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Item 9A. Controls and Procedures

2021-02-17 compared with 2020-02-12 · 416 added, 551 removed, 882 unchanged (52% of the section changed)

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As required by Rule 13a-15(b) under the Exchange Act we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d- 15(e) under the Exchange Act) as of the end of the period covered by this annual report.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported,

within the time periods specified in the SEC’s rules and forms.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2020 at a reasonable assurance level.

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Pursuant to General Instruction G(3) to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2021 Annual Meeting of Stockholders.

Directors and Executive Officers

The following table sets forth names, ages and titles of our directors and executive officers as of February 12, 2020:

Chairman and Chief Executive Officer

Director, President and Secretary

Chief Financial Officer and Senior Vice President

Chief Administrative Officer and Regional Senior Vice President

Senior Vice President - Reserves, Planning & Midstream

Howard Keenan, Jr.

Set forth below is the description of the backgrounds of our directors and executive officers.

Rady has served as our Chief Executive Officer and Chairman of the Board of Directors since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Rady served as Chief Executive Officer of the general partner of AMGP beginning in January 2017 and as Chairman of the Board of Directors of such entity beginning in April 2017.

Rady also previously served as Chief Executive Officer and Chairman of the Board of Directors of AMGP beginning in February 2014.

Rady was a co-founder and has served as Chief Executive Officer and Chairman of the Board of Directors of Antero Resources since May 2004 and of its predecessor company from its founding in 2002 until its sale to XTO Energy, Inc.

in April 2005.

Prior to Antero, Mr.

Rady served as President, CEO and Chairman of Pennaco Energy from 1998 until its sale to Marathon in early 2001.

Prior to Pennaco, Mr.

Rady was with Barrett Resources from 1990 until 1998 where he initially was recruited as Chief Geologist in 1990, then served as Exploration Manager, EVP Exploration, President, COO and Director and ultimately CEO.

Rady began his career with Amoco where he served 10 years as a geologist focused on the Rockies and Mid-Continent.

Rady is the managing member of Salisbury Investment Holdings, LLC.

Rady holds a B.A.

in Geology from Western Colorado University and M.Sc.

in Geology from Western Washington University.

Rady’s significant experience as a chief executive of oil and gas companies, together with his training as a geologist and broad industry knowledge, enable Mr.

Rady to provide the board with executive counsel on a full range of business, strategic and professional matters.

has served as our President and Secretary and as a director since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Warren served as President and Secretary of the general partner of AMGP beginning in January 2017, and as a director of such entity beginning in April 2017.

Warren also previously served as President and Secretary and as a director of AMGP beginning in January 2016, prior to which he served as President, Chief Financial Officer and Secretary and as a director beginning in February 2014.

Warren was a co-founder and has served as President, Chief Financial Officer and Secretary and as a director of Antero Resources since May 2004 and of its predecessor company from its founding in 2002 until its sale to XTO Energy, Inc.

in April 2005.

Prior to Antero Resources, Mr.

Warren served as EVP, CFO and Director of Pennaco Energy from 1998 until its sale to Marathon in early 2001.

Warren spent 10 years as a natural resources investment banker focused on equity and debt financing and M&A advisory with Lehman Brothers, Dillon Read and Kidder Peabody.

Warren began his career as a landman in the Gulf Coast region with Amoco, where he spent six years.

Warren is the managing member of Canton Investment Holdings, LLC.

Warren holds a B.A.

from the University of Mississippi, a J.D.

from the University of Mississippi School of Law and an M.B.A.

from the Anderson School of Management at U.C.L.A.

Warren’s significant experience as a chief financial officer of oil and gas companies, together with his experience as an investment banker and broad industry knowledge, enable Mr.

Warren to provide the board with executive counsel on a full range of business, strategic, financial and professional matters.

Kennedy has served as our Chief Financial Officer since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Kennedy served as Chief Financial Officer and Senior Vice President of Finance of AMGP beginning in January 2016, prior to which he served as Vice President of Finance of such entity beginning in August 2013.

Kennedy has also served as Senior Vice President of Finance of Antero Resources since January 2016, prior to which he served as Vice President of Finance from August 2013 to December 2015.

Kennedy was Executive Vice President and Chief Financial Officer of Forest Oil Corporation (“Forest”) from 2009 to 2013.

From 2001 until 2009, Mr.

Kennedy held various financial positions of increasing responsibility within Forest.

From 1996 to 2001, Mr.

Kennedy was an auditor with Arthur Andersen focusing on the Natural Resources industry.

Kennedy holds a B.S.

in Accounting from the University of Colorado at Boulder.

Schopp has served as our Chief Administrative Officer and Senior Regional Vice President since January 2020, as Chief Administrative Officer, Regional Senior Vice President and Treasurer from the closing of the Transactions in March 2019 to December 2019.

Prior to the Transactions, Mr.

Schopp served as Chief Administrative Officer, Senior Regional Vice President, and Treasurer of AMGP beginning in January 2016, prior to which he served as Chief Administrative Officer, Regional Vice President and Treasurer of such entity beginning in February 2014.

Schopp has also served as Chief Administrative Officer and Senior Regional Vice President of Antero Resources since January 2020, as Chief Administrative Officer, Regional Senior Vice President and Treasurer from January 2016 to December 2019, as Chief Administrative Officer, Regional Vice President and Treasurer from October 2013 to January 2016, as Vice President of Accounting and Administration and Treasurer from January 2005 to September 2013, as Controller and Treasurer from 2003 to 2005 and as Vice President of Accounting and Administration and Treasurer of Antero Resources’ predecessor company from January 2005 until its sale to XTO Energy, Inc.

in April 2005.

Schopp has also served as Chief Administrative Officer, Senior Regional Vice President, and Treasurer of the general partner of AMGP since April 2017.

From 1993 to 2000, Mr.

Schopp was CFO, Director and ultimately CEO of T-Netix.

From 1980 to 1993 Mr.

Schopp was with KPMG LLP.

As a Senior Manager with KPMG, he maintained an extensive energy and mining practice.

Schopp holds a B.B.A.

from Drake University.

Patrick Ash has served as our and Antero Resources’ Senior Vice President – Reserves, Planning & Midstream, since June 2019, prior to which he served as our and Antero Resources’ Vice President of Reservoir Engineering and Planning beginning with the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Ash served as Vice President of Reservoir Engineering and Planning of Antero Resources and AMGP beginning in December 2017.

Prior to joining us, Mr.

Ash was at Ultra Petroleum for six years in management positions of increasing responsibility, most recently serving as Vice President, Development, including during and after Ultra’s bankruptcy proceedings, from which it emerged in 2017.

In this position he led the reservoir engineering, geoscience, and corporate engineering groups.

From 2001 to 2011, Mr.

Ash served in engineering roles at Devon, NFR Energy and Encana.

Ash holds a B.S.

in Petroleum Engineering from Texas A&M University and a MBA from Washington University in St.

Peter Dea has served as a director of the Company since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Dea served as a director of the general partner of AMGP beginning in April 2018.

He is the Co-Founder and Executive Chairman of Confluence Resources LP, a Denver, Colorado-based oil and gas exploration and production company, and has been with the company since its inception in September 2016.

Dea also serves on the Boards of Encana Corporation and Liberty Oilfield Services.

Additionally, Mr.

Dea served as Co-Founder, President and CEO of Cirque Resources LP since its inception in May 2007 and served as President, CEO and a Director of Western Gas Resources, Inc., from 2001 through their merger with Anadarko Petroleum Corporation in 2006.

He joined Barrett Resources Corporation in 1993 and was CEO from 1999 and Chairman of the Board from 2000 until its sale in 2001 to Williams.

Prior to joining Barrett, Mr.

Dea held various management and geologic positions for Exxon Company USA.

In addition to receiving geology degrees from the University of Montana, MS, and Western Colorado University, BA, he also attended the Harvard Business School Advanced Management Program.

Dea brings to the Board 35 years of experience and leadership in the exploration and development of multiple shale plays across the U.S., further supporting our integrated long-term strategy and focus.

We believe his background and skill set make Mr.

Dea well-suited to serve as a member of our board of directors.

Howard Keenan, Jr.

has served as a director of the Company since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Keenan served as a director of AMGP beginning in April 2017 and as a director of AMGP beginning in February 2014.

Keenan also has served as a director of Antero Resources since 2004.

Keenan has over 40 years of experience in the financial and energy businesses.

Since 1997, he has been a Member of Yorktown Partners LLC, a private

investment manager focused on the energy industry.

From 1975 to 1997, he was in the Corporate Finance Department of Dillon, Read & Co.

and active in the private equity and energy areas, including the founding of the first Yorktown Partners fund in 1991.

He is serving or has served as a director of multiple Yorktown Portfolio companies and currently serves as a director of the following public companies:

Brigham Minerals, Inc.

and Solaris Oilfield Infrastructure, Inc.

Keenan holds an B.A.

degree cum laude from Harvard College and an M.B.A.

degree from Harvard University.

Keenan has significant experience with energy companies and investments and broad knowledge of the oil and gas industry.

We believe his background and skill set make Mr.

Keenan well-suited to serve as a member of our board of directors.

Keyte has served as a director of the Company since April 2019.

Keyte is the Chairman of the board and Chief Executive Officer of Caerus Oil and Gas LLC, which he co-founded in November 2009.

Prior to that, Mr.

Keyte held senior executive positions at Forest Oil Corporation from November 1997 until November 2009, including the positions of Chief Financial Officer, Executive Vice President and Chief Accounting officer.

Keyte served on the board of Regal Entertainment Group, a publicly held movie exhibition company, from 2006 until the company was sold in 2018.

Keyte holds a B.S.

degree in economics from the University of Pennsylvania’s Wharton School of Finance.

Keyte has significant experience in executive management and finance in the oil and gas industry.

We believe his background and skill set make Mr.

Keyte well-suited to serve as a member of our board of directors.

Klimley has served as a director of the Company since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Klimley served as a director of the general partner of AMGP beginning in 2017, and as a director of AMGP from March 2015 to 2017.

Klimley joined The Silverfern Group, which is focused on private equity co-investments, after a nearly 25 year career leading investment banking practices covering the energy and mining sectors.

Additionally, Mr.

Klimley has served as an Adjunct Professor at Columbia University’s graduate schools of business and international affairs since 2010.

Previously, Mr.

Klimley acted as President of Brooks J.

Klimley & Associates, an energy advisory services firm focused on strategy and capital raising for energy and natural resources companies.

Prior to founding his own firm in 2009, Mr.

Klimley acted as the President of CIT Energy and held senior leadership positions at a number of financial institutions, including Citicorp, Bear Stearns, UBS and Kidder, Peabody.

Klimley holds a dual B.A.

in Jurisprudence (Law) from Oxford University and a joint degree in Economics and History from Columbia University.

Klimley has significant experience with energy companies and investments and broad knowledge of the oil and gas industry.

We believe his background and skill set make Mr.

Klimley well-suited to serve as a member of our board of directors.

Mollenkopf has served as a director of the Company since the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Mollenkopf served as a director of the general partner of AMGP beginning in April 2017.

Mollenkopf retired from MPLX, L.P.

in October 2016.

He previously served MPLX as Executive Vice President and Chief Operating Officer, MarkWest operations, from December 2015 through September 2016 following the merger of MPLX and MarkWest.

From 2011 through 2015, he served as Executive Vice President and Chief Operating Officer of MarkWest.

Mollenkopf began his employment with MarkWest Hydrocarbon, Inc.

in 1996 as Manager New Projects and progressed to General Manager and later to Vice President of the Michigan Business unit.

Mollenkopf was one of the founders of MarkWest Energy GP, LLC, the general partner of MarkWest.

Between 2002 and 2011, Mr.

Mollenkopf served MarkWest as Vice President — Business Development, Senior Vice President — Southwest Business Unit, Senior Vice President and Chief Operations Officer, Senior Vice President and Chief Operating Officer.

Between 1982 and 1996, Mr.

Mollenkopf worked for ARCO Oil and Gas Company in California and Texas, holding positions of increasing responsibility in facilities, project, process and plant engineering as well as operations supervision.

Mollenkopf holds a Bachelor of Science degree in mechanical engineering from the University of Colorado at Boulder, at which he continues to serve on the Engineering Advisory Council for the college of engineering.

Mollenkopf has significant experience in executive management, business development, marketing, engineering and operations in the oil and gas industry.

We believe his background and skill set make Mr.

Mollenkopf well-suited to serve as a member of our board of directors.

Robeson has served as a director of the Company since the closing of the Transactions in March 2019.

Prior to the Transactions, Ms.

Robeson served as a director of the general partner of AMGP beginning in 2017.

Prior to her retirement in March 2014, Ms.

Robeson was Senior Vice President & Chief Financial Officer of DCP Midstream GP, LLC, the general partner of DCP Midstream Partners, LP from May 2012 until January 2014.

Robeson also served as Group Vice President and Chief Financial Officer of DCP Midstream LLC from January 2002 to May 2012.

Robeson served as a director of American Midstream GP, LLC, the general partner of American Midstream Partners, LP from June 2014 to June 2016.

