelines[131](index=131&type=chunk) - The Business Combination was accounted for as a reverse recapitalization, with Altus Midstream Company treated as the acquired company for financial reporting purposes[136](index=136&type=chunk) - Key performance metrics used to assess operations and growth include Adjusted EBITDA, throughput volumes, and costs and expenses[140](index=140&type=chunk) [Overview](index=26&type=section&id=Overview) This overview describes Altus Midstream Company's operations in the Permian Basin, its assets, and its equity interests in Permian Basin pipelines - Altus Midstream Company operates gas gathering, processing, and transmission assets in the Permian Basin of West Texas, anchored by midstream service agreements with Apache Corporation for its Alpine High resource play[131](index=131&type=chunk) - The company also owns, or has options to own, equity interests in a total of **five Permian Basin pipelines**, providing access to fully integrated, wellhead-to-water connectivity[131](index=131&type=chunk) - As of March 31, 2019, Altus Midstream's assets include approximately **111 miles of natural gas gathering pipelines**, **52 miles of residue gas pipelines**, **26 miles of NGL Pipelines**, **380 MMcf/d of rich gas processing capacity**, and **400 MMcf/d of lean gas treating capacity**[132](index=132&type=chunk) [Altus Midstream Operational Assessment](index=27&type=section&id=Altus%20Midstream%20Operational%20Assessment) This section assesses Altus Midstream's operational performance, highlighting Adjusted EBITDA as a key non-GAAP financial measure for evaluation - Adjusted EBITDA is a key non-GAAP financial measure used by management to evaluate operating performance and compare results, excluding financing costs, interest income, income taxes, depreciation, and accretion[137](index=137&type=chunk) | Metric | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :-------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Net income (loss) including noncontrolling interest | $5,728 | $(12,607) | +$18,335 | | Adjusted EBITDA | $12,109 | $(3,865) | +$15,974 | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in midstream services revenue, operating expenses, and net income | Metric | 3 Months Ended March 31, 2019 (in thousands) | 3 Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :-------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Midstream services revenue — affiliate | $33,847 | $12,099 | +$21,748 | | Operations and maintenance | $16,399 | $10,992 | +$5,407 | | General and administrative | $2,991 | $1,617 | +$1,374 | | Depreciation and accretion | $7,651 | $3,705 | +$3,946 | | Taxes other than income | $2,575 | $3,355 | $(780) | | Operating Income (Loss) | $4,231 | $(7,570) | +$11,801 | | Average throughput volumes of natural gas (MMcf/d) | 564 | 206 | +358 | - Midstream services revenue from affiliate increased by **$21.7 million** (YoY) to **$33.8 million**, primarily driven by increased throughput volumes as Apache increased production from Alpine High[146](index=146&type=chunk) - Net income before income taxes increased by **$13.7 million** and Adjusted EBITDA increased by **$16.0 million** for the three months ended March 31, 2019, primarily due to the increase in midstream services revenue, partially offset by higher operations and maintenance and G&A expenses[157](index=157&type=chunk) [Capital Resources and Liquidity](index=32&type=section&id=Capital%20Resources%20and%20Liquidity) This section discusses the company's future capital expenditure requirements for infrastructure development and pipeline options, and its funding strategies - Future infrastructure development and the exercise of outstanding Pipeline Options will require significant capital expenditures, expected to be funded by current cash, revolving credit facility borrowing capacity, and reinvested operating cash flow[158](index=158&type=chunk)[159](index=159&type=chunk) - Anticipated total annual investments in Altus Midstream's assets are approximately **$325 million in 2019**, **$185 million in 2020**, and **$200 million in 2021**, primarily for gathering, compression, processing, and transportation facilities[161](index=161&type=chunk) - The company exercised an option for a **15% ownership stake** in the EPIC crude oil pipeline project for **$51.8 million** in Q1 2019, and expects to exercise the remaining three Pipeline Options for approximately **$1.6 billion** in total anticipated capital spending[162](index=162&type=chunk) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Cash and cash equivalents | $177,438 | $449,935 | | Total debt | $29,000 | $0 | | Available committed borrowing capacity | $450,000 | $450,000 | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section addresses the company's exposure to market risks, including indirect commodity price risk and direct credit risk from customers - The company's midstream service agreements are fee-based, but it is indirectly exposed to commodity price risk through Apache's and potential third-party customers' economic decisions to develop and produce oil and natural gas[175](index=175&type=chunk) - Fluctuations in commodity prices also indirectly impact operating cost elements such as power and fuel, and affect industry activity and demand[176](index=176&type=chunk) - The company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, Apache or potential third-party customers[177](index=177&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting - The company's Chief Executive Officer and President, and Chief Financial Officer and Treasurer, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2019, and concluded they were effective[179](index=179&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2019[181](index=181&type=chunk) [PART II — OTHER INFORMATION](index=35&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, exhibits, and official signatures, completing the quarterly report [ITEM 1. LEGAL PROCEEDINGS](index=35&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section confirms that Altus Midstream Company is not currently involved in any pending or threatened material legal proceedings - The Company is not aware of any pending or threatened legal proceedings against it at the time of the filing of this Quarterly Report on Form 10-Q[183](index=183&type=chunk) [ITEM 1A. RISK FACTORS](index=35&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the Annual Report for a comprehensive discussion of risk factors and confirms no material changes since the last filing - Readers are referred to Part I, Item 1A — Risk Factors of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018[184](index=184&type=chunk) - There have been no material changes to the company's risk factors since its Annual Report on Form 10-K for the fiscal year ended December 31, 2018[184](index=184&type=chunk) [ITEM 6. EXHIBITS](index=36&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including key agreements, corporate governance documents, and officer certifications - Exhibits include the Contribution Agreement, Second Amended and Restated Certificate of Incorporation, Bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer[186](index=186&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) This section contains the official signatures of the company's authorized officers, certifying the accuracy and completeness of the report - The report is signed by Ben C. Rodgers, Chief Financial Officer and Treasurer, and Rebecca A. Hoyt, Senior Vice President, Chief Accounting Officer, and Controller, on May 2, 2019[191](index=191&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Altus Midstream Company (Exact name of registrant as specified in its charter) Delaware 001-38048 81-4675947 (Commission File Number) (I.R.S. Employer Identification No.) One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19 ...