Antero Midstream (US:AM)2021-10-28 18:37Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2021 was $219 million, with capital expenditures of $80 million during the quarter, slightly lower than previous guidance due to weather impacts [14][15] - Year-to-date free cash flow after dividends totaled $32 million, allowing the company to reduce leverage to 3.6 times [15][16] - The company expects to remain within its capital guidance range of $240 to $260 million for the full year [15] Business Line Data and Key Metrics Changes - The Smithburg one processing plant was placed online in early July, adding 200 million cubic feet per day of processing capacity, bringing total joint venture processing capacity to 1.6 BCF per day [6][14] - Compression capacity averaged 86% utilization, while processing and fractionation capacity averaged 96% and 93% respectively during the quarter [13] Market Data and Key Metrics Changes - Approximately one-third of Antero Resources' LPG exports went to developing nations in 2020, a trend that continued into 2021 [10][11] - The company reported a significant reduction in methane leak loss rate to 0.15%, well below the industry goal of 1% [12] Company Strategy and Development Direction - The company is focused on building out its midstream infrastructure to support Antero Resources' drilling partnership, with plans for a high-pressure pipeline and low-pressure gathering infrastructure [7][9] - Antero Midstream is targeting approximately $500 million of free cash flow after dividends from 2021 through 2025, aiming for a completely undrawn credit facility by the end of that period [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term visibility provided by the partnership with Antero Resources, which supports their capital investment strategy [16] - The company does not expect to be a cash taxpayer through the end of the 2020s, with potential tax payments beginning in the 2030s [22] Other Important Information - The company has received multiple credit rating upgrades in 2021, reflecting its strong liquidity position and improved financial strength [17] - Antero Midstream has aligned executive compensation with ESG performance and established an ESG committee to enhance its commitment to environmental and social governance [12] Q&A Session Summary Question: Expectations for completions in Q4 - Management expects low to mid double-digits for completions in Q4, consistent with previous guidance [20] Question: Impact of corporate minimum tax on cash flow - Management does not anticipate any changes to cash flow outlook due to proposed tax changes, expecting to remain a non-cash taxpayer through the end of the decade [22] Question: Capital allocation and potential for buybacks - Management targets a leverage ratio of three times, with evaluations for capital returns to occur after achieving this target [24] Question: Rate relief program extension - Management clarified that the rate relief program runs through Q4 2023, with no plans for extension [26] Question: Ethane extraction and JV frac volumes - Management noted that Antero Midstream does not participate in ethane recovery, so there will be no impact from increased ethane volumes [30] Question: 2022 capital expenditure guidance - Management confirmed that the capital expenditure range for 2022 remains $275 to $300 million despite inflationary pressures [33] Question: Capital required if Antero Resources elects to drill - Management indicated that Antero Resources considers the full picture when making development decisions, but currently plans for maintenance capital only [36]