Robeson served as a

director of Tesco Corporation from November 2015 to December 2017.

Robeson earned her B.S.

degree in accounting from Northwest Missouri State University.

Robeson became a certified public accountant in 1983 and her license is currently inactive.

Robeson is a member of the board of directors of SM Energy, an independent energy company engaged in the acquisition, development, and production of crude oil, natural gas and natural gas liquids in onshore North America, and serves as Audit Committee Chair and serves on the Nominating and Governance Committee.

Robeson is also a director of Newpark Resources, a worldwide provider of drilling fluids systems and composite matting systems used in oilfield services, and serves on the Audit, Nominating and Governance and Compensation committees.

Robeson brings to the Board over 30 years of experience in various aspects of the oil and gas industry, including exploration and production, midstream and refining and marketing.

She also has significant financial management, risk management and accounting oversight experience.

We believe her background and skill set make Ms.

Robeson well-suited to serve as a member of our board of directors.

Code of Ethics

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Pursuant to General Instruction G(3) to Form 10- K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2021 Annual Meeting of Stockholders.

Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related STOCKHOLDER Matters

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Exhibits and Financial Statement Schedules

Exhibit and Financial Statement Schedules

(a)(1) and (a)(2) Financial Statements and Financial Statement Schedules

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001-36719) filed on September 13, 2016).

First Supplemental Indenture, dated as of January 17, 2017, among Antero Midstream Partners LP, Antero Midstream Finance Corporation, Antero Midstream Corporation, each of the other parties identified therein and Wells Fargo Bank, National Association, a national banking association to the indenture governing the 2024 Notes.

001-38075) filed on February 12, 2020).

Second Supplemental Indenture, dated as of April 15, 2019, among Antero Midstream Partners LP, Antero Midstream Finance Corporation, Antero Midstream Corporation, each of the other parties identified therein and Wells Fargo Bank, National Association, a national banking association to the indenture governing the 2024 Notes (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No.

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001-38075) filed on February 25, 2019).

Bank, National Association, a national banking association, to the indenture governing the 2027 Notes (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No.

First Supplemental Indenture, dated as of April 15, 2019, among Antero Midstream Partners LP, Antero Midstream Finance Corporation, Antero Midstream Corporation, each of the other parties identified therein and Wells Fargo Bank, National Association, a national banking association, to the indenture governing the 2027 Notes (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-38075) filed on April 16, 2019).

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001-38075) filed on March 12, 2019).

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended.

Second Amended and Restated Gathering and Compression Agreement, dated as of December 8, 2019, by and between Antero Resources Corporation and Antero Midstream LLC.

Amended and Restated Secondment Agreement, effective as of March 13, 2019, by and between Antero Midstream Corporation, Antero Midstream Partners LP, Antero Midstream Partners GP LLC, Antero Midstream LLC, Antero Water LLC, Antero Treatment LLC and Antero Resources Corporation.

Indenture, dated as of November 10, 2020, by and among Antero Midstream Partners LP, Antero Midstream Finance Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-38075) filed on November 10, 2020)

Form of 7.875% Senior Note due 2026 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No.

001-38075) filed on November 10, 2020).

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

Second Amended and Restated Gathering and Compression Agreement, dated as of December 8, 2019, by and between Antero Resources Corporation and Antero Midstream LLC (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

Second Amended and Restated Services Agreement, effective as of March 13, 2019, by and among Antero Midstream Partners LP, Antero Midstream Corporation, Antero Midstream Partners GP LLC and Antero Resources Corporation (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

Amended and Restated Water Services Agreement, dated as of February 12, 2019, by and between Antero Resources Corporation and Antero Water LLC (incorporated by reference to Exhibit 10.4 to Antero Midstream Partners LP’s Annual Report on Form 10-K (Commission File No.

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001-36719) filed on November 2, 2018).

Second Amendment, dated as of February 26, 2019, by and among the Lenders party thereto, Antero Midstream Partners LP, and Wells Fargo Bank, National Association, as Administrative Agent.

Joinder Agreement, dated as of November 19, 2019, by and among the Lenders party thereto, Antero Midstream Partners LP, and Wells Fargo Bank, National Association, as Administrative Agent.

Second Amendment, dated as of February 26, 2019, by and among the Lenders party thereto, Antero Midstream Partners LP, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

Joinder Agreement, dated as of November 19, 2019, by and among the Lenders party thereto, Antero Midstream Partners LP, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

Amended and Restated Credit Agreement, by and among Antero Midstream Partners LP, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Antero Midstream Partners LP’s Quarterly Report on Form 10-Q (Commission File No.

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001-36719) filed on October 26, 2016).

Voting Agreement, dated as of October 9, 2018, by and among Antero Midstream Partners LP and the shareholders of Antero Midstream GP LP named on Schedule I thereto (incorporated by reference to Exhibit 10.1 to Antero Midstream GP LP’s Current Report on Form 8-K (Commission File No.

001-38075) filed on October 10, 2018).

Voting Agreement, dated as of October 9, 2018, by and between Antero Midstream GP LP and Antero Resources Corporation (incorporated by reference to Exhibit 10.2 to Antero Midstream GP LP’s Current Report on Form 8-K (Commission File No.

Form of Retention Award Grant Notice and Retention Award Agreement under the Antero Midstream Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-38075) filed on April 29, 2020).

Form of Retention Award Grant Notice and Retention Award Agreement under the Antero Midstream Corporation Long Term Incentive Plan (Employees) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-38075) filed on October 28, 2020).

Amendment No.

1 to the Voting Agreement by and between Antero Midstream GP LP and Antero Resources Corporation, dated as of March 11, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission File No.

001-38075) filed on March 12, 2019).

Stockholders’ Agreement, dated as of October 9, 2018, by and among Antero Midstream GP LP, Arkrose Subsidiary Holdings LLC, Paul M.

Rady, Mockingbird Investment, LLC, Glen C.

Warren, Jr., Canton Investment Holdings LLC and the other holders named therein (incorporated by reference to Exhibit 10.3 to Antero Midstream GP LP’s Current Report on Form 8-K (Commission File No.

Warren, Jr., Canton Investment Holdings LLC and the other holders named therein (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission File No.

001-38075) filed on October 10, 2018).

Subsidiaries of Antero Midstream Corporation.

List of Guarantor and Issuer Subsidiaries.

Consent of KPMG LLP.

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Section 1350).

Unaudited pro forma condensed combined financial statements of Antero Midstream Corporation.

Unaudited pro forma condensed combined financial statements of Antero Midstream Corporation (incorporated by reference to Exhibit 99.1 to the Company’s Annual Report on Form 10-K (Commission File No.

001-38075) filed on February 12, 2020).

The following financial information from this Form 10-K of Antero Midstream Corporation for the year ended December 31, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to the Consolidated Financial Statements, tagged as blocks of text.

Cover Page Interactive Data File (embedded within the Inline XBRL document).

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

The exhibits marked with the asterisk symbol (*) are filed or furnished with this Annual Report on Form 10-K.

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February 17, 2021

/s/ JANINE J.

February 17, 2021

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Partners’ Capital and Stockholders’ Equity

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors or

To the Stockholders and the Board of Directors

Antero Midstream Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Antero Midstream Corporation and subsidiaries (the Company) as of December 31, 2018 and 2019, the related consolidated statements of operations and comprehensive income, partners’ capital and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Antero Midstream Corporation and subsidiaries (the Company) as of December 31, 2019 and 2020, the related consolidated statements of operations and comprehensive income (loss), partners’ capital and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S.

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Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting within Item 9A Controls and Procedures.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of lease classification for ongoing modifications to the gathering and compression assets

As discussed in Note 7 to the consolidated financial statements, the Company determined that the gathering and compression agreement with Antero Resources is an operating lease.

Lease classification for ongoing modifications to the gathering and compression assets

As discussed in Note 7 to the consolidated financial statements, the Company determined that the gathering and compression agreement with Antero Resources Corporation is an operating lease.

The Company continues to expand its gathering and compression system to serve its customer and, as a result, the minimum volume commitments and the lease payments increase for the expanded system.

The increases in volume commitments and lease payments are modifications of the arrangement that require reconsideration of the lease classification.

The increases in volume commitments and lease payments are modifications of the agreement that require evaluation of the lease classification.

We identified the evaluation of lease classification for ongoing modifications to the gathering and compression assets as a critical audit matter.

The evaluation of lease classification for these modified leases, including evaluating economic life as a key estimate, required significant judgment.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s process for identifying lease modifications and determining lease classification for those modifications, including controls related to the review and approval of the Company’s lease modifications and the Company’s review of the lease classification.

We evaluated the Company’s accounting memoranda and other documentation underlying the accounting conclusions reached, including application of relevant accounting guidance in regards to the modification accounting and subsequent lease classification.

We evaluated the economic life used in the determination of lease classification.

The evaluation of lease classification for these modified leases, including evaluating the economic life as a key estimate, requires significant judgment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control over the Company’s process for identifying lease modifications and evaluating lease classification for those modifications, including the review and approval of the Company’s lease modifications and the Company’s evaluation of the lease classification.

We evaluated the Company’s accounting memoranda and documentation underlying the accounting conclusions reached, including application of relevant accounting guidance in regard to the modification accounting and subsequent lease classification.

We evaluated the economic life used in the Company’s determination of lease classification by comparing it to relevant industry publications.

We evaluated fixed assets that are placed in service for new minimum volume commitments which would require reassessment of the lease.

Evaluation of the initial measurement of property and equipment and customer relationships acquired in the Antero Midstream Partners LP business combination

As discussed in Note 3 to the consolidated financial statements, on March 12, 2019, the Company acquired Antero Midstream Partners LP in a business combination.

As a result of the transaction, the Company recognized property and equipment of $3,371,427 thousand and customer relationships intangible assets of $1,567,000 thousand.

We identified the evaluation of the initial measurement of property and equipment and the customer relationships acquired in the Antero Midstream Partners LP business combination as a critical audit matter.

There was a high degree of subjectivity in evaluating the key assumptions used to calculate the acquisition date fair value of the property and equipment and the customer relationships intangible assets.

The Company used the indirect cost and market approaches to value the property and equipment.

The key assumptions included the inflationary trend and the useful lives of the underlying assets for the indirect cost method and comparable price per acre for the market approach.

The Company used a discounted cash flow to value the customer relationships for which the key assumptions included forecasted revenue and the discount rate.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s business combination process, including controls related to the selection of the key assumptions used to determine the acquisition date fair value of property and equipment and customer relationships intangible assets.

For the customer relationships intangible assets we evaluated the Company’s forecasts of revenues based on the Company’s

budgets and the Antero Midstream Partners LP historical performance.

Impairment of Utica fresh water assets

As discussed in Note 8 to the consolidated financial statements, the Company evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying values of the assets may not be recoverable.

An impairment loss is recognized if the undiscounted future cash flow projections for the assets being assessed are less than their carrying value.

If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to their estimated fair values based on discounted cash flows, which includes forecasted EBITDA and discount rate assumptions.

During the year ended December 31, 2020 the Company recorded an impairment related to its Utica fresh water assets of $89 million.

We identified the evaluation of the impairment of Utica fresh water assets as a critical audit matter.

There was a high degree of subjectivity in evaluating the key assumptions used to determine the fair value of the Utica fresh water assets.

The Company used a discounted cash flow model to determine the fair value of the Utica fresh water assets which included the key assumptions of forecasted EBITDA and the discount rate.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process of estimating the fair value of Utica fresh water assets, including controls related to the selection of the key assumptions used to determine the fair value of the Utica fresh

water assets.

We evaluated the Company’s forecasted EBITDA by comparing it to the Company’s historical performance.

To assess the Company’s ability to forecast, we compared the Company’s historical EBITDA forecasts to actual results.

In addition, we involved valuation professionals with specialized skills and knowledge who assisted in:

● Evaluating the approaches used to value the respective assets;

● Evaluating the inflationary trends, useful lives, and recent transactions based on publicly available information related to the estimated values for the property and equipment;

● Independently developing range of estimates of the fair value of the property and equipment and comparing it to the Company’s estimated fair values for the property and equipment;

● Evaluating the Company’s discount rate applied in the valuation of the customer relationships intangible assets by comparing the Company’s inputs to publicly available data, the implied rate of return on the transaction, and the return on other acquired assets;

● Testing the estimate of the customer relationships intangible assets fair value using the Company’s cash flow assumptions and discount rate, and evaluated the result with the Company’s fair value estimate.

● evaluating the approach used to value the Utica fresh water assets

● evaluating the Company’s discount rate applied in the valuation of the Utica fresh water assets by comparing the Company’s inputs to publicly available data for comparable entities

● testing the estimate of the Utica fresh water assets fair value using the Company’s cash flow assumptions and discount rate and comparing the results to the Company’s fair value estimate.

We have served as the Company’s auditor since 2016.

