Antero Midstream (US:AM)2024-08-01 19:40Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2024 was $255 million, a 5% increase year-over-year [9] - Free cash flow after dividends was $43 million, a 41% increase compared to Q2 2023 [9] - Leverage remained flat at 3.1 times despite a $70 million acquisition during the quarter [9][10] Business Line Data and Key Metrics Changes - Antero Midstream closed a $70 million acquisition from Summit Midstream, which included two compressor stations and approximately 50 miles of high-pressure pipelines [5][6] - The acquisition is expected to be immediately accretive to free cash flow and supports future development by Antero Resources [6] Market Data and Key Metrics Changes - Antero Resources has a peer-leading free cash flow breakeven gas price of $2.20 per Mcf, attributed to strong well performance and high exposure to liquids prices [7] - Despite NYMEX gas prices averaging $2.07 in the first half of 2024, Antero Resources' unhedged outspend was only $59 million, significantly lower than peers [8] Company Strategy and Development Direction - The company continues to execute a business plan focused on organic growth supplemented by bolt-on acquisitions [12] - Antero Midstream aims to achieve a leverage target of 3.0 times in the second half of the year, positioning itself to return additional capital to shareholders [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of maintaining a strong balance sheet and financial flexibility through successful refinancings [10][11] - The company is optimistic about its ability to generate consistent free cash flow and achieve its debt and leverage targets [11] Other Important Information - The company has received an upgrade to investment grade for Antero Resources, reflecting its balance sheet strength and operational performance [8][11] - Antero Midstream has maintained a $500 million buyback authorization, with plans to initiate buybacks once leverage targets are met [21] Q&A Session Summary Question: Was the potential delay in gathering and compressing volumes from the deferred pad at AR reflected in guidance? - Yes, the guidance update includes this potential delay, and no changes are expected as a result [16] Question: Can you provide insights on water results in Q2? - The decline in water volumes was due to the timing of well servicing, with expectations for increased volumes in Q3 [17][18] Question: What is the thought process on buybacks once the leverage target is achieved? - The company plans to start the buyback program in the second half of the year, with a focus on using the $500 million authorization efficiently [21] Question: What are the drivers of base business growth in 2024? - The increase in EBITDA guidance is driven by the recent acquisition and expected flat volumes year-over-year [22][23] Question: How sensitive is the timing of the buyback to the deferral at AR? - The timing of the buyback is not significantly impacted by changes in EBITDA or leverage due to the scale of the debt [30] Question: Any updates on third-party opportunities? - Conversations regarding third-party opportunities continue, particularly in Ohio, but no definitive outcomes have been established yet [32]