ALTUS MIDSTREAM COMPANY | --- | --- | |-----------------------|--------------| | | | | | | | | | | Investor Presentation | | | November 2020 | Nasdaq: ALTM | 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 ...

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 September 30, 2020 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 ju ...

Financial Data and Key Metrics Changes - Altus Midstream reported a second quarter net income of $18 million, which included an unrealized embedded derivative loss of approximately $11 million [20] - Adjusted EBITDA for the second quarter was approximately $44 million, down about 6% from the previous quarter, despite gathering volumes declining nearly 25% [20][21] - Operating costs during the second quarter decreased by approximately 10% from the preceding quarter and 23% compared to Q4 2019 [15] Business Line Data and Key Metrics Changes - Gathering volumes averaged 434 million cubic feet per day in Q2, down 25% compared to Q1, but recovered to approximately 560 million cubic feet per day in July [14] - The Shin Oak natural gas liquids pipeline experienced reduced throughput due to low NGL prices and production curtailments, but volumes rebounded in June and July [9] - Capital investment in midstream infrastructure during the quarter was approximately $74 million, primarily for the Permian Highway pipeline [21] Market Data and Key Metrics Changes - The Permian Basin remains short of takeaway capacity for natural gas, which has led to reduced flaring of associated gas and increased demand for pipeline capacity [12] - The company anticipates gathered volumes to increase in the current quarter as curtailed production at Alpine High comes back online [20] Company Strategy and Development Direction - Altus Midstream is focused on becoming free cash flow positive in early 2021 with the startup of the Permian Highway pipeline [28] - The company is pursuing additional third-party business and reducing costs through operational efficiencies, including the shift to electric-powered compression [16][40] - The company has sold approximately $22 million worth of idle assets over the past 18 months and is looking to generate additional cash flow from underutilized assets [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but expressed confidence in the company's diversified cash flow streams and healthy balance sheet [18] - The outlook for 2021 includes expected adjusted EBITDA ranging from $220 million to $260 million, representing a 40% increase compared to 2020 [27] - Management emphasized the importance of maintaining manageable leverage levels and the potential for future financing alternatives for preferred shares [31][33] Other Important Information - The company executed two deals with Apache to lease and operate underutilized compression assets, which will generate revenue in the second half of the year [18] - A reverse stock split was approved by shareholders to comply with NASDAQ minimum price listing rules [28] Q&A Session Summary Question: Dividend commencement and debt pay down priorities - Management indicated that the situation is fluid and emphasized the importance of manageable leverage levels before considering dividends [31][33] Question: Fuel switching cost benefits - Management discussed the potential benefits of fuel switching, estimating operating cost reductions between 10% to 20% with electric-powered compression, but stated that quantification will occur in future calls [35][37]