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Consolidated Balance Sheets

December 31, 2018 and 2019

(In thousands)

(In thousands, except per share amounts)

Current assets:

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Accounts receivable–third party

Income tax receivable

Other current assets

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Other assets, net

Liabilities and Equity

Liabilities and Stockholders' Equity

Current liabilities:

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Contingent acquisition consideration

Taxes payable

Other current liabilities

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Total liabilities

Partners' Capital and Stockholders' Equity:

Common shareholders— 186,219 shares issued and outstanding at December 31, 2018;

none issued and outstanding at December 31, 2019

IDR LLC Series B units ( 66 units vested at December 31, 2018;

none issued and outstanding at

December 31, 2019)

Stockholders' Equity:

Preferred stock, $ 0.01 par value:

none authorized or issued at December 31, 2018;

100,000 authorized at December 31, 2019

100,000 authorized as of both December 31, 2019 and 2020

Series A non-voting perpetual preferred stock;

none designated, issued or outstanding at

December 31, 2018;

12 designated and 10 issued and outstanding at December 31, 2019

12 designated and 10 issued and outstanding as of both December 31, 2019 and 2020

Common stock, $ 0.01 par value;

none authorized, issued or outstanding at December 31, 2018;

2,000,000 authorized and 484,042 issued and outstanding at December 31, 2019

2,000,000 authorized;

484,042 and 476,639 issued and outstanding as of December 31, 2019 and 2020, respectively

Additional paid-in capital

Accumulated loss

Total partners' capital and stockholders' equity

Total liabilities and partners' capital and stockholders' equity

Accumulated deficit

Total stockholders' equity

Total liabilities and stockholders' equity

See accompanying notes to consolidated financial statements.

ANTERO MIDSTREAM CORPORATION

Consolidated Statements of Operations and Comprehensive Income

Years Ended December 31, 2017, 2018, and 2019

(In thousands, except per unit amounts)

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

Year Ended December 31,

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Facility idling

Impairment of property and equipment

Impairment of goodwill

Impairment of property and equipment

Impairment of customer relationships

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Accretion of asset retirement obligations

Loss on asset sale

Total operating expenses

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Net income (loss) and comprehensive income (loss)

Net income (loss) per share–basic and diluted

Net income (loss) per share–basic

Net income (loss) per share–diluted

Weighted average common shares outstanding:

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Consolidated Statements of Partners’ Capital and Stockholders’ Equity

Years Ended December 31, 2017, 2018, and 2019

(In thousands)

Balance at December 31, 2017

Pre-IPO net loss and comprehensive loss

Pre-IPO equity-based compensation

Conversion of Antero Resources Midstream Management LLC to a limited partnership

Post-IPO net income and comprehensive income

Post-IPO equity-based compensation

Distributions to Antero Resources Investment LLC

Distributions to shareholders

Vesting of Series B units

Balance at December 31, 2017

Net income and comprehensive income

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Balance at December 31, 2019

Dividends to stockholders

Equity-based compensation

Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes

Repurchases and retirement of common stock

Net loss and comprehensive loss

Balance at December 31, 2020

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Cash Flows

Years Ended December 31, 2017, 2018, and 2019

(In thousands)

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Distributions from Antero Midstream Partners LP, prior to the Transactions

Payment of contingent consideration in excess of acquisition date fair value

Accretion and change in fair value of contingent acquisition consideration

Deferred income tax benefit

Deferred income taxes

Equity-based compensation

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Amortization of deferred financing costs

Settlement of asset retirement obligations

Loss on asset sale

Changes in assets and liabilities:

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Accounts receivable–third party

Income tax receivable

Other current assets

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Accounts payable–third party

Accrued liabilities

Income taxes payable

Accrued liabilities

Net cash provided by operating activities

Cash flows used in investing activities:

Cash flows provided by (used in) investing activities:

Additions to gathering systems and facilities

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Cash consideration paid to Antero Midstream Partners LP unitholders

Cash received in asset sale

Change in other assets

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Cash flows provided by (used in) financing activities:

Distributions to Antero Resources Investment LLC

Distributions to unitholders and dividends to stockholders

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Payments of deferred financing costs

Payments on bank credit facilities, net

Repayments on bank credit facilities, net

Payment of contingent acquisition consideration

Employee tax withholding for settlement of equity compensation awards

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Cash paid during the period for interest

Cash paid during the period for income taxes

Cash received (paid) during the period for income taxes

Decrease in accrued capital expenditures and accounts payable for property and equipment

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Notes to Consolidated Financial Statements

Years Ended December 31, 2016, 2017, and 2018

(1) Organization

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On May 4, 2017, Antero Resources Midstream Management LLC converted from a limited liability company to a limited partnership under the laws of the State of Delaware and changed its name to Antero Midstream GP LP (“AMGP”) in connection with its initial public offering.

On March 12, 2019, pursuant to the Simplification Agreement, dated as of October 9, 2018, by and among AMGP, Antero Midstream Partners and certain of their affiliates (the “Simplification Agreement”), (i) AMGP was converted from a limited partnership to a corporation under the laws of the State of Delaware and changed its name to Antero Midstream Corporation (the “Conversion”), (ii) an indirect, wholly owned subsidiary of Antero Midstream Corporation was merged with and into Antero Midstream Partners, with Antero Midstream Partners surviving the merger as an indirect, wholly owned subsidiary of Antero Midstream Corporation (the “Merger”), and (iii) Antero Midstream Corporation exchanged (the “Series B Exchange” and, together with the Conversion, the Merger and the other transactions pursuant to by the Simplification Agreement, the “Transactions”) each issued and outstanding Series B Unit (the “Series B Units”) representing a membership interest in Antero IDR Holdings LLC (“IDR Holdings”) for 176.0041 shares of its common stock, par value $ 0.01 per share (“AMC common stock”) .

As a result of the Transactions, Antero Midstream Partners is now a wholly owned subsidiary of Antero Midstream Corporation and former shareholders of AMGP, unitholders of Antero Midstream Partners, including Antero Resources Corporation (“Antero Resources”), and holders of Series B Units now own AMC common stock.

Unless the context otherwise requires, references to the “Company,” “we,” “us” or “our” refer to (i) for the period prior to March 13, 2019, AMGP and its consolidated subsidiaries, which did not include Antero Midstream Partners and its subsidiaries, and (ii) for the period beginning on March 13, 2019, Antero Midstream Corporation and its consolidated subsidiaries, including Antero Midstream Partners and its subsidiaries Antero Midstream LLC, Antero Water LLC (“Antero Water”), Antero Treatment LLC and Antero Midstream Finance Corporation (“Finance Corp”).

We are a growth-oriented midstream company formed to own, operate and develop midstream energy infrastructure primarily to service Antero Resources and its production and completion activity in the Appalachian Basin’s Marcellus Shale and Utica Shale located in West Virginia and Ohio.

Our assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants, and water handling assets.

On March 12, 2019, pursuant to the Simplification Agreement, dated as of October 9, 2018, by and among AMGP, Antero Midstream Partners and certain of their affiliates (the “Simplification Agreement”), (i) AMGP was converted from a limited partnership to a corporation under the laws of the State of Delaware and changed its name to Antero Midstream Corporation (the “Conversion”), (ii) an indirect, wholly owned subsidiary of Antero Midstream Corporation was merged with and into Antero Midstream Partners, with Antero Midstream Partners surviving the merger as an indirect, wholly owned subsidiary of Antero Midstream Corporation (the “Merger”) and (iii) Antero Midstream Corporation exchanged (the “Series B Exchange” and, together with the Conversion, the Merger and the other transactions pursuant to by the Simplification Agreement, the “Transactions”) each issued and outstanding Series B Unit (the “Series B Units”) representing a membership interest in Antero IDR Holdings LLC (“IDR Holdings”) for 176.0041 shares of its common stock, par value $ 0.01 per share (“AM common stock”) .

As a result of the Transactions, Antero Midstream Partners became and is now a wholly owned subsidiary of Antero Midstream Corporation and former shareholders of AMGP, unitholders of Antero Midstream Partners, including Antero Resources Corporation (“Antero Resources”), and holders of Series B Units became owners of AM common stock.

Unless the context otherwise requires, references to the “Company” refer to (i) for the period prior to March 13, 2019, AMGP and its consolidated subsidiaries, which did not include Antero Midstream Partners and its subsidiaries, and (ii) for the period beginning on March 13, 2019, Antero Midstream Corporation and its consolidated subsidiaries, including Antero Midstream Partners and its subsidiaries, including Antero Midstream LLC, Antero Water LLC (“Antero Water”), Antero Treatment LLC and Antero Midstream Finance Corporation (“Finance Corp”).

Antero Midstream is a growth-oriented midstream company formed to own, operate and develop midstream energy infrastructure primarily to service Antero Resources and its production and completion activity in the Appalachian Basin.

The Company’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets.

The Company, through Antero Midstream Partners and its affiliates, provides midstream services to Antero Resources under long-term contracts.

The Company’s gathering and compression assets comprise 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 fresh water from sources including the Ohio River, local reservoirs and several regional waterways.

The Company, through Antero Midstream Partners, also has a 15 % equity interest in the gathering system of Stonewall Gas Gathering LLC (“Stonewall”) and a 50 % equity interest in a joint venture to develop processing and fractionation assets with MarkWest Energy Partners, L.P.

The Company’s gathering and compression assets comprise 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 the Appalachian Basin.

The Company’s water handling assets include two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs and several regional waterways, which portions of these systems are also utilized to transport flowback and produced water.

The Company’s water treatment assets also include other flowback and produced water treatment facilities.

The Company, through Antero Midstream Partners, also has a 15 % equity interest in a gathering system of Stonewall Gas Gathering LLC (“Stonewall”) and a 50 % equity interest in a joint venture to develop processing and fractionation assets with MarkWest Energy Partners, L.P.

(“MarkWest”), a wholly owned subsidiary of MPLX, LP (“MPLX”) (the “Joint Venture”).

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The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, these consolidated statements include all adjustments (consisting of normal and recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of December 31, 2018 and 2019, and the results of the Company’s operations and its cash flows for the years ended December 31, 2017, 2018 and 2019.

In the opinion of management, these consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2019 and 2020, and the results of the Company’s operations and its cash flows for the years ended December 31, 2018, 2019 and 2020.

The Company has no items of other comprehensive income (loss);

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Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Certain costs of doing business incurred and charged to the Company by Antero Resources have been reflected in the accompanying consolidated financial statements.

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Such investments are included in Investments in unconsolidated affiliates on the Company’s consolidated balance sheets.

Income from investees that are accounted for under the equity method is included in Equity in earnings

Income from investees that are accounted for under the equity method is included in Equity in earnings of unconsolidated affiliates on the Company’s consolidated statements of operations and cash flows.

When the Company records its proportionate share of net income, it increases equity income in the statements of operations and comprehensive income (loss) and the

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

of unconsolidated affiliates on the Company’s consolidated statements of operations and cash flows.

When the Company records its proportionate share of net income, it increases equity income in the statements of operations and comprehensive income (loss) and the carrying value of that investment on the Company’s balance sheet.

carrying value of that investment on the Company’s balance sheet.

When a distribution is received, it is recorded as a reduction to the carrying value of that investment on the balance sheet.

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Under this approach, distributions received from equity method investees are classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities).

The Company, through Antero Midstream Partners and its affiliates, provides gathering and compression and water handling services under fee-based contracts primarily based on throughput or at cost plus a margin.

Revenue Recognition

The Company, through Antero Midstream Partners and its affiliates, provides gathering, compression and water handling services under fee-based contracts primarily based on throughput or at cost plus a margin.

Certain of these contracts contain operating leases of the Company’s assets under GAAP.

Under these arrangements, the Company receives fees for gathering gas products, compression services, and water handling services.

The revenue the Company earns from these arrangements is directly related to (1) in the case of natural gas gathering and compression, the volumes of metered natural gas that it gathers, compresses, and delivers to natural gas compression sites or other transmission delivery points, (2) in the case of fresh water services, the quantities of fresh water delivered to its customers for use in their well completion operations, (3) in the case of wastewater treatment services performed by the Company prior to idling of the Clearwater Facility (as defined below) in September 2019, the quantities of wastewater treated for our customers, (4) in the case of wastewater services provided by third parties, the third-party costs the Company incurs plus 3 %, or (5) in the case of flowback and produced water performed by the Company, a cost of service fee based on the costs incurred by the Company.

Under these arrangements, the Company receives fees for gathering, compression and water handling services.

The revenue the Company earns from these arrangements is directly related to (i) in the case of natural gas gathering and compression, the volumes of metered natural gas that it gathers, compresses and delivers to natural gas compression sites or other transmission delivery points, (ii) in the case of fresh water services, the quantities of fresh water delivered to its customers for use in their well completion operations, (iii) in the case of wastewater treatment services performed by the Company prior to idling of the Clearwater Facility (as defined below) in September 2019, the quantities of wastewater treated for its customers, (iv) in the case of wastewater services provided by third parties, the third-party costs the Company incurs plus 3 % or (v) in the case of flowback and produced water treatment performed by the Company, a cost of service fee based on the costs incurred by the Company.

