Antero Midstream Stock

Antero Midstream Corporation operates as a growth-oriented midstream energy company that owns, operates and develops midstream energy assets that primarily service Antero Resources’ production and completion activity in the Appalachian Basin located in West Virginia and Ohio. The company’s operations are located in the United States.

The company’s assets consist of gathering systems and compression facilities, water handling and blending facilities and interests in processing and fractionation plants. The company conducts its operations and owns its operating assets and ownership interests in the Joint Venture and Stonewall through Antero Midstream Partners LP (Antero Midstream Partners) and its subsidiaries, all of which are wholly-owned. Additionally, Antero Resources Corporation (Antero Resources) had a 29.0% ownership interest in the company as of December 31, 2023.

Segments

The company operates through two segments, Gathering and Processing, and Water Handling

The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in the Appalachian Basin, as well as equity in earnings from its investments in the Joint Venture and Stonewall. The Joint Venture and Stonewall provide processing and fractionation services and high pressure gas gathering services, respectively, in the Appalachian Basin.

The Water Handling segment includes two independent systems that deliver water from sources, including the Ohio River, local reservoirs and several regional waterways, and other fluid handling services, which include high rate transfer, wastewater transportation, disposal and blending. Portions of these water handling systems are also utilized to transport flowback and produced water. The Water Handling systems consist of permanent buried pipelines, surface pipelines and water storage facilities, as well as pumping stations, blending facilities and impoundments to transport water throughout the systems used to deliver water for well completions.

Assets

The company’s gathering and processing assets consist of high and low pressure gathering pipelines, compressor stations and processing and fractionation plants that collect and process natural gas and NGLs from Antero Resources’ wells in West Virginia and Ohio. The company’s water handling assets include two independent systems that deliver water from sources, including the Ohio River, local reservoirs and several regional waterways. Portions of these systems are also utilized to transport flowback and produced water. The water handling systems consist of permanent buried pipelines, surface pipelines and water storage facilities, as well as pumping stations, blending facilities and impoundments to transport water throughout the systems used to deliver water to Antero Resources’ well completions.

During the year ended December 31, 2023, the company added 17 miles of low pressure pipeline, 6 miles of buried water pipeline and 9 miles of surface water pipeline in the Appalachian Basin. In addition, the company’s compression capacity declined by 0.1 billion cubic feet of natural gas per day (Bcf/d) during the year ended December 31, 2023 as a result of its program to repurpose underutilized compressor units to expand existing or construct new compressor stations. The company plans to redeploy the compressor units taken offline during the year ended December 31, 2023, on the construction of new or expansion of existing compression stations. As of December 31, 2023, the company had the ability to store 5.5 million barrels of water in 36 impoundments. Additionally, the company builds water blending and storage infrastructure to support other fluid handling services that it provides to Antero Resources for well completion and production activities. The company also owns water treatment assets, including the Antero Clearwater Facility (the Clearwater Facility), which it idled in 2019. Since idling the Clearwater Facility, the company has satisfied its obligation to handle Antero Resources’ flowback and produced water through its other fluid handling services.

Relationship with Antero Resources

Antero Resources is the company’s most significant customer and is one of the largest producers of natural gas and NGLs in North America. As of December 31, 2023, substantially all of Antero Resources’ approximate 570,000 gross acres (515,000 net acres) are dedicated to the company for gathering, compression and water services. During the year ended December 31, 2023, Antero Resources produced, on average, 3.4 Bcfe/d net (34% liquids). As of December 31, 2023, Antero Resources’ drilling inventory consisted of 1,588 identified gross potential horizontal well locations (all of which were located on acreage dedicated to us) for gathering and compression and water handling services, which provides the company with significant opportunities for growth as Antero Resources’ active drilling program continues. Antero Resources announced its 2024 drilling. The company derives substantially all of its revenue from Antero Resources.

Operational and Managerial Arrangements with Antero Resources

Gathering and Compression

The company’s gathering and compression service agreements with Antero Resources include the second amended and restated gathering and compression agreement dated December 8, 2019 (the 2019 gathering and compression agreement), a gathering and compression agreement acquired with the Crestwood assets (the Marcellus gathering and compression agreement) and compression agreement acquired with the EnLink assets (the Utica compression agreement and, together with the 2019 gathering and compression agreement and the Marcellus gathering and compression agreement, the gathering and compression agreements). Pursuant to these gathering and compression agreements, Antero Resources has dedicated substantially all of its acreage in West Virginia, Ohio and Pennsylvania to the company for gathering and compression services.