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 and notes for the periods ended June 30, 2020 and 2019 [Statement of Consolidated Operations](index=6&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20OPERATIONS) Q2 2020 net income was **$17.7 million**, a significant improvement, while the six-month period incurred a **$9.1 million** net loss due to derivative losses Consolidated Operations Highlights (Three Months Ended June 30) | Metric | 2020 (In thousands USD) | 2019 (In thousands USD) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $31,616 | $24,139 | +31.0% | | **Operating Income (Loss)** | $11,711 | $(4,942) | N/A | | **Net Income (Loss) Including Noncontrolling Interests** | $17,662 | $(5,498) | N/A | | **Net Loss Attributable to Class A Common Shareholders** | $(255) | $(2,293) | +88.9% | | **Diluted EPS** | $(0.07) | $(0.61) | +88.5% | Consolidated Operations Highlights (Six Months Ended June 30) | Metric | 2020 (In thousands USD) | 2019 (In thousands USD) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $72,383 | $57,985 | +24.8% | | **Operating Income (Loss)** | $30,352 | $(711) | N/A | | **Net Income (Loss) Including Noncontrolling Interests** | $(9,130) | $230 | N/A | | **Net Loss Attributable to Class A Common Shareholders** | $(10,108) | $(1,193) | -747.3% | | **Diluted EPS** | $(2.84) | $(0.32) | -787.5% | - A significant unrealized derivative instrument loss of **$72.6 million** was recorded in the first six months of 2020, which was the primary driver of the net loss for the period[19](index=19&type=chunk) [Consolidated Balance Sheet](index=9&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) Total assets increased to **$1.64 billion** as of June 30, 2020, while liabilities rose to **$748.6 million** due to debt and derivatives Key Balance Sheet Items | Account | June 30, 2020 (In thousands USD) | Dec 31, 2019 (In thousands USD) | | :--- | :--- | :--- | | **Total Assets** | $1,642,243 | $1,500,854 | | Equity Method Interests | $1,408,479 | $1,258,048 | | **Total Liabilities** | $748,643 | $597,330 | | Long-Term Debt | $493,000 | $396,000 | | Embedded Derivative | $175,498 | $102,929 | | **Total Equity** | $70,344 | $(353,075) | [Statement of Consolidated Cash Flows](index=11&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CASH%20FLOWS) Operating cash flow significantly increased to **$86.8 million** for the six months ended June 30, 2020, while investing activities decreased to **$175.3 million** Cash Flow Summary (Six Months Ended June 30) | Activity | 2020 (In thousands USD) | 2019 (In thousands USD) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $86,797 | $21,688 | | **Net Cash Used in Investing Activities** | $(175,295) | $(697,698) | | **Net Cash Provided by Financing Activities** | $84,395 | $602,995 | | **Decrease in Cash and Cash Equivalents** | $(4,103) | $(73,015) | - Capital expenditures dropped significantly to **$26.5 million** in the first half of 2020 from **$259.3 million** in the same period of 2019[29](index=29&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes detail accounting policies, operations, affiliate transactions, revenue recognition, debt, equity interests, and derivative fair value measurements - The company's operations consist of one reportable segment focused on gas gathering, processing, and transmission assets in the Permian Basin, and equity interests in four Permian Basin pipeline entities[40](index=40&type=chunk) - For the periods presented, the company's only significant customer was its affiliate, Apache Corporation[67](index=67&type=chunk) - On June 30, 2020, the company effected a one-for-twenty reverse stock split of its Class A and Class C Common Stock. All share and per-share amounts have been retroactively restated[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, noting COVID-19 impacts, increased revenue, significant derivative losses, and expected cash flow positivity by early 2021 [Overview](index=30&type=section&id=Overview) Altus Midstream operates Permian Basin gas assets and pipeline equity interests, facing COVID-19 impacts but expecting cash flow positivity by early 2021 - The company's assets include 182 miles of gas gathering pipelines, three cryogenic processing trains with **200 MMcf/d** capacity each, and equity interests in the GCX, EPIC, PHP, and Shin Oak pipelines[137](index=137&type=chunk)[139](index=139&type=chunk) - Management is monitoring the impact of the COVID-19 pandemic on throughput volumes and capacity utilization, noting that the current market has slowed the pace of securing third-party processing opportunities[138](index=138&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q2 2020 revenues rose **31%** to **$31.6 million** with lower costs, yielding **$11.7 million** operating income, though a **$72.6 million** derivative loss impacted the six-month net loss Revenue Comparison (Three Months Ended June 30) | Metric | 2020 (In thousands USD) | 2019 (In thousands USD) | Change | | :--- | :--- | :--- | :--- | | **Midstream services revenue — affiliate** | $31,616 | $24,139 | +$7.5M | Costs and Expenses Comparison (Three Months Ended June 30) | Expense Category | 2020 (In thousands USD) | 2019 (In thousands USD) | Change | | :--- | :--- | :--- | :--- | | **Operations and maintenance** | $9,508 | $14,005 | -$4.5M | | **Depreciation and accretion** | $4,062 | $9,107 | -$5.0M | | **Total costs and expenses** | $19,905 | $29,081 | -$9.2M | - The decrease in operations and maintenance expense was primarily due to increased operational efficiency from transitioning to the centralized Diamond cryogenic complex from mechanical refrigeration units[158](index=158&type=chunk) - Income from equity method interests increased significantly by **$18.2 million** for the quarter and **$34.2 million** for the six months, driven by the GCX and Shin Oak pipelines coming into service[169](index=169&type=chunk) [Capital Resources and Liquidity](index=38&type=section&id=Capital%20Resources%20and%20Liquidity) Capital spending significantly decreased to **$26.5 million** in H1 2020, with **$493.0 million** total debt and **$307.0 million** available borrowing capacity as of June 30, 2020 - The company believes cash from operations, a reduced capital program, and distributions from equity method interests will generate operating cash flows in excess of capital expenditures by **Q1 2021**[178](index=178&type=chunk) Liquidity Summary | Metric | June 30, 2020 (In thousands USD) | Dec 31, 2019 (In thousands USD) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,880 | $5,983 | | **Total debt** | $493,000 | $405,767 | | **Available committed borrowing capacity** | $307,000 | $404,000 | - The company's revolving credit facility matures in **November 2023** and has an aggregate commitment of **$800.0 million**, which can be increased to **$1.5 billion**[187](index=187&type=chunk) - The company was in compliance with its debt covenants as of June 30, 2020, with a Leverage Ratio of less than **4.00:1.00**[191](index=191&type=chunk)[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces indirect commodity price, interest rate, and credit risks, particularly from variable-rate debt and concentration with its primary customer - The company is indirectly exposed to commodity price risk, as adverse price changes can affect Apache's and other customers' decisions to develop and produce oil and gas[198](index=198&type=chunk) - As of June 30, 2020, the company had **$493.0 million** of variable-rate loans outstanding. A hypothetical **1.0%** increase in interest rates would have increased quarterly interest expense by approximately **$1.2 million**[200](index=200&type=chunk) - Credit risk is concentrated with its primary customer, Apache Corporation, and any potential future third-party customers[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[203](index=203&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, these controls[205](index=205&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company has no direct legal proceedings, but its minority interest in Permian Highway Pipeline LLC is involved in a lawsuit regarding environmental permits - The company is not aware of any direct pending or threatened legal proceedings against it[207](index=207&type=chunk) - Permian Highway Pipeline LLC, in which the company holds a minority equity interest, has intervened in a lawsuit filed by the Sierra Club to defend verifications issued by the Army Corps of Engineers[208](index=208&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 pandemic has amplified existing risks, including commodity prices, economic conditions, and credit risk, with uncertain future impacts on the company - The COVID-19 pandemic has amplified previously identified risks, including those related to demand for oil and gas, economic conditions, availability of capital, and customer credit risk[210](index=210&type=chunk) - Management states that due to the uncertainty of the pandemic, there can be no assurance it will not materially and adversely affect the company's future business, financial condition, and results of operations[210](index=210&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) An amendment to the lease agreement with Apache Corporation allows for termination if the property is sold, facilitating Altus Midstream LP's vacating plans - Effective **July 27, 2020**, Altus Midstream LP and Apache Corporation entered into a First Amendment to their Lease Agreement for property in Reeves County, Texas[212](index=212&type=chunk) - The amendment facilitates Altus's desire to vacate the premises by allowing for lease termination if Apache sells the property, with a pro rata rent reduction for a partial sale[213](index=213&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate agreements, the amended lease, officer certifications, and XBRL financial statements

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)