The Company recognizes revenue when it satisfies a performance obligation by delivering a service to a customer or the use of leased assets to a customer.

See Note 7—Revenue for the Company’s required disclosures under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers .

The Company includes lease revenue within revenues by service.

See Note 7—Revenue.

Use of Estimates

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Property and Equipment

Property and equipment primarily consists of gathering pipelines, compressor stations and the wastewater treatment facility and related landfill (collectively, the “Clearwater Facility”) used for the disposal of salt therefrom and fresh water delivery pipelines and facilities stated at historical cost less accumulated depreciation, amortization and impairment.

Property and equipment primarily consists of gathering pipelines, compressor stations and the wastewater treatment facility and related landfill (collectively, the “Clearwater Facility”) previously used for the disposal of salt therefrom, other flowback and produced water treatment facilities;

and water handling pipelines and facilities stated at historical cost less accumulated depreciation, amortization and impairment.

The Company capitalizes construction-related direct labor and material costs.

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Uncertainties that may impact these estimates of useful lives include, among others, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions and supply and demand for the Company’s services in the areas in which it operates.

When assets are placed into service, management

When assets are placed into service, management makes estimates with respect to useful lives and salvage values that management believes are reasonable.

Amortization of landfill airspace consists of the amortization of landfill capital costs, including those that have been incurred and capitalized and estimated future costs for landfill development and construction, and the amortization of asset retirement costs arising from landfill final capping, closure and post-closure obligations.

Amortization expense is recorded on a units-of-consumption

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

makes estimates with respect to useful lives and salvage values that management believes are reasonable.

Amortization of landfill airspace consists of the amortization of landfill capital costs, including those that have been incurred and capitalized and estimated future costs for landfill development and construction, as well as the amortization of asset retirement costs arising from landfill final capping, closure, and post-closure obligations.

Amortization expense is recorded on a units-of-consumption basis, applying cost as a rate per-cubic yard.

basis, applying cost as a rate per-cubic yard.

The rate per-cubic yard is calculated by dividing each component of the amortizable basis of the landfill by the number of cubic yards needed to fill the corresponding asset’s airspace.

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The Company recognized an impairment with respect to the Clearwater Facility during the year ended December 31, 2019.

See Note 4—Clearwater Facility Impairment.

See Note 4—Clearwater Facility Idling.

The Company recognized a $ 90 million impairment with respect to the freshwater delivery system during the year ended December 31, 2020.

Asset Retirement Obligations

The Company’s asset retirement obligations include its obligation to close, maintain and monitor landfill cells and support facilities.

After the entire landfill reaches capacity and is certified closed, the Company must continue to maintain and monitor the landfill for a post-closure period, which generally extends for 30 years .

After the landfill is certified closed, the Company must continue to maintain and monitor the landfill for a post-closure period, which generally extends for 30 years .

The Company records the fair value of its landfill retirement obligations as a liability in the period in which the regulatory obligation to retire a specific asset is triggered.

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Fresh water impoundments and wastewater pit retirement assets are capitalized as the related retirement obligations are incurred, and are amortized on a straight-line basis until reclamation.

The Company is under no legal obligations, neither contractually nor under the doctrine of promissory estoppel, to restore or dismantle its gathering pipelines, compressor stations, water delivery pipelines and facilities, flowback and produced water facilities and the wastewater treatment facility upon abandonment.

See Note 4—Clearwater Facility Impairment.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

As of December 31, 2020, the Company has $ 5 million of asset retirement obligations it expects to settle within the next 12 months that are recorded in Other current liabilities on the consolidated balance sheet.

The Company is under no legal obligations, neither contractually nor under the doctrine of promissory estoppel, to restore or dismantle its gathering pipelines, compressor stations, water delivery pipelines, flowback and produced water facilities and the Clearwater Facility upon abandonment.

See Note 4—Clearwater Facility Idling.

Litigation and Other Contingencies

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The ultimate amount of losses, if any, may differ from these estimates.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

The Company accrues losses associated with environmental obligations when such losses are probable and can be reasonably estimated.

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For awards granted under its own plan, the Company recognizes compensation cost related to all equity-based awards in the financial statements based on the estimated grant date fair value.

The Company is authorized to grant various types of equity-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards and other types of awards.

The grant date fair values are determined based on the type of award and may utilize market prices on the date of grant, Black-Scholes option-pricing model, Monte Carlo simulations or other acceptable valuation methodologies, as appropriate for the type of equity-based award.

The Company is authorized to grant various types of equity-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, dividend equivalent awards and other types of awards.

The grant date fair values of such awards are determined based on the type of award and may utilize market prices on the date of grant, Black-Scholes option-pricing model, Monte Carlo simulations or other acceptable valuation methodologies, as appropriate for the type of equity-based award.

Compensation cost is recognized ratably over the applicable vesting or service period.

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See Note 12—Equity-Based Compensation.

The Company recognizes deferred tax assets and liabilities for temporary differences resulting from net operating loss carryforwards for income tax purposes and the differences between the financial statement and tax basis of assets and liabilities.

The Company recognizes deferred tax assets and liabilities for temporary differences resulting from net operating loss and charitable contribution carryforwards and the differences between the financial statement and tax basis of assets and liabilities.

The effect of changes in tax laws or tax rates is recognized in income during the period such changes are enacted.

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and/or (ii) a tax position is effectively settled with a tax authority at a differing amount.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted.

The CARES Act allows corporations with net operating losses (“NOLs”) incurred in 2018, 2019 and 2020 to carry back such NOLs to each of the five years preceding the year of the NOLs, beginning with the earliest year in which there was taxable income, and claim an income tax refund in the applicable carryback years.

As a result of this NOLs carryback provision in the CARES Act, the Company was able to recognize an income tax refund receivable in March 2020 of $ 55 million, including $ 11 million in income tax benefit for the current year and $ 44 million of previously recognized deferred income tax benefit.

As of December 31, 2020, the Company had received $ 39 million of this refund.

Fair Value Measures

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The highest priority (Level 1) is

The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs.

to unobservable inputs.

Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

The carrying values on the consolidated balance sheet of the Company’s cash and cash equivalents, accounts receivable—Antero Resources, accounts receivable—third party, other current assets, accounts payable—Antero Resources, accounts payable—third party, accrued liabilities, other current liabilities, other liabilities and the Credit Facility (as defined in Note 10—Long-Term Debt) approximate fair values due to their short-term maturities.

The carrying values on the consolidated balance sheet of the Company’s cash and cash equivalents, accounts receivable—Antero Resources, accounts receivable—third party, other current assets, accounts payable—Antero Resources, accounts payable—third party, accrued liabilities and, other current liabilities approximate fair values due to their short-term maturities.

The assets and liabilities of Antero Midstream Partners were recorded at fair value as of the acquisition date, March 12, 2019 (see Note 3—Business Combination).

Additionally, the Company uses certain fair valuation techniques in performing its annual goodwill impairment test described below.

Additionally, the Company uses certain valuation techniques in performing its annual goodwill impairment test described below and in determining the fair value of property and equipment, both of which were subject to impairment write downs during the years ended December 31, 2019 and 2020.

Investments in Unconsolidated Affiliates

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If the sum of the expected undiscounted future cash flows related to the asset is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset.

See Note 4—Clearwater Facility Impairment and Note 5—Goodwill and Intangibles.

As of March 31, 2020, the Company’s goodwill was fully impaired.

See Note 4—Clearwater Facility Idling and Note 5—Goodwill and Intangibles.

Treasury Share Retirement

The Company periodically retires treasury shares acquired through share repurchases and returns those shares to the status of

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Treasury Share Retirement

The Company periodically retires treasury shares acquired through share repurchases and returns those shares to the status of authorized but unissued.

authorized but unissued.

When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to accumulated earnings.

The portion allocable to additional paid-in capital is determined by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of retirement.

Recently Issued Accounting Standards

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value Measurement:

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement,” which provides changes to certain fair value disclosure requirements.

This ASU is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted.

The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

(3) Business Combination

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The components of the fair value of consideration transferred are as follows (in thousands):

Fair value of shares of AMC common stock issued (1)

Fair value of shares of AM common stock issued (1)

Total fair value of consideration transferred

(1) The fair value of each share of AMC common stock issued in connection with the Transactions was determined to be $ 12.54 , the closing price of AMGP common shares on March 12, 2019.

The final purchase price allocation of the Transactions, and final adjustments thereto, are summarized in the table below.

(1) The fair value of each share of AM common stock issued in connection with the Transactions was determined to be $ 12.54 , the closing price of AMGP common shares on March 12, 2019.

The final purchase price allocation of the Transactions are summarized in the table below.

The fair value of assets acquired and liabilities assumed at March 12, 2019 were as follows (in thousands):

As Originally

Cash and cash equivalents

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Net assets acquired

Adjustments to the preliminary purchase price allocation stem mainly from additional information obtained by the Company in between the closing of the Transactions on March 12, 2019 and December 31, 2019 about facts and circumstances that existed as of the date of the Transactions, including updates to the completion of certain valuations to determine the underlying fair value of certain assets.

The decrease in the fair value of the property and equipment resulted in a $ 10 million reversal of Depreciation in the consolidated statement of operations.

The increase in the fair value of customer relationships resulted in a $ 21 million increase in Amortization of customer relationships in the consolidated statement of operations.

All customer relationships are subject to amortization, which will be recognized over a weighted-average period of 23 years .

All customer relationships are subject to amortization, which is recognized over a weighted-average period of 23 years for the remaining economic life of the relationship as of the acquisition date.

The purchase price allocation resulted in the recognition of $ 575 million of goodwill in three reporting units within the Company’s gathering and processing segment and $ 340 million of goodwill in two reporting units within its water handling segment.

Substantially all of the goodwill is expected to be deductible for tax purposes.

Goodwill represented the efficiencies realized with simplifying the Company’s corporate structure to own, operate and develop midstream energy infrastructure primarily to service Antero Resources.

See Note 5—Goodwill and Intangibles.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Substantially all of goodwill is expected to be deductible for tax purposes.

Goodwill represents the efficiencies realized with simplifying our corporate structure to own, operate and develop midstream energy infrastructure primarily to service Antero Resources.

The Company’s financial statements include $ 6 million of acquisition-related costs associated with the Transactions.

The Company’s financial statements include $ 6 million of acquisition-related costs associated with the Transactions for the year ended December 31, 2019.

These costs were expensed as general and administrative costs.

(4) Clearwater Facility Impairment

(4) Clearwater Facility Idling

On September 18, 2019, the Company commenced a strategic evaluation of the Clearwater Facility at which time, such facility was idled.

Based on the preliminary results of the evaluation and ongoing discussions with the facility’s contractor, the Company determined that the facility is expected to be idled for the foreseeable future.

Accordingly, the Company performed an interim impairment analysis of the facility and determined:

The Company expects the facility to be idled for the foreseeable future.

Accordingly, the Company performed an impairment analysis of the facility and determined:

(i) to reduce the carrying value of the facility to its estimated salvage value, which included the land associated with the Clearwater Facility;

1 unchanged sentence

and (iii) the customer relationships intangible asset was impaired.

The following table shows the impairment charges for the year ended December 31, 2019 related to the Clearwater Facility as updated to reflect the final purchase price allocation of the Transactions (in thousands):

Additionally, during the year ended December 31, 2020, the Company determined that the carrying value of the landfill was no longer recoverable resulting in an impairment charge to property and equipment.

The following table shows the impairment charges for the years ended December 31, 2019 and 2020 related to the Clearwater Facility, which also reflect the final purchase price allocation of the Transactions (in thousands):

Year Ended December 31,

Impairment of property and equipment

2 unchanged sentences

Total impairment expense

The Company incurred $ 11 million in facility idling costs for the care and maintenance of the Clearwater Facility during the period from September 18, 2019 through December 31, 2019.

The Company incurred $ 11 million and $ 15 million in facility idling costs for the care and maintenance of the Clearwater Facility during the years ended December 31, 2019 and 2020, respectively.

(5) Goodwill and Intangibles

1 unchanged sentence

Significant assumptions used to estimate the reporting units’ fair value include the discount rate as well as estimates of future cash flows, which are impacted primarily by commodity prices and producer customers’ development plans (which impact volumes and capital requirements).

During the third quarter of 2019, the Company performed an interim impairment analysis of the goodwill related to the wastewater treatment reporting unit recorded in connection with the Transactions due to the Company’s strategic evaluation of the Clearwater Facility.

As a result of this evaluation, the Company incurred impairment charges to the goodwill and customer relationships intangible asset associated with the Clearwater Facility, which is in the water handling segment.

See Note 4—Clearwater Facility Impairment.

The Company performed its annual goodwill impairment test in the fourth quarter of 2019.

As a result of this test, the Company incurred impairment charges of $ 298 million to its fresh water delivery and services reporting unit, which is in the water handling segment.

This was primarily due to decreased water volumes driven by decreased drilling and increased use of water blending operations by Antero Resources.

During the third quarter of 2019, the Company incurred impairment charges to the goodwill and customer relationships intangible asset associated with the Clearwater Facility, which is in the water handling segment.

See Note 4—Clearwater Facility Idling.

During the fourth quarter of 2019, the Company incurred impairment charges of $ 298 million to its fresh water delivery and services reporting unit, which is in the water handling segment.

This was primarily due to decreased water volumes driven by decreased drilling operations by Antero Resources.

There was no goodwill remaining in this segment after this impairment was incurred.

During the first quarter of 2020, the Company performed an interim impairment analysis of the goodwill due to changes in Antero Resources’ drilling plans as a result of the decline in commodity prices.

As a result of this evaluation, the Company impaired all remaining goodwill of $ 575 million associated with its gathering and processing segment in the first quarter of 2020.

All customer relationships are subject to amortization and will be amortized over a weighted-average period of 21 years , which reflects the remaining economic life of the relationships as of December 31, 2020.

The changes in the carrying amount of customer relationships for the years ended December 31, 2019 and 2020 were as follows (in thousands):

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

The changes in the carrying amount in goodwill for the year ended December 31, 2019 were as follows (in thousands):

Gathering and

Goodwill as of December 31, 2018

Goodwill acquired (1)

Impairment of goodwill

Goodwill as of December 31, 2019

(1) See Note 3—Business Combination.

All customer relationships are subject to amortization and will be amortized over a weighted-average period of 23 years .

The changes in the carrying amount of customer relationships for the year ended December 31, 2019 were as follows (in thousands):

Customer relationships as of December 31, 2018

Customer relationships acquired (1)

Accumulated amortization

Amortization of customer relationships

Impairment of customer relationships

Customer relationships as of December 31, 2019

Amortization of customer relationships

Customer relationships as of December 31, 2020

(1) See Note 3—Business Combination.

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(6) Transactions with Affiliates

Substantially all revenues earned in the year ended December 31, 2019 were earned from Antero Resources, under various agreements for gathering and compression and water handling services.

Substantially all revenues earned in the years ended December 31, 2019 and 2020 were earned from Antero Resources, under various agreements for gathering and compression and water handling services.

Revenues earned from gathering and processing services consists of lease income.

There were no such revenues earned by AMGP for the years ended December 31, 2017 and 2018.

There were no such revenues earned by AMGP for the year ended December 31, 2018.

Accounts receivable–Antero Resources and Accounts payable–Antero Resources

2 unchanged sentences

Allocation of Costs Charged by Antero Resources

The employees supporting the Company’s operations are concurrently employed by Antero Resources and Antero Midstream Corporation.

Direct operating expense includes costs charged to the Company of $ 6 million during the year ended December 31, 2019, related to services provided by employees associated with the operation of the Company’s gathering lines, compressor stations, and water handling assets.

There were no such charges to AMGP during the years ended December 31, 2017 and 2018.

For the years ended December 31, 2017, 2018 and 2019, general and administrative expenses charged to the Company by Antero Resources were

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

$ 0.7 million, $ 0.5 million, and $ 33 million, respectively.

The employees supporting the Company’s operations are concurrently employed by Antero Resources and the Company.

Direct operating expense includes costs charged to the Company of $ 6 million and $ 7 million during the years ended December 31, 2019 and 2020, respectively.

These costs were for services provided by employees associated with the operation of the Company’s gathering lines, compressor stations and water handling assets.

There were no such charges to AMGP during the year ended December 31, 2018.

For the years ended December 31, 2018, 2019 and 2020, general and administrative expenses charged to the Company by Antero Resources were $ 0.5 million, $ 33 million and $ 25 million, respectively.

These costs relate to:

(i) various business services, including payroll processing, accounts payable processing and facilities management, (ii) various corporate services, including legal, accounting, treasury, information technology and human resources and (iii) compensation, including certain equity-based compensation.

These expenses are charged to the Company based on the nature of the expenses and are apportioned based on a combination of the Company’s proportionate share of gross property and equipment, capital expenditures and labor costs, as applicable.

The Company reimburses Antero Resources directly for all general and administrative costs charged to it, with the exception of noncash equity compensation attributed to the Company for awards issued prior to the Transactions under Antero Resources’ long-term incentive plan and the Antero Midstream Corporation Long Term Incentive Plan (the “AMC LTIP”).

These expenses are charged to the Company based on (i) the nature of the expenses and are apportioned based on a combination of the Company’s proportionate share of gross property and equipment, capital expenditures and labor costs, as applicable, and (ii) an annual management service fee.

The Company reimburses Antero Resources directly for all general and administrative costs charged to it.

See Note 12—Equity-Based Compensation.

Revenue from Contracts with Customers

All of the Company’s revenues are derived from service contracts with customers and are recognized when the Company satisfies a performance obligation by delivering a service to a customer.

The Company derives substantially all of its revenues from Antero Resources.

All of the Company’s revenues are derived from service contracts with customers and are recognized when the Company

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

satisfies a performance obligation by delivering a service to a customer.

The Company currently derives substantially all of its revenues from Antero Resources.

The following sets forth the nature, timing of satisfaction of performance obligations and significant payment terms of the Company’s contracts with Antero Resources.

2 unchanged sentences

The Company also has an option to gather and compress natural gas produced by Antero Resources on any additional acreage it acquires during the term of the agreement outside of West Virginia, Ohio and Pennsylvania on the same terms and conditions.

In December 2019, the Company and Antero Resources agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low pressure gathering fees will be reduced from 2020 through 2023 to the extent Antero Resources achieves certain volumetric targets.

Upon completion of this term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Resources on or before the 180 th day prior to the anniversary of such effective date.

For the year ended December 31, 2020, the company provided Antero Resources $ 48 million in rebates.

Upon completion of the initial contract term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Resources on or before the 180 th day prior to the anniversary of such effective date.

Under the gathering and compression agreement, the Company receives a low pressure gathering fee, a high pressure gathering fee and a compression fee, in each case subject to CPI-based adjustments.

3 unchanged sentences

The gathering system is considered a single lease due to the interrelated network of the assets.

When a modification to the gathering and compression agreement occurs, the Company reassesses the classification of this lease.

The Company accounts for its lease and non-lease components as a single lease component as the lease component is the predominant component.

4 unchanged sentences

Water Services Agreement

The Company is party to a water services agreement with Antero Resources, which commenced on September 23, 2015,

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

whereby the Company agreed to provide certain water handling services to Antero Resources within an area of dedication in defined service areas in West Virginia, Ohio and other locations.

Upon completion of the initial term 20-year term, the water services agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Resources on or before the 180 th day prior to the anniversary of such effective date.

Under the agreement, the Company receives a fixed fee per barrel in West Virginia, Ohio and all other locations for fresh water deliveries by pipeline directly to the well site.

The Company is party to a water services agreement with Antero Resources, whereby the Company provides certain water handling services to Antero Resources within an area of dedication in defined service areas in West Virginia and Ohio.

Upon completion of the initial term in 2035, the water services agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Resources on or before the 180 th day prior to the anniversary of such effective date.

Under the agreement, the Company receives a fixed fee per barrel for fresh water deliveries by pipeline directly to the well site.

Additionally, the Company receives a fixed fee per barrel for fresh water delivered by truck to high-rate transfer facilities.

For flowback and produced water blending services, the Company receives a cost of service fee based on the costs incurred by the Company.

Antero Resources also agreed to pay the Company a fixed fee per barrel for wastewater treatment at the Clearwater Facility, which was idled in the third quarter of 2019 and we expect will remain idled for the foreseeable future.

Antero Resources also agreed to pay the Company a fixed fee per barrel for wastewater treatment at the Clearwater Facility, which was idled in the third quarter of 2019.

All such fees under the agreement are subject to annual CPI-based adjustments and additional fees based on certain costs.

As of the start of 2020, there are no minimum volume commitments under the water services agreement.

Under the water services agreement, the Company may also contract with third parties to provide water services to Antero Resources.

Antero Resources reimburses the Company for third-party out-of-pocket costs plus a 3 % markup.

On February 12, 2019, Antero Resources and Antero Midstream Partners amended and restated the water services agreement to, among other things, make certain clarifying changes with respect to the CPI adjustments.

The initial term of the water services agreement runs to 2035.

The Company satisfies its performance obligations and recognizes revenue when the fresh water volumes have been delivered to the hydration unit of a specified well pad, flowback and produced water blending services have been completed and the wastewater volumes have been delivered to the Clearwater Facility .

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

The Company satisfies its performance obligations and recognizes revenue when the fresh water volumes have been delivered to the hydration unit of a specified well pad, flowback and produced water blending services have been completed, or prior to the idling of the Clearwater Facility in September 2019, when the wastewater volumes were delivered to the Clearwater Facility .

The Company invoices the customer the month after water services are performed, and payment is due in the same month.

3 unchanged sentences

The gathering and compression agreement includes certain minimum volume commitment provisions.

If and to the extent Antero Resources requests that the Company construct new high pressure lines and compressor stations, the gathering and compression agreement contains minimum volume commitments that require Antero Resources to utilize or pay for 75 % and 70 %, respectively, of the capacity of such new construction for 10 years .

If and to the extent Antero Resources requests that the Company construct new high pressure lines and compressor stations, the gathering and compression agreement contains minimum volume commitments that require Antero Resources to utilize or pay for 75 % of the gathering capacity and 70 % of the compression capacity of such new construction for 10 years .

The Company recognizes lease income from its minimum volume commitments under its gathering and compression agreement on a straight-line basis and additional operating lease income is earned when excess volumes are delivered under the contract.

1 unchanged sentence

Minimum volume commitments for fresh water deliveries under the water services agreement concluded at December 31, 2019.

Minimum revenue amounts under the gathering and compression minimum volume commitments are as follows (in thousands):

Minimum revenue amounts under the gathering and compression minimum volume commitments as of December 31, 2020 are as follows (in thousands):

Year ending December 31, 2021

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Disaggregation of Revenue

In the following table, revenue is disaggregated by type of service and type of fee.

The table also identifies the reportable segment to which the disaggregated revenues relate.

AMGP did not earn revenue for the years ended December 31, 2017 and 2018.

In the following table, revenue is disaggregated by type of service and type of fee and is identified by the reportable segment to which such revenues relate.

For more information on reportable segments see Note 17—Reporting Segments.

Segment to which

Year Ended December 31,

(in thousands)

revenues relate

Reportable segment

Revenue from contracts with customers

2 unchanged sentences

Gathering and Processing (1)

Gathering—low pressure rebate

Gathering and Processing (1)

Gathering—high pressure

14 unchanged sentences

Gathering and Processing (1)

Gathering—low pressure rebate

Gathering and Processing (1)

Per Unit Fixed Fee

14 unchanged sentences

therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.

The remainder of our service contracts, which relate to contracts with third parties, are short-term in nature with a contract term of one year or less.

The remainder of the Company’s service contracts, which relate to contracts with third parties, are short-term in nature with a contract term of one year or less.

Accordingly, the Company is exempt from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

2 unchanged sentences

Accordingly, the Company’s service contracts do not give rise to contract assets or liabilities.

At December 31, 2019, the Company’s receivables with customers were $ 101 million.

There were no receivables from customers as of December 31, 2018.

As of December 31, 2020, the Company’s receivables with customers were $ 101 million and $ 74 million, respectively.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

(8) Property and Equipment

The Company’s investment in property and equipment for the period presented is summarized in the following table.

AMGP had no property and equipment at December 31, 2018.

The Company’s investment in property and equipment for the periods presented is as follows:

(in thousands)

1 unchanged sentence

40 - 50 years (1)

Fresh water permanent buried pipelines and equipment

10 - 20 years

Fresh water surface pipelines and equipment

Permanent buried pipelines and equipment

Surface pipelines and equipment

Heavy trucks and equipment

6 unchanged sentences

(2) Amortization of landfill costs is recorded over the life of the landfill on a units-of-consumption basis.

During the years ended December 31, 2019 and 2020, the Company recorded impairment expense of $ 409 million and $ 7 million, respectively, for the Clearwater Facility.

See Note 4—Clearwater Facility Idling to our consolidated financial statements for more information.

During the first quarter of 2020, the Company evaluated its assets for impairment due to the decline in the industry environment as a result of low commodity prices.

As a result of this evaluation, the Company recorded an impairment expense of $ 89 million, which included an $ 83 million impairment expense to its permanent buried pipelines and equipment and a $ 6 million impairment expense to its surface pipelines and equipment.

(9) Income Taxes

6 unchanged sentences

Income tax expense differs from the amount that would be computed by applying the U.S.

statutory federal income tax rate of 35 % for the year ended December 31, 2017, and 21 % for the years ended December 31, 2018 and 2019, to income before taxes as a result of the following:

statutory federal income tax rate of 21 % for the years ended December 31, 2018, 2019 and 2020, to income before taxes as a result of the following:

Year Ended December 31,

5 unchanged sentences

Charitable contributions

Carryback of NOLs

Total income tax expense (benefit)

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and such amounts as measured by tax laws.

The tax effect of the temporary differences giving rise to net deferred tax assets

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and such amounts as measured by tax laws.

The tax effect of the temporary differences giving rise to net deferred tax assets as follows:

Year Ended December 31,

(in thousands)

Deferred tax assets:

Net operating loss carryforwards

NOL carryforwards

Investment in Antero Midstream Partners (1)

Transaction costs

Equity-based compensation

6 unchanged sentences

Net deferred tax assets (liabilities)

As of December 31, 2019, the Company has a deferred tax asset in its Investment in Antero Midstream Partners of $ 28 million.

(1) Investment in Antero Midstream Partners includes $ 2 million of transaction costs associated with the Transactions.

See Note 3—Business Combination.

As of December 31, 2019 and 2020, the Company has a deferred tax asset in its Investment in Antero Midstream Partners of $ 31 million and $ 38 million, respectively.

At the time of the Transactions on March 12, 2019, the investment in Antero Midstream Partners was recorded at fair value for both GAAP and income tax purposes.

1 unchanged sentence

Due to Antero Midstream Partners’ strong history of pre-tax earnings, the Company believes the benefits of this deferred tax asset will be realized.

Additionally, as of December 31, 2019, the Company has U.S.

federal and state NOL carryforwards before the effect of income taxes of $ 277 million and $ 202 million, respectively, which have no expiration date.

In assessing the realizability of all of the deferred tax assets, management considers whether some portion or all of the deferred tax assets will be realized based on a more-likely-than-not standard of judgment.

2 unchanged sentences

Based upon the projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that the Company will realize the benefits of these deductible differences and thus has not recorded a valuation allowance.

As of December 31, 2020, the Company has U.S.

federal and state NOL carryforwards before the effect of income taxes of $ 211 million and $ 315 million, respectively, which have no expiration date.

Tax years 2017 through 2020 remain open to examination by the U.S.

Internal Revenue Service.

The Company and its subsidiaries file tax returns with various state taxing authorities and those returns remain open to examination for tax years 2016 through 2020.

(10) Long-term Debt

On May 9, 2018, AMGP entered into a credit facility (the “AMGP Credit Facility”) with a bank, which provided for a line of credit of up to $ 12 million.

At December 31, 2018, AMGP had no borrowings under the AMGP Credit Facility.

In connection with the Transactions, the AMGP Credit Facility was terminated on March 12, 2019.

AMGP had no long-term debt at December 31, 2018.

Antero Midstream Corporation’s long-term debt was as follows at December 31, 2019:

The Company’s long-term debt as of December 31, 2019 and 2020 was as follows:

(in thousands)

December 31, 2019

Credit Facility (a)

2 unchanged sentences

5.75 % senior notes due 2027 (d)

Net unamortized debt issuance costs

5.75 % senior notes due 2028 (e)

Total principal

Unamortized debt premiums

Unamortized debt issuance costs

Total long-term debt

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Antero Midstream Partners Revolving Credit Facility

Antero Midstream Partners, an indirect, wholly owned subsidiary of Antero Midstream Corporation, as borrower (the “Borrower”), has a senior secured revolving credit facility (the “Credit Facility”) with a consortium of banks.

Lender commitments under the Credit Facility currently are $ 2.13 billion.

At December 31, 2019, the Borrower had borrowings under the Credit Facility of $ 960 million with a weighted average interest rate of 3.15 %.

No letters of credit were outstanding at December 31, 2019 under the Credit Facility.

Lender commitments under the Credit Facility are currently $ 2.13 billion.

As of December 31, 2019, the Borrower had outstanding borrowings under the Credit Facility of $ 960 million with a weighted average interest rate of 3.15 % .

As of December 31, 2020, the Borrower had outstanding borrowings under the Credit Facility of $ 614 million with a weighted average interest rate of 1.66 % .

No letters of credit under the Credit Facility were outstanding as of December 31, 2019 and 2020.

The maturity date of the facility is October 26, 2022.

The Credit Facility includes fall away covenants and lower interest rates that are triggered if and when the Borrower is assigned an Investment Grade Rating (as defined below).

Under the Credit Facility, “Investment Grade Period” is a period that, as long as no event of default has occurred and the Borrower is in pro forma compliance with the financial covenants under the Credit Facility, commences when the Borrower elects to give notice to the Administrative Agent that the Borrower has received at least one of either (i) a BBB- or better rating from Standard and Poor’s or (ii) a Baa3 or better from Moody’s (provided that the non-investment grade rating from the other rating agency is at least either Ba1 if Moody’s or BB+ if Standard & Poor’s (an “Investment Grade Rating”)).

An Investment Grade Period can end at the Borrower’s election.

During a period that is not an Investment Grade Period, the Credit Facility is ratably secured by mortgages on substantially all of the Borrower’s properties, including the properties of its subsidiaries, and guarantees from its subsidiaries.

During an Investment Grade Period, the liens securing the obligations thereunder shall be automatically released (subject to the provisions of the Credit Facility).

The Credit Facility includes fall away covenants and lower interest rates that are triggered if and when the Borrower is assigned an Investment Grade Rating (as defined in the Credit Facility).

The Credit Facility contains certain covenants including restrictions on indebtedness, and requirements with respect to leverage and interest coverage ratios.

provided, however, that during an Investment Grade Period, such covenants become less restrictive on the Borrower.

The Credit Facility permits distributions to the holders of the Borrower’s equity interests in accordance with the cash distribution policy previously adopted by the board of directors of the general partner of the Borrower, provided that no event of default exists or would be caused thereby, and only to the extent permitted by our organizational documents.

The Borrower was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2019.

The Borrower was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2019 and 2020.

Principal amounts borrowed are payable on the maturity date with such borrowings bearing interest that is payable quarterly or, in the case of Eurodollar Rate Loans, at the end of the applicable interest period if shorter than six months.

Interest is payable at a variable rate based on LIBOR or the base rate, determined by election at the time of borrowing, plus an applicable margin rate.

Interest at the time of borrowing is determined with reference to (i) during any period that is not an Investment Grade Period, the Borrower’s then-current leverage ratio and (ii) during an Investment Grade Period, with reference to the rating given to the Borrower by Moody’s or Standard and Poor’s.

During an Investment Grade Period, the applicable margin rates are reduced by 25 basis points.

Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from 0.25 % to 0.375 % based on the leverage ratio, during a period that is not an Investment Grade Period, and 0.175 % to 0.375 % based on the Borrower’s rating during an Investment Grade Period.

(b) 5.375 % Senior Notes Due 2024

Interest at the time of borrowing is determined with reference to the Borrower’s then-current leverage ratio subject to certain exceptions.

Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from 0.25 % to 0.375 % (subject to certain exceptions) based on the leverage ratio then in effect.

5.375 % Senior Notes Due 2024

On September 13, 2016, Antero Midstream Partners and its wholly owned subsidiary, Finance Corp (together with Antero Midstream Partners, the “Issuers”), issued $ 650 million in aggregate principal amount of 5.375 % senior notes due September 15, 2024 (the “2024 Notes”) at par.

The 2024 Notes were recorded at their fair value of $ 652.6 million as of March 12, 2019, the closing date of the Transactions, and the related premium of $ 2.6 million will be amortized into interest expense over the life of the 2024 Notes.

The 2024 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

1 unchanged sentence

Interest on the 2024 Notes is payable on March 15 and September 15 of each year.

Antero Midstream Partners may redeem all or part of the 2024 Notes at any time at redemption prices ranging from 104.031 % as of September 30, 2019 to 100.00 % on or after September 15, 2022.

Antero Midstream Partners may redeem all or part of the 2024 Notes at any time at redemption prices ranging from 102.688 % as of December 31, 2020 to 100.00 % on or after September 15, 2022.

If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2024 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2024 Notes at a price equal to 101 % of the principal amount of the 2024 Notes, plus accrued and unpaid interest.

7.875 % Senior Notes Due 2026

On November 10, 2020, the Issuers issued $ 550 million in aggregate principal amount of 7.875 % senior notes due May 15, 2026 (the “2026 Notes”) at par.

The 2026 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2026 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Antero Midstream Corporation, Antero Midstream Partners’ wholly owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries.

Interest on the 2026 Notes is payable on May 15 and November 15 of each year.

Antero Midstream Partners may redeem all or part of the 2026 Notes at any time on or after May 15, 2023 at redemption prices ranging from 103.938 % on or after May 15, 2023 to 100.00 % on or after May 15, 2025.

In addition, prior to May 15, 2023, Antero Midstream Partners may redeem up to 35 % of the aggregate principal amount of the 2026 Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 107.875 % of the principal amount of the 2026 Notes, plus accrued and unpaid interest.

At any time prior to May 15, 2023, Antero Midstream Partners may also redeem the 2026 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2026 Notes plus a “make-whole” premium and accrued and unpaid interest.

If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2026 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2026 Notes

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

at a price equal to 101 % of the principal amount of the 2026 Notes, plus accrued and unpaid interest.

5.75 % Senior Notes Due 2027

On February 25, 2019, the Issuers issued $ 650 million in aggregate principal amount of 5.75 % senior notes due March 1, 2027 (the “2027 Notes”) at par.

The 2027 Notes were recorded at their fair value of $ 653.3 million as of March 12, 2019, the closing date of the Transactions, and the related premium of $ 3.3 million will be amortized into interest expense over the life of the 2027 Notes.

The 2027 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

5 unchanged sentences

If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2027 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2027 Notes at a price equal to 101 % of the principal amount of the 2027 Notes, plus accrued and unpaid interest.

5.75 % Senior Notes Due 2028

(e) 5.75 % Senior Notes Due 2028

On June 28, 2019, the Issuers issued $ 650 million in aggregate principal amount of 5.75 % senior notes due January 15, 2028 (the “2028 Notes”) at par.

6 unchanged sentences

If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2028 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2028 Notes at a price equal to 101 % of the principal amount of the 2028 Notes, plus accrued and unpaid interest.

Senior Notes Guarantors

The Company and each of the Company’s wholly owned subsidiaries (except for the Issuers) has fully and unconditionally guaranteed the 2024 Notes, 2026 Notes, 2027 Notes and 2028 Notes (collectively the “Senior Notes”).

In the event a guarantor is sold or disposed of (whether by merger, consolidation, the sale of a sufficient amount of its capital stock so that it no longer qualifies as a Restricted Subsidiary (as defined in the applicable indenture governing the series of Senior Notes) of the Issuer or the sale of all or substantially all of its assets) and whether or not the guarantor is the surviving entity in such transaction to a person that is not an Issuer or a Restricted Subsidiary of an Issuer, such guarantor will be released from its obligations under its guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the applicable Senior Notes.

In addition, a guarantor will be released from its obligations under the applicable indenture and its guarantee, upon the release or discharge of the guarantee of other indebtedness under a credit facility that resulted in the creation of such guarantee, except a release or discharge by or as a result of payment under such guarantee;

if the Issuers designate such subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indenture governing the applicable Senior Notes or in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the applicable Senior Notes.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

During the years ended December 31, 2019 and 2020, all of the Company’s assets and operations are attributable to the Issuers and its guarantors.

(11) Accrued Liabilities

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Interest expense

Production taxes

Total accrued liabilities

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

(12) Equity-Based Compensation

(12) Equity-Based Compensation and Retention Awards

(a) Summary of Equity-Based Compensation

The Company’s general and administrative expenses include equity-based compensation costs related to the Antero Midstream GP LP Long-Term Incentive Plan (“AMGP LTIP”) and the Series B Units prior to the Transactions.

Equity-based compensation after the Transactions include (i) costs allocated to Antero Midstream Partners by Antero Resources for grants made prior to the Transactions pursuant to Antero Resources’ long-term incentive plan, (ii) costs due to Antero Midstream Corporation LTIP (the “AMC LTIP”) and (iii) the Exchanged B Units (as defined below).

Antero Midstream Partners’ portion of the equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to the applicable classes of equity.

Equity-based compensation expense allocated to Antero Midstream Partners was $ 4.9 million for the period from March 13, 2019 to December 31, 2019.

For grants made prior to the Transactions, Antero Resources has total unamortized expense related to its various equity-based compensation plans that can be allocated to the Company of approximately $ 26 million as of December 31, 2019, which includes grants made under the AMP LTIP (as defined below) prior to the Transactions, which were converted into awards under the AMC LTIP.

Equity-based compensation after the Transactions include (i) costs allocated to Antero Midstream Corporation by Antero Resources for grants made prior to the Transactions pursuant to the Antero Resources Corporation Long-Term Incentive Plan (the “AR LTIP”), (ii) costs related to the Antero Midstream Corporation Long-Term Incentive Plan (the “AM LTIP”) and (iii) the Exchanged B Units (as defined below).

The Company’s portion of the equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to the applicable classes of equity.

Equity-based compensation expense allocated to Antero Midstream Partners was $ 4.9 million for the period from March 13, 2019 to December 31, 2019 and $ 5.2 million for the year ended December 31, 2020.

For grants made prior to the Transactions, Antero Resources has total unamortized expense related to its various equity-based compensation plans that can be allocated to the Company of approximately $ 8 million as of December 31, 2020, which includes grants made under the Antero Midstream Partners Long Term Incentive Plan (the “AMP LTIP”) prior to the Transactions, which were converted into awards under the AM LTIP.

A portion of this will be allocated to Antero Midstream Partners as it is amortized over the remaining service period of the related awards.

Antero Midstream Partners does not reimburse Antero Resources for noncash equity compensation allocated to it for awards issued under the Antero Resources long-term incentive plan.

The Company does not reimburse Antero Resources for noncash equity compensation allocated to it for awards issued under the AR LTIP.

Exchanged B Units

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Upon Closing of the Transactions, each Series B Unit, vested and unvested, was exchanged for 176.0041 shares of our common stock (the “Series B Exchange”).

A total of 17,353,999 shares of AMC common stock were issued in exchange for the 98,600 Series B Units then outstanding (the “Exchanged B Units”), which included 5,782,601 restricted shares of AMC common stock issued in exchange for the 32,855 unvested Series B Units.

The Company accounted for the Series B Exchange as a share-based payment modification under ASC 718, Stock Compensation .

A total of 17,353,999 shares of the Company’s common stock were issued in exchange for the 98,600 Series B Units then outstanding (the “Exchanged B Units”), which included 5,782,601 restricted shares of the Company’s common stock issued in exchange for the 32,855 unvested Series B Units.

The Company accounted for the Series B Exchange as a share-based payment modification under FASB ASC Topic 718, Stock Compensation .

On March 12, 2019, which is the modification date, the Company determined the estimated fair value of the unvested Series B Unit awards using a Monte Carlo simulation using various assumptions including a floor equity value of $ 2.0 billion, expected volatility of 40 % based on historical volatility of a peer group of publicly traded partnerships, a risk free rate of 2.51 % and expected IDR distributions based on internal estimates discounted based on a weighted average cost of capital assumption of 7.25 %.

Based on these assumptions, the estimated value of each Series B Unit was $ 1,257 when exchanged for shares of AMC common stock.

Based on these assumptions, the estimated value of each Series B Unit was $ 1,257 when exchanged for shares of the

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Company’s common stock.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy.

The unvested Exchanged B Units retained the same vesting conditions as the Series B Units and vested on December 31, 2019.

No awards were issued and outstanding as of December 31, 2019.

No awards were issued and outstanding as of December 31, 2019 and 2020.

Expenses related to Exchanged B Units were recognized on a straight-line basis over the requisite service period of the entire award.

1 unchanged sentence

The Company recognized $ 66 million of equity-based compensation expense related to the Series B awards, including the Series B Units prior to the Closing of the Transactions and the Exchanged B Units following the Closing of the Transactions, for the year ended December 31, 2019.

For the years ended December 31, 2017 and 2018, the Company recognized $ 35 million and $ 34 million, respectively, of equity-based compensation expense related to the Series B Units.

As of December 31, 2019, there is no unamortized expense related to these awards.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

For the year ended December 31, 2018, the Company recognized $ 34 million of equity-based compensation expense related to the Series B Units.

On April 17, 2017, Antero Midstream GP LP adopted the AMGP LTIP pursuant to which certain non-employee directors of Antero Midstream GP LP’s general partner and certain officers, employees and consultants of Antero Resources were eligible to receive awards representing equity interests in Antero Midstream GP LP.

For the years ended December 31, 2017, 2018 and 2019, the Company recognized expense of $ 0.2 million, $ 0.7 million and $ 0.2 million, respectively, related to these awards.

For the years ended December 31, 2018 and 2019, the Company recognized expense of $ 0.7 million and $ 0.2 million, respectively, related to these awards.

Expenses related to these awards were recognized on a straight-line basis over the requisite service period of the entire award.

1 unchanged sentence

In connection with the Transactions, the AMGP LTIP was terminated on March 12, 2019.

Effective March, 12, 2019, the Board of Directors of Antero Midstream Corporation (the “Board”) adopted the AMC LTIP under which awards may be granted to employees, directors and other service providers of the Company and its affiliates.

The AMC LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other stock-based awards, cash awards and substitute awards.

No expense was recognized for the year ended December 31, 2020.

Effective March, 12, 2019, the Board of Directors of Antero Midstream Corporation (the “Board”) adopted the AM LTIP under which awards may be granted to employees, directors and other service providers of the Company and its affiliates.

The AM LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other stock-based awards, cash awards and substitute awards.

The terms and conditions of the awards granted are established by the compensation committee of the Board.

The Company is authorized to grant up to 15,398,901 shares of common stock to employees and directors under the AMC LTIP.

As of December 31, 2019, a total of 13,596,444 shares were available for future grant under the AMC LTIP.

For the year ended December 31, 2019, the Company recognized expense of $ 2.7 million related to these awards.

Expenses related to restricted stock units are recognized on a straight-line basis over the requisite service period of the entire award.

The Company is authorized to grant up to 15,398,901 shares of common stock to employees and directors under the AM LTIP.

As of December 31, 2020, a total of 11,131,949 shares were available for future grant under the AM LTIP.

For the years ended December 31, 2019 and 2020, the Company recognized expense of $ 2.7 million and $ 7.6 million, respectively, related to these awards.

Expenses related to restricted stock units (“RSUs”) are recognized on a straight-line basis over the requisite service period of the entire award.

Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period.

Restricted Stock Unit Awards

As part of the Transactions, each of the unvested outstanding phantom units in the Antero Midstream Partners Long Term Incentive Plan (“AMP LTIP”) was assumed by Antero Midstream Corporation and converted into 1.8926 restricted stock units under the AMC LTIP representing a right to receive shares of AMC common stock for each converted phantom unit.

Restricted stock unit (“RSU”) awards vest subject to the satisfaction of service requirements.

(b) Restricted Stock Unit Awards

As part of the Transactions, each of the unvested outstanding phantom units granted under the AMP LTIP was assumed by the Company and converted into 1.8926 RSUs under the AM LTIP representing a right to receive shares of the Company’s common stock for each converted phantom unit.

RSU awards vest subject to the satisfaction of service requirements.

Expense related to each RSU award is recognized on a straight-line basis over the requisite service period of the entire award.

Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period.

The grant date fair values of these awards are determined based on the closing price of Antero’s common stock on the date of the grant.

The grant date fair values of these awards are determined based on the closing price of the Company’s common stock on the date of the grant.

Summary Information for Restricted Stock Unit Awards

A summary of RSU awards activity during the year ended December 31, 2019 is as follows:

A summary of the RSU awards activity during the year ended December 31, 2020 is as follows:

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Intrinsic Value

(in thousands)

Total AMC LTIP RSUs awarded and unvested—December 31, 2018

AMP LTIP Awards converted into AMC LTIP Awards (1)

Total AMC LTIP RSUs awarded and unvested—December 31, 2019

Effective as of March 12, 2019, all unvested outstanding phantom units in the AMP LTIP were assumed by the Company and converted into restricted stock units under the AMC LTIP at a conversion rate of 1.8926 restricted stock units for each phantom unit.

Total AM LTIP RSUs awarded and unvested—December 31, 2019

Total AM LTIP RSUs awarded and unvested—December 31, 2020

Intrinsic values are based on the closing price of the Company’s common shares on the referenced dates.

At December 31,

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

2019, unamortized expense of $ 13 million related to the unvested RSUs is expected to be recognized over a weighted average period of approximately 2.5 years and the Company’s proportionate share will be allocated to it as it is recognized.

As of December 31, 2020, unamortized expense of $ 19 million related to the unvested RSUs is expected to be recognized over a weighted average period of approximately 2.4 years and the Company’s proportionate share will be allocated to it as it is recognized.

Performance Share Unit Awards Based on Return on Invested Capital (“ROIC”)

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Expense for the awards are recognized on a straight-line basis over the requisite service period of the entire award.

For the year ended December 31, 2019, the Company recognized $ 0.2 million of expense related to these awards.

In 2019 and 2020, the likelihood of achieving the performance conditions related to ROIC PSU awards outstanding was probable and, therefore, for the years ended December 31, 2019 and 2020, the Company recognized expense of $ 0.2 million and $ 0.3 million, respectively .

Summary Information for Performance Share Unit Awards

2 unchanged sentences

Total awarded and unvested—December 31, 2020

The grant-date fair value for the ROIC PSUs is based on the closing price of the Company’s common stock on the date of the modified terms for the ROIC PSU agreement, assuming the achievement of the performance condition.

As of December 31, 2020, there was $ 0.4 million of unamortized equity-based compensation expense related to unvested PSUs that is expected to be recognized over a weighted average period of 1.3 years.

(d) Cash Retention Awards

In January 2020, the Company granted cash awards of $ 2.2 million to certain executives under the AM LTIP that vest ratably

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

over a period of up to three years .

In July 2020, the Company granted additional cash awards of $ 0.7 million to certain non-executive employees under the AM LTIP that vest ratably over a period of four years .

The compensation expense for these awards is recognized ratably over the applicable vesting period.

As of December 31, 2020, the Company has accrued $ 1.8 million in other liabilities in the consolidated balance sheet related to cash awards.

(13) Cash Distributions and Dividends

3 unchanged sentences

Distribution Date

September 13, 2017

August 3, 2017

August 23, 2017

November 1, 2017

November 23, 2017

February 1, 2018

17 unchanged sentences

December 31, 2019

Income relating to periods prior to May 9, 2017, the closing of our IPO, was distributed to Antero Investment prior to its liquidation.

January 31, 2020

February 12, 2020

February 14, 2020

April 30, 2020

July 30, 2020

August 12, 2020

August 14, 2020

October 29, 2020

November 12, 2020

November 16, 2020

Dividends are paid in accordance with the terms of the Series A Preferred Stock as discussed in Note 14—Equity and Earnings Per Common Share.

D istributions declared on unvested Series B Units prior to the closing date of the Transactions that were paid upon the vesting date to the holders of the Exchanged B Units

On January 15, 2020, the Board declared a cash dividend on the shares of AMC common stock of $ 0.3075 per share for the quarter ended December 31, 2019.

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

The Company pays dividends (1) out of surplus or (2) if there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, as provided under Delaware law.

On January 20, 2021, the Board announced the declaration of a cash dividend on the shares of AM common stock of $ 0.3075 per share for the quarter ended December 31, 2020.

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

The Company pays dividends (i) out of surplus or (ii) if there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, as provided under Delaware law.

The Board also declared a cash dividend of $ 138 thousand on the shares of Series A Preferred Stock of Antero Midstream Corporation 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.

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

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

(14) Equity and Earnings Per Common Share

3 unchanged sentences

(the "Series A Preferred Stock"), to The Antero Foundation on that date.

Dividends on the Series A

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Preferred Stock are cumulative from the date of original issue and payable in cash on the 45 th day following the end of each fiscal quarter, or such other dates as the Board will approve, at a rate of 5.5 % per annum on (i) the liquidation preference per share of Series A Preferred Stock (as described below) and (ii) the amount of accrued and unpaid dividends for any prior dividend period on such share of Series A Preferred Stock, if any .

Dividends on the Series A Preferred Stock are cumulative from the date of original issue and payable in cash on the 45 th day following the end of each fiscal quarter, or such other dates as the Board will approve, at a rate of 5.5 % per annum on (i) the liquidation preference per share of Series A Preferred Stock (as described below) and (ii) the amount of accrued and unpaid dividends for any prior dividend period on such share of Series A Preferred Stock, if any .

At any time following the date of issue, in the event of a change of control, or at any time on or after March 12, 2029, the Company may redeem the Series A Preferred Stock at a price equal to $ 1,000 per share, plus any accrued and unpaid dividends, payable in cash;

provided that if any shares of the Series A Preferred Stock are held by The Antero Foundation at the time of such redemption, the price for redemption of each share of Series A Preferred Stock will be the greater of (i) $ 1,000 per share, plus any accrued but unpaid dividends, and (ii) the fair market value of the Series A Preferred Stock.

On or after March 12, 2029, the holder of each share of Series A Preferred Stock (other than The Antero Foundation) may convert such shares, at any time and from time to time, at the option of the holder into a number of shares of AMC common stock equal to the conversion ratio in effect on the applicable conversion date, subject to certain limitations.

The Series A Preferred Stock ranks senior to the AMC common stock as to dividend rights, as well as with respect to rights upon liquidation, winding-up or dissolution of the Company.

On or after March 12, 2029, the holder of each share of Series A Preferred Stock (other than The Antero Foundation) may convert such shares, at any time and from time to time, at the option of the holder into a number of shares of AM common stock equal to the conversion ratio in effect on the applicable conversion date, subject to certain limitations.

The Series A Preferred Stock ranks senior to the AM common stock as to dividend rights, as well as with respect to rights upon liquidation, winding-up or dissolution of the Company.

Holders of the Series A Preferred Stock do not have any voting rights in the Company, except as required by law, or any preemptive rights.

