What changed in this filing

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Item 3. Legal Proceedings

2021-02-17 compared with 2020-02-12 · 62 added, 37 removed, 127 unchanged (44% of the section changed)

2 unchanged sentences

As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business.

However, we are not currently subject to any material litigation.

We maintain insurance policies with insurers in amounts and with coverage and deductibles that we, with the advice of our insurance advisors and brokers, believe are reasonable and prudent.

We cannot, however, assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices.

The Company is currently involved in a consolidated lawsuit with Veolia Water Technologies, Inc.

(“Veolia”) and Veolia Water North America Operating Services, LLC (“Veolia North America”) relating to the Clearwater Facility.

On March 13, 2020, Antero Treatment LLC (“Antero Treatment”), a wholly owned subsidiary of the Company, filed suit against Veolia and Veolia North America in the district court of Denver County, Colorado, asserting claims of fraud, breach of contract and other related claims.

Antero Treatment alleges that Veolia failed to meet its contractual obligations to design and build a “turnkey” wastewater disposal facility under a Design/Build Agreement dated August 18, 2015 (the “DBA”), and that Veolia fraudulently concealed certain design flaws during contract negotiations and continued to conceal and fraudulently misrepresent the impact of certain design changes post-execution of the DBA.

Antero Treatment is seeking damages from Veolia of at least $457 million, which represents the Company’s recorded impairment of the idled Clearwater Facility.

In the alternative, Antero Treatment sought rescission of the DBA and restitution of, at a minimum, the $230 million out-of-pocket costs paid to Veolia pursuant to the DBA.

Antero Treatment also asserts related claims against Veolia North America, including equitable claims with respect to certain amounts Antero paid to Veolia North America.

On March 13, 2020, Veolia filed a separate suit against the Company, Antero Resources, and certain of the Company’s wholly owned subsidiaries (collectively, the “Antero Defendants”) in Denver County, Colorado.

In its lawsuit, Veolia asserts breach of contract and equitable claims against the Antero Defendants for alleged failures under the DBA, including an allegation that the Antero Defendants improperly terminated the DBA to prevent Veolia from earning an approximate $26 million contract balance.

The Antero Defendants vigorously deny Veolia’s claims.

Veolia seeks money damages in an amount not yet specified.

Veolia’s suit has been consolidated into the action filed by Antero Treatment.

On April 17, 2020, Veolia, Veolia North America and the Antero Defendants each filed partial motions to dismiss directed at certain claims asserted by the opposing party.

On July 23, 2020, the Court dismissed Veolia’s equitable claims against the Antero

Defendants and Antero Treatment’s alternative claim for rescission against Veolia.

All other claims remain part of the consolidated action.

The case is set for trial beginning on November 29, 2021.

Mine Safety Disclosure s

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Total Number of

Approximate Value

Dollar Value of

Average Price

Shares Purchased

of Shares that May

Shares that May

as Part of Publicly

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December 1, 2020 – December 31, 2020

(1) The total number of shares purchased includes 974 shares repurchased in October 2019, representing shares of our common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of equity awards held by our employees.

There were no such repurchases in November and December.

(1) The total number of shares purchased represents shares of our common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of equity awards held by our employees.

(2) In August 2019, the Board authorized a $300 million share repurchase program.

On December 16, 2019, we repurchased 19,377,592 shares of our common stock from Antero Resources at a price of $5.1606 per share, which shares were thereafter cancelled.

During the three months ended December 31, 2020, we did not make any repurchases under this program .

On January 20, 2021, the Board declared an aggregate cash dividend on the shares of our common stock of $0.3075 per share for the quarter ended December 31, 2020.

The dividend will be payable on February 12, 2020 to stockholders of record as of January 31, 2020.

The Board also declared a cash dividend of $138 thousand on shares of our Series A Preferred Stock to be paid on February 14, 2020 in accordance with the terms of the Series A Preferred Stock, which are discussed in Note 14—Equity and Earnings Per Common Share to our consolidated financial statements.

The dividend will be payable on February 11, 2021 to stockholders of record as of February 3, 2021.

