3Q17 Earnings Call November 2, 2017

Transcription

1 3Q17 Earnings Call November 2, 2017

2 ForwardLooking Statements This presentation contains forwardlooking statements. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Antero Midstream Partners LP, and its subsidiaries (collectively, the Partnership ) or Antero Midstream GP LP and its subsidiaries other than the Partnership (collectively, AMGP ) as applicable expect, believe or anticipate will or may occur in the future are forwardlooking statements. The words believe, expect, anticipate, plan, intend, estimate, project, foresee, should, would, could, or other similar expressions are intended to identify forwardlooking statements. However, the absence of these words does not mean that the statements are not forwardlooking. Without limiting the generality of the foregoing, forwardlooking statements contained in this presentation specifically include expectations of plans, strategies, objectives, and anticipated financial and operating results of AMGP, the Partnership and Antero Resources Corporation ( Antero Resources ). These statements are based on certain assumptions made by the AMGP, the Partnership and Antero Resources based on management s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of AMGP or the Partnership, as applicable, which may cause actual results to differ materially from those implied or expressed by the forwardlooking statements. These include the factors discussed or referenced under the heading Item 1A. Risk Factors in our Annual Report on Form 10K for the year ended December 31, 2016 and in the Partnership s subsequent filings with the SEC, as well as the factors discussed under Risk Factors in AMGP s final prospectus dated May 3, 2017 and filed with the SEC on May 5, AMGP and the Partnership caution you that these forwardlooking statements are subject to risks and uncertainties that may cause these statements to be inaccurate, and readers are cautioned not to place undue reliance on such statements. These risks include, but are not limited to, Antero Resources expected future growth, Antero Resources ability to meet its drilling and development plan, commodity price volatility, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks discussed or referenced under the heading Item 1A. Risk Factors in the Partnership s Annual Report on Form 10K for the year ended December 31, 2016 and in the Partnership s subsequent filings with the SEC. The Partnership s ability to make future distributions is substantially dependent upon the development and drilling plan of Antero Resources, which itself is substantially dependent upon the review and approval by the board of directors of Antero Resources of its capital budget on an annual basis. In connection with the review and approval of the annual capital budget by the board of directors of Antero Resources, the board of directors will take into consideration many factors, including expected commodity prices and the existing contractual obligations and capital resources and liquidity of Antero Resources at the time. In addition, AMGP s ability to make future distributions is substantially dependent on the Partnership s business, financial conditions and the ability to make distributions. Any forwardlooking statement speaks only as of the date on which such statement is made, and neither AMGP or the Partnership undertakes any obligation to correct or update any forwardlooking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Antero Midstream Partners LP is denoted as AM, Antero Midstream GP LP is denoted as AMGP and Antero Resources Corporation is denoted as AR in the presentation, which are their respective New York Stock Exchange ticker symbols. 1

3 Wellhead Production (Cumulative MMcf) Well Recoveries Continue to Improve AR s production from advanced completions is outperforming the 2.0 Bcf/1,000 wellhead type curve 2,500 lb/ft completions are 17% above type curve (First 243 days) AR Type Curve Outperformance 3,500 3,000 1,875 lb/ft $0.89 MM/1,000 Well Cost 90 wells 40 Bbl/ft of Water 1,500 lb/ft $0.85 MM/1,000 Well Cost 38 wells 34 Bbl/ft of Water 2,500 2,000 1,500 2,500 lb/ft $0.97 MM/1,000 Well Cost 21 wells 48 Bbl/ft of Water 2.0 Bcf/1,000' Type Curve Cumulative Production 1, Days From Peak Gas 1. Cumulative average production per well normalized to a 9,000 lateral. Cumulative production lines excludes wellhead condensate. 2. 1,875 pounds per foot type curve represents 1,750 pounds per foot wells and 2,000 pounds per foot wells. 2

4 Midstream Capital Efficiencies Continue to Improve Longer lateral wells, increasing recoveries per well, and more wells per pad result in more efficient gathering, compression and freshwater delivery capital investment Increasing Lateral Lengths (Feet) Increasing Wells Per Pad 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 17,400 10,300 8, A 2017E Record A 2017E Record Increasing Recoveries Per 1,000 (Bcfe) Increasing Water Per Foot (Bbl/ft) A 2017E Record A 2017E Record 3

5 Antero Clearwater Facility Nearing Completion Largest shale oil and gas related water treatment facility in the world 60,000 Bbls/d capacity 100% fixed fee long term contracts Compliments fresh water delivery infrastructure ($800 million investment) At full capacity, will eliminate ~172,000 water truck trips per year, or ~15 MMBbls 4

6 High Growth Midstream Throughput High growth throughput driven by derisked sponsor development plan Low Pressure Gathering (MMcf/d) Compression (MMcf/d) 2,000 1,800 1,600 1,400 1,200 1, Fixed Fee: $0.32/Mcf 1,431 1,587 3Q Q ,400 1,200 1, Fixed Fee: $0.19/Mcf 1, Q Q 2017 High Pressure Gathering (MMcf/d) Fresh Water Delivery (MBbl/d) 2,000 1,800 1,600 1,400 1,200 1, Fixed Fee: $0.19/Mcf 1,351 1,918 3Q Q Fixed Fee: $3.69/Bbl Q Q 2017 Note: All fees are as of year end Marcellus Utica 5

7 Attractive Return on Invested Capital Attractive project rates of return and increasing capital efficiencies result in economic and rapidly improving Partnershipwide return on invested capital (ROIC) AM Return on Invested Capital (ROIC) AM s focus on organic growth and capital efficiencies results in an increasing returns on invested capital through 2020 based on consensus estimates Antero Midstream s ROIC declined in 2015 due to the water dropdown transaction and associated earnout payment included in liabilities on balance sheet 2017 estimated ROIC of 15% in fourth year of operations 25% 20% 15% 10% 12% 9% 12% 15% 17% 19% 20% Return on Invested Capital = 5% Net Income + Interest Expense + Taxes Average Total Liabilities and Partners Capital Current Liabilities 0% Actual Consensus 2014A 2015A 2016A 2017E 2018E 2019E 2020E Source: Factset consensus estimates. 6

8 $1 Billion Delevering Program Completed Antero monetized over $1 billion of none&p assets through the sale of $311 million of AM common units and $750 million through hedge restructuring Restructuring of hedge swap prices resulted in no change to hedge volumes 80% of targeted natural gas production hedged through 2020 at $3.43/MMBtu $1.2 billion of remaining hedge value Utilizing a portion of net operating losses carried forward to eliminate cash taxes on realized gains BBtu/d 2,400 2,000 1,600 1, $3.64 No Change to Price $3.91 $3.50 $ x 3.0x 2.0x 1.0x 0.0x $3.63 $3.50 $3.25 AR Leverage Reduction (1) 3.4x Natural Gas Hedge Position Consolidated 3.2x Standalone 3.0x 2.6x 6/30/2017 9/30/2017 Previous Hedge Price Restructured Hedge Price $3.31 $3.00 Remaining Value as of 9/30/17: $1.2 Billion (2) Hedged Volume ~$750 Million of Proceeds $3.16 $3.00 Current NYMEX Strip (2) $2.91 $/Mcf $4.00 $3.00 $ AR standalone LTM EBITDAX includes $119 million in distributions from AR s ownership of AM common units. 2. Nymex strip pricing as of 9/30/

9 Appendix 8

10 9 Antero Midstream EBITDA Reconciliation EBITDA and DCF Reconciliation Three months ended $ in thousands June 30, Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow: Net income $49,912 $87,175 Interest expense 3,879 9,015 Depreciation expense 24,140 30,512 Accretion of contingent acquisition consideration 3,461 3,590 Equitybased compensation 6,793 6,951 Equity in earnings from unconsolidated affiliate (484) (3,623) 5,820 Adjusted EBITDA $87,701 $139,440 Interest paid (4,264) (2,308) Cash reserved for payment of income tax withholding upon vesting of Antero Midstream Partners LP equitybased compensation awards (1,000) (2,431) Cash to be received from unconsolidated affiliates 778 Cash reserved for bond interest (8,734) Maintenance capital expenditures (5,710) (16,422) Distributable Cash Flow $77,505 $109,545

11 10 Cautionary Note Regarding Hydrocarbon Quantities The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserve estimates (collectively, 3P ). Antero has provided internally generated estimates for proved, probable and possible reserves in this presentation in accordance with SEC guidelines and definitions, which have been audited by Antero s thirdparty engineers. Unless otherwise noted, reserve estimates as of December 31, 2016 assume ethane rejection and strip pricing. Actual quantities that may be ultimately recovered from Antero s interests may differ substantially from the estimates in this presentation. Factors affecting ultimate recovery include the scope of Antero s ongoing drilling program, which will be directly affected by commodity prices, the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors, and actual drilling results, including geological and mechanical factors affecting recovery rates. In this presentation: 3P reserves refer to Antero s estimated aggregate proved, probable and possible reserves as of December 31, The SEC prohibits companies from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category. EUR, or Estimated Ultimate Recovery, refers to Antero s internal estimates of per well hydrocarbon quantities that may be potentially recovered from a hypothetical future well completed as a producer in the area. These quantities do not necessarily constitute or represent reserves within the meaning of the Society of Petroleum Engineer s Petroleum Resource Management System or the SEC s oil and natural gas disclosure rules. Condensate refers to gas having a heat content between 1250 BTU and 1300 BTU in the Utica Shale. Highlyrich gas/condensate refers to gas having a heat content between 1275 BTU and 1350 BTU in the Marcellus Shale and 1225 BTU and 1250 BTU in the Utica Shale. Highlyrich gas refers to gas having a heat content between 1200 BTU and 1275 BTU in the Marcellus Shale and 1200 BTU and 1225 BTU in the Utica Shale. Rich gas refers to gas having a heat content of between 1100 BTU and 1200 BTU. Dry gas refers to gas containing insufficient quantities of hydrocarbons heavier than methane to allow their commercial extraction or to require their removal in order to render the gas suitable for fuel use.