What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-12 compared with 2024-02-14 · 81 added, 106 removed, 274 unchanged (41% of the section changed)

13 unchanged sentences

These services are provided by us directly or through third-parties with which we contract.

Asset Acquisition

On May 1, 2024, we acquired certain Marcellus gas gathering and compression assets from Summit for $70 million in cash, before closing adjustments, with an effective date of April 1, 2024.

This acquisition was funded with our operating cash flow.

The acquired assets include 48 miles of high pressure gathering pipelines and two compressor stations with 100 MMcf/d of compression capacity.

These assets were already interconnected to our low pressure and high pressure gas gathering systems at the time of acquisition and service Antero Resources’ production.

Currently, we do not expect to make any significant capital investments related to the acquired assets.

See Note 6—Property and Equipment to our consolidated financial statements for additional information.

Financing Highlights

Credit Facility

On July 30, 2024, we entered into an amendment and restatement of our senior secured revolving credit facility with lender commitments of $1.25 billion, which matures on July 30, 2029 (subject to certain terms and conditions related to the outstanding balances to our 2027, 2028 and 2029 notes).

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

Issuance of Senior Notes

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The net proceeds from this offering were used to repay outstanding borrowings on the Credit Facility.

See Note 8—Long-Term Debt to the consolidated financial statements for more information.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

Repurchase of Senior Notes

During the year ended December 31, 2024, we repurchased or otherwise fully redeemed $550 million aggregate principal amount of our 7.875% senior notes due May 15, 2026 (the “2026 Notes”) at a weighted average premium of 101.975% of the principal amount thereof, plus accrued and unpaid interest.

The 2026 Notes were retired as