The Board also declared a cash dividend of $138 thousand on shares of our Series A Non-Voting Perpetual Preferred Stock, par value $0.01 (the “Series A Preferred Stock”), to be paid on February 16, 2021 in accordance with the terms of the Series A Preferred Stock, which are discussed in Note 14—Equity and Earnings Per Common Share to our consolidated financial statements.

As of December 31, 2020, there were dividends in the amount of $69 thousand accumulated in arrears on our Series A Preferred Stock.

Stock Performance Graph

The graph below shows the cumulative total shareholder return assuming the investment of $100 on May 4, 2017, the date of our initial public offering, in each of our predecessor’s common shares through March 12, 2019 and our common stock thereafter, the Standard & Poor’s 500 (“S&P 500”) Index, and the Alerian Midstream Energy (“AMNA”) Index.

Standard & Poor’s 500 (“S&P 500”) Index, and the Alerian Midstream Energy (“AMNA”) Index.

We believe the AMNA Index is meaningful because it is an independent, objective view of the performance of similarly-sized midstream energy companies.

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The Merger has been accounted for as an acquisition by AMGP of Antero Midstream Partners under ASC 805 – Business Combinations and accounted for as a business combination, with the assumed assets and liabilities of Antero Midstream Partners recorded at their estimated fair value.

As a result of the Merger, our historical financial data for previous periods are not comparable to the year ended December 31, 2019 or to our future financial results.

T he selected financial data for the years ended December 31, 2015, 2016, 2017 and 2018 are the financial statements of AMGP and its consolidated subsidiaries, which do not include Antero Midstream Partners and its subsidiaries.

As a result of the Merger, our historical financial data for previous periods are not comparable to the years ended December 31, 2019 and 2020 or to our future financial results.

The selected financial data for the years ended December 31, 2016, 2017 and 2018 are the financial statements of AMGP and its consolidated subsidiaries, which do not include Antero Midstream Partners and its subsidiaries.

Effective March 12, 2019, we began consolidating Antero Midstream Partners and its subsidiaries in our consolidated financial statements.

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Accordingly, we are also presenting our pro forma results of operations for the years ended December 31, 2018 and December 31, 2019, which give effect to the adjustments described in Exhibit 99.1 to this Annual Report on Form 10-K.

forma information presented below should be read in conjunction with the unaudited pro forma condensed combined financial statements, which are filed as Exhibit 99.1 to this Annual Report on Form 10-K and describe the assumptions and adjustments used in preparing such information.

The pro forma adjustments are based on currently available information and certain estimates and assumptions.

The pro forma information presented below should be read in conjunction with the unaudited pro forma condensed combined financial statements, which are filed as Exhibit 99.1 to this Annual Report on Form 10-K and describe the assumptions and adjustments used in preparing such information.

The pro forma adjustments are based on currently available information and certain estimates and

Therefore, the actual adjustments may differ from the pro forma adjustments.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this report:

Year Ended December 31,

(in thousands, except per share amounts)

9 unchanged sentences

Facility idling

Impairment of property and equipment

Impairment of goodwill

Impairment of property and equipment

Impairment of customer relationships

1 unchanged sentence

Accretion of asset retirement obligations

Loss on asset sale

Total operating expenses

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Weighted average common shares outstanding:

Year Ended December 31,

(in thousands, except per share amounts)

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Net cash used in investing activities

Net cash activities provided by (used in) financing activities

Net cash used in financing activities

Other financial data:

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Pro forma Net income (loss)

Pro forma Adjusted EBITDA (1)

For a discussion of the non-GAAP financial measure Pro Forma Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to its most directly comparable financial measures calculated and presented in accordance with GAAP, please read “—Non-GAAP Financial Measure” below.

Adjusted EBITDA (1)(2)

(1) Adjusted EBITDA is a non-GAAP financial measure.

For a discussion of this measure, including a reconciliation to its most directly comparable financial measure calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures”.

(2) 2018 and 2019 information is Pro Forma.

The following table presents our pro forma results of operations for the years ended December 31, 2018 and 2019, which give effect to the adjustments described in Exhibit 99.1 to this Annual Report on Form 10-K.