4 unchanged sentences

Basic weighted average number of shares outstanding

Dilutive effect of restricted stock units

Dilutive effect of RSUs

Dilutive effect of Series A preferred stock

1 unchanged sentence

Weighted average number of outstanding equity awards excluded from calculation of diluted earnings per common share (1):

Restricted stock units

Series B Units

Preferred shares

1 unchanged sentence

Earnings per common share—basic for (i) the years ended December 31, 2017 and 2018 is computed by dividing net income attributable to AMGP by the basic weighted average number of common shares representing limited partner interest in AMGP outstanding during the period and (ii) the year ended December 31, 2019 is computed by dividing net income (loss) attributable to Antero Midstream Corporation by the basic weighted average number of shares of AMC common stock outstanding during the period.

Earnings per common share—basic for (i) the year ended December 31, 2018 is computed by dividing net income attributable to AMGP by the basic weighted average number of common shares representing limited partner interest in AMGP outstanding during the period and (ii) the years ended December 31, 2019 and 2020 is computed by dividing net income (loss) attributable to Antero Midstream Corporation by the basic weighted average number of shares of AM common stock outstanding during the period.

Earnings per common share—assuming dilution for each period is computed after giving consideration to the potential dilution from outstanding equity awards, calculated using the treasury stock method.

2 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Year Ended December 31,

1 unchanged sentence

Net income (loss)

Pre-IPO net income attributed to parent

Less net income attributable to Series B Units

1 unchanged sentence

Net income (loss) available to common shareholders

Net income (loss) per share–basic and diluted

Net income (loss) per share–basic

Net income (loss) per share–diluted

Weighted average common shares outstanding–basic

8 unchanged sentences

To estimate the fair value of the long-term debt, the Company used Level 2 market data inputs.

The Company estimated the fair value of its assets in performing its annual goodwill analysis.

The Company utilized a combination of approaches to discounted cash flow approach, comparable company method and the cost approach, whereby certain property and equipment was adjusted for recent purchases of similar items, economic and functional obsolescence, location, normal useful lives, and capacity (if applicable).

The Company performed its fourth quarter quantitative analysis using a weighted-average cost of capital of 10.0 % as of December 31, 2019, which is based on significant inputs not observable in the market, and thus represents a Level 3 measurement within the fair value hierarchy.

The Company estimated the fair value of its assets in performing its goodwill impairment analysis.

The Company utilized a combination of approaches to discounted cash flow approach, comparable company method and the market value approach.

The Company used a weighted-average cost of capital of 10.0 % and 18.0 % as of December 31, 2019 and March 31, 2020, respectively, which were based on significant inputs not observable in the market, and thus represents a Level 3 measurement within the fair value hierarchy.

Property and equipment

The Company estimated the undiscounted future cash flow projections to assess its property and equipment for impairment.

The carrying values of certain fresh water permanent buried pipelines and equipment and fresh water surface pipelines and equipment were deemed not recoverable.

As a result, the carrying values have been reduced to the estimated fair values, which are based on discounted future cash flows using assumptions as to revenues, costs and a discount rate typical of third-party market participants of 19.0 % as of March 31, 2020, which is a Level 3 fair value measurement within the fair value hierarchy.

Contingent Acquisition Consideration

In connection with Antero Resources’ contribution of Antero Water and certain water handling assets to Antero Midstream Partners in September 2015 (the “Water Acquisition”), Antero Midstream Partners agreed to pay Antero Resources (a) $ 125 million in cash if Antero Midstream Partners delivered 176,295,000 barrels or more of fresh water during the period between January 1, 2017 and December 31, 2019 and (b) an additional $ 125 million in cash if Antero Midstream Partners delivers 219,200,000 barrels or more of fresh water during the period between January 1, 2018 and December 31, 2020.

In connection with Antero Resources’ contribution of Antero Water and certain water handling assets to Antero Midstream Partners in September 2015 (the “Water Acquisition”), Antero Midstream Partners agreed to pay Antero Resources (a) $ 125 million in cash if Antero Midstream Partners delivered 176,295,000 barrels or more of fresh water during the period between January 1, 2017 and December 31, 2019 and (b) an additional $ 125 million in cash if Antero Midstream Partners delivered 219,200,000 barrels or more of fresh water during the period between January 1, 2018 and December 31, 2020.

This contingent consideration liability is valued based on Level 3 inputs related to expected average volumes and weighted average cost of capital.

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

The following table provides a reconciliation of changes in Level 3 financial liabilities measured at fair value on a recurring basis for the period shown below (in thousands):

Contingent acquisition consideration—December 31, 2018

Contingent acquisition consideration assumed from Antero Midstream Partners

Accretion and change in fair value of contingent acquisition consideration

Contingent acquisition consideration—December 31, 2019

The Company accounts for contingent consideration in accordance with applicable accounting guidance pertaining to business combinations.

Antero Midstream Partners is contractually obligated to pay Antero Resources contingent consideration in connection with the Water Acquisition.

The Company updates its assumptions each reporting period based on new developments and adjusts such amounts to fair value based on revised assumptions, if applicable, until such consideration is satisfied through payment upon achievement of the specified objectives or it is eliminated upon failure to achieve the specified objectives.

As of December 31, 2019, Antero Midstream Partners had delivered more than 176,295,000 barrels of fresh water during the period between January 1, 2017 and December 31, 2019.

As a result, Antero Midstream Partners paid Antero Resources $ 125 million in January 2020.

The Company does not expect to pay for the contingent consideration for delivery of 219,200,000 barrels or more barrels of fresh water during the period between January 1, 2018 and December 31, 2020 based on Antero Resources’ disclosed 2020 budget.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy.

The fair value of the contingent consideration liability associated with future milestone payments was based on the risk adjusted present value of the contingent consideration payout.

In January 2020, Antero Midstream Partners paid Antero Resources $ 125 million and, as of December 31, 2020, no additional contingent acquisition consideration was earned.

Senior Unsecured Notes

As of December 31, 2019 the fair value of the Company’s 2024 Notes, 2027 Notes and 2028 Notes was approximately $ 603 million, $ 571 million and $ 569 million, respectively, based on Level 2 market data inputs.

As of December 31, 2019 and 2020 the fair value and carrying value of the Company’s senior unsecured notes were as follows:

December 31, 2019

December 31, 2020

(in thousands)

Fair Value (1)

Carrying Value (2)

Fair Value (1)

Carrying Value (2)

(1) Fair values are based on Level 2 market data inputs.

(2) Carrying values are presented net of unamortized debt issuance costs and debt premiums.

Other Assets and Liabilities

2 unchanged sentences

(16) Investments in Unconsolidated Affiliates

Summary of Investments in Unconsolidated Affiliates

Investment in Antero Midstream Partners

1 unchanged sentence

AMGP recognized distributions earned from Antero Midstream Partners as “Equity in earnings of unconsolidated affiliates” on its statement of operations in the period in which they were earned and were allocated to AMGP’s capital account.

AMGP’s long-term interest in the IDRs on the balance sheet is recorded in “Investment in unconsolidated affiliates.” The ownership of the general partner interests and IDRs did not provide AMGP with any claim to the assets of AMGP other than the balance in its Antero Midstream Partners capital account.

AMGP’s long-term interest in the IDRs on the balance sheet was recorded in “Investment in unconsolidated affiliates.” The ownership of the general partner interests and IDRs did not provide AMGP with any claim to the assets of AMGP other than the balance in its Antero Midstream Partners capital account.

Income related to the IDRs was recognized as earned and increased AMGP’s capital account and equity investment.

2 unchanged sentences

Investment in Stonewall and MarkWest Joint Venture

The Company has a 15 % equity interest in the gathering system of Stonewall, which operates a 67 -mile pipeline on which Antero Resources is an anchor shipper.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Antero Midstream Partners has a 50 % equity interest in the Joint Venture to develop processing and fractionation assets with MarkWest, a wholly owned subsidiary of MPLX, LP.

The Company has a 15 % equity interest in a gathering system of Stonewall, which operates a 67 -mile pipeline on which Antero Resources is an anchor shipper.

The Company has a 50 % equity interest in the Joint Venture to develop processing and fractionation assets with MarkWest, a wholly owned subsidiary of MPLX, LP.

The Joint Venture was formed to develop processing and fractionation assets in Appalachia.

2 unchanged sentences

When the Company records its proportionate share of net income, it increases equity income in the consolidated statements of operations and comprehensive income and the carrying value of that investment on its balance sheet.

When distributions on the Company’s proportionate share of net income are received, they are recorded as reductions to the carrying value of the investment on the balance sheet and are classified as cash inflows from operating activities in accordance with the nature of the distribution approach under ASU No.

When distributions on the

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Company’s proportionate share of net income are received, they are recorded as reductions to the carrying value of the investment on the balance sheet and are classified as cash inflows from operating activities in accordance with the nature of the approach under FASB ASC Topic 230, Statement of Cash Flows .

The Company uses the equity method of accounting to account for its investments in Stonewall and the Joint Venture because it exercises significant influence, but not control, over the entities.

The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as its ownership interest, representation on the applicable board of directors and participation in policy-making decisions of Stonewall and the Joint Venture.

The following table is a reconciliation of our investments in these unconsolidated affiliates:

The following table is a reconciliation of the Company’s investments in these unconsolidated affiliates:

Total Investment

3 unchanged sentences

Balance at December 31, 2018

Equity in net income of unconsolidated affiliates

Distributions from unconsolidated affiliates

Balance at December 31, 2018

Distributions from unconsolidated affiliates

Balance at March 12, 2019

1 unchanged sentence

Additional Investments

Equity in net income of unconsolidated affiliates (1)

Equity in earnings of unconsolidated affiliates (1)

Distributions from unconsolidated affiliates

Balance at December 31, 2019

As adjusted for the amortization of the difference between the cost of the equity investments in Stonewall and the Joint Venture and the amount of the underlying equity in the net assets of Stonewall and the Joint Venture as of the date of the acquisition of Antero Midstream Partners.

Additional investments

Equity in earnings of unconsolidated affiliates (1)

Distributions from unconsolidated affiliates

Balance at December 31, 2020

(b) Summarized Financial Information of Unconsolidated Affiliates

The following tables present summarized financial information for the Company’s investments in unconsolidated affiliates.

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Combined Balance Sheets

7 unchanged sentences

Total liabilities and partners' capital

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

Statements of Combined Operations

3 unchanged sentences

Income from operations

Net income attributable to the equity method investments

Net income attributable to unconsolidated affiliates, including noncontrolling interest

Net income attributable to unconsolidated affiliates

(17) Reporting Segments

1 unchanged sentence

Following the completion of the Transactions, the Company’s operations, which are located in the United States, are organized into two reporting segments:

(1) gathering and processing and (2) water handling.

(i) gathering and processing and (ii) water handling.

Gathering and Processing

3 unchanged sentences

The Company’s water handling segment includes two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs and several regional waterways.

The water handling segment also includes the Clearwater Facility that was placed in service in 2018 and idled in September 2019 (See Note 4—Clearwater Facility Impairment), as well as other fluid handling services, which includes high rate transfer, wastewater transportation, disposal and treatment.

The water handling segment also includes the Clearwater Facility that was placed in service in 2018 and idled in September 2019 (See Note 4—Clearwater Facility Idling), as well as other fluid handling services, which includes high rate transfer, wastewater transportation, disposal and treatment.

See Note 8—Property and Equipment.

5 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

The operating results and assets of the Company’s reportable segments were as follows for the year ended December 31, 2019 (in thousands):

The summarized operating results and assets of the Company’s reportable segments were as follows for the year ended December 31, 2019 and 2020 (in thousands):

Gathering and

(in thousands)

Unallocated (1)

7 unchanged sentences

General and administrative (excluding equity-based compensation)

Facility idling

Equity-based compensation

Impairment of property and equipment

Facility idling

Impairment of goodwill

Impairment of property and equipment

Impairment of customer relationships

1 unchanged sentence

Accretion of asset retirement obligations

Total expenses

Total operating expenses

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Additions to property and equipment, net

Additions to property and equipment

Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018, and 2019

Gathering and

(in thousands)

Unallocated (1)

Year ended December 31, 2020

Revenue–Antero Resources

Amortization of customer relationships

Total revenues

Operating expenses:

Direct operating

General and administrative (excluding equity-based compensation)

Equity-based compensation

Facility idling

Impairment of goodwill

Impairment of property and equipment

Accretion of asset retirement obligations

Loss on asset sale

Total operating expenses

Operating loss

Equity in earnings of unconsolidated affiliates

Additions to property and equipment, net

Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.

(18) Quarterly Financial Information (Unaudited)

1 unchanged sentence

Year ended December 31, 2019

Total operating revenues

Total operating expenses

Net income and comprehensive income

Net income attributable to Series B units

Net income attributable to common shareholders

Net income per common share–basic and diluted

Operating income (loss)

Net income (loss) and comprehensive income (loss)

Net income (loss) per common share–basic

Net income (loss) per common share–diluted

Year ended December 31, 2020

3 unchanged sentences

Net income (loss) and comprehensive income (loss)

Net income (loss) per common share–basic and diluted

Net income (loss) per common share–basic

Net income (loss) per common share–diluted

ANTERO MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Continued)

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 9A. Controls and Procedures