Under the gathering and compression agreements, the company receives a low pressure gathering fee per Mcf, a high pressure gathering fee per thousand cubic feet of natural gas (Mcf) and a compression fee per Mcf, as applicable, subject to annual Consumer Price Index (CPI)-based adjustments

Water Handling Services

Pursuant to the water services agreement, the company provides certain water handling services to Antero Resources within an area of dedication in defined service areas in Ohio and West Virginia. The company also has certain rights of first offer with respect to water services for acreage located outside of the existing dedicated areas. Antero Resources agreed to pay the company for all water handling services provided by it in accordance with the terms of the water services agreement, under which Antero Resources has no minimum volume commitments. Under the agreement, Antero Resources will pay a fixed fee for all fresh water deliveries by pipeline directly to the well site, subject to annual CPI-based adjustments. Antero Resources also agreed to pay the company a fixed fee per barrel for water treatment at the Clearwater Facility, which was idled in the third quarter of 2019 and it expects will remain idled for the foreseeable future. Under the agreement, the company receives a fixed fee for all fresh water deliveries by pipeline directly to the well site, subject to annual CPI-based adjustments. In addition, the company also provides other fluid handling services. These operations, along with the company’s fresh water delivery systems, support well completion and production operations for Antero Resources. These services are provided by the company directly or through third-parties with which it contracts. For other fluid handling services provided by third parties, Antero Resources reimburses its third-party out-of-pocket costs plus 3%. The initial term of the water services agreement runs to 2035.

Gas Processing and NGLs Fractionation

The Joint Venture was formed to develop processing and fractionation assets in Appalachia. In connection with its entry into the Joint Venture with MarkWest, the company released to the Joint Venture its right to provide certain processing and fractionation services on 195,000 gross acres held by Antero Resources in the Appalachian Basin. The company has a right-of-first-offer agreement with Antero Resources for the provision of processing and fractionation services pursuant to which Antero Resources, subject to certain exceptions, may not procure any gas processing or NGLs fractionation services with respect to its production (other than production subject to a pre-existing dedication) without first offering it the right to provide such services.

Secondment and Services Agreements

Pursuant to a secondment agreement and a services agreement, Antero Resources seconds employees to the company to provide operational services with respect to the company’s assets and certain corporate, general and administrative services in exchange for reimbursement of any direct expenses and an allocation of any indirect expenses attributable to its provision of such services. These agreements extend through 2039.

Title to Properties

The company’s real property is classified into two categories: parcels that it owns in fee and parcels in which its interest derives from leases, easements, rights-of-way, permits or licenses from landowners or governmental authorities, permitting the use of such land for its operations. Portions of the land on which the company’s pipelines and major facilities are located are owned by it in fee title, and it has satisfactory title to these lands. The remainder of the land on which the company’s pipelines and major facilities are located are held by it pursuant to surface leases between it, as lessee, and the fee owner of the lands, as lessors.

Regulation

Some of the company’s gas pipelines are subject to regulation by the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to the Natural Gas Pipeline Safety Act of 1968 (NGPSA), with respect to natural gas, and the Hazardous Liquids Pipeline Safety Act of 1979 (HLPSA), with respect to crude oil and NGLs.

The company is also subject to the requirements of the federal Occupational Safety and Health Act, as amended (OSHA), and comparable state laws that regulate the protection of the health and safety of employees. In addition, OSHA’s hazard communication standard, the Emergency Planning and Community Right to Know Act and implementing regulations and similar state statutes and regulations require that information be maintained about hazardous materials used or produced in the company’s operations and that this information be provided to employees, state and local government authorities and citizens.

History

The company was founded in 2002. It was incorporated in 2002. The company was formerly known as Antero Resources Midstream Management LLC and changed its name to Antero Midstream GP LP in 2017. Further, the company changed its name to Antero Midstream Corporation in 2019.