9 unchanged sentences

General and administrative (excluding equity-based compensation)

Facility idling

Equity-based compensation

Facility idling

Impairment of property and equipment

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Net income (loss) and comprehensive income (loss)

Non-GAAP Financial Measure

We use Pro Forma Adjusted EBITDA as an important indicator of our performance.

We define Pro Forma Adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation, impairment, accretion and changes in fair value of contingent acquisition consideration, accretion of asset retirement obligations, equity-based compensation, excluding equity in earnings of unconsolidated affiliates, contract restructuring expenses, amortization of customer relationships and including cash distributions from unconsolidated affiliates and including Antero Midstream Partners’ pre-acquisition:

net income before interest expense, depreciation, impairment, accretion and changes in fair value of contingent acquisition consideration, accretion of asset retirement obligations, equity-based compensation, amortization of customer relationships excluding equity in earnings of unconsolidated affiliates, including cash distributions from unconsolidated affiliates and excluding equity in earnings of Antero Midstream Partners.

We use Pro Forma Adjusted EBITDA to assess:

Non-GAAP Financial Measures

We use Adjusted EBITDA as an important indicator of our performance.

In our presentation of Adjusted EBITDA for the year ended December 31, 2020, net income (loss) and the corresponding adjustments reflect our actual results of operations.

In our presentation of Adjusted EBITDA for the years ended December 31, 2019 and 2018, net income (loss) and the corresponding adjustments reflect our pro forma results of operations.

The pro forma information should be read in conjunction with the unaudited pro forma condensed combined financial statements, which are filed as Exhibit 99.1 to this Annual Report on Form 10-K.

For more information, see “Items Affecting Comparability of Our Financial Results.”

We define Adjusted EBITDA as net income before net interest expense, income tax expense, depreciation, impairment, accretion and changes in fair value of contingent acquisition consideration, accretion of asset retirement obligations, equity-based compensation, excluding equity in earnings of unconsolidated affiliates, contract restructuring expenses, amortization of customer relationships, gains and losses on asset sales and including cash distributions from unconsolidated affiliates.

We use Adjusted EBITDA to assess:

● the financial performance of our assets, without regard to financing methods capital structure or historical cost basis;

1 unchanged sentence

● the viability of acquisitions and other capital expenditure projects.

Pro Forma Adjusted EBITDA is a non-GAAP financial measure.

The GAAP measure most directly comparable to Pro Forma Adjusted EBITDA is Pro Forma Net income (loss).

The non-GAAP financial measure of Pro Forma Adjusted EBITDA should

not be considered as an alternative to the GAAP measure of net income.

Pro Forma Adjusted EBITDA presentations are not made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Pro Forma Net income (loss).

You should not consider Pro Forma Adjusted EBITDA in isolation or as a substitute for analyses of results as reported under GAAP.

Our definition of Pro Forma Adjusted EBITDA may not be comparable to similarly titled measures of other corporations.

The following table represents a reconciliation of our Pro Forma Adjusted EBITDA to the most directly comparable GAAP financial measure for the periods presented:

Adjusted EBITDA is a non-GAAP financial measure.

The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss).

The non-GAAP financial measure of Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income (loss).

Adjusted EBITDA presentations are not made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect net income (loss).

You should not consider Adjusted EBITDA in isolation or as a substitute for analyses of results as reported under GAAP.

Our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other corporations.

The following table represents a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP financial measure for the periods presented:

Year Ended December 31,

(in thousands)

Reconciliation of Pro Forma Net Income (Loss) to Pro Forma Adjusted EBITDA:

Pro Forma Net income (loss)

Interest expense

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

Net income (loss)

Interest expense, net

Income tax expense (benefit)

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Equity in earnings of unconsolidated affiliates

Distributions from unconsolidated affiliates

Contract restructuring fees

Gain on sale of assets–Antero Resources

Pro Forma Adjusted EBITDA

Loss on asset sale

Contract restructuring fees

Distributions from unconsolidated affiliates

Adjusted EBITDA

(1) Pro Forma.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings