Antero Midstream (US:AM)2022-07-28 18:05Financial Data and Key Metrics Changes - Antero Midstream's low pressure gathering volumes were 3 Bcf per day, a 3% increase year-over-year, while compression volumes were 2.8 Bcf per day, reflecting a 1% increase year-over-year [12] - Free cash flow before dividends exceeded $100 million, with free cash flow after dividends breakeven [14] - The company expects to generate increasingly positive free cash flow after dividends in the latter half of the year, driven by declining capital expenditures [15] Business Line Data and Key Metrics Changes - Freshwater delivery volumes averaged 110,000 barrels per day with 15 wells serviced, with year-to-date serviced wells totaling 36 compared to a guidance of 75 to 80 wells [13] - The Castle Peak compressor station has an initial capacity of 160 million cubic feet per day, with plans to expand to 240 million cubic feet per day in 2023 [7] Market Data and Key Metrics Changes - Antero Midstream is well positioned in the liquids-rich midstream corridor, which is expected to see throughput growth due to strong well performance [10] - The company has maintained high utilization rates averaging 85% over the last five years, allowing for capital optimization through the relocation and reuse of legacy assets [8] Company Strategy and Development Direction - The company is focused on expanding its footprint into the liquids-rich midstream corridor while optimizing its capital program [11] - Antero Midstream aims to achieve a leverage target of 3x by 2024, at which point it will evaluate further return of capital strategies [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth plan, citing improved well performance and a multi-decade drilling inventory [16] - The company believes it has one of the most derisked business profiles in the midstream industry, with unmatched visibility into attractive volume and cash flow growth [16] Other Important Information - Antero Resources, the primary customer, has paid down over $2 billion of debt in the last two years and is nearing investment-grade ratings [17] - The company expects to see a significant increase in free cash flow in the near to medium term, positioning it as an attractive investment opportunity in the midstream space [17] Q&A Session Summary Question: Impact of improving well performance on Antero Midstream - Management indicated that improved well performance could lead to lower capital intensity and better returns on assets [18][19] Question: Potential decrease in gathering CapEx due to well results - Management stated it is too early to quantify potential decreases in gathering CapEx but will provide updates in 2023 [21][22] Question: Compression side opportunities - Management noted that there are opportunities for additional capacity reuse, with a potential of 50 million cubic feet over a five to seven-year period [24] Question: Cash allocation between Antero Resources and Antero Midstream - Management discussed the valuation disconnect between the two entities and indicated that Antero Resources is focused on buying back its shares [27] Question: Water side of the business and quarterly cadence - Management provided guidance on servicing wells, expecting a distribution of 55% in the third quarter and 45% in the fourth quarter [30] Question: High-pressure volumes and compression capacity - Management clarified that the recent drop in high-pressure volumes was related to specific pads and does not indicate a long-term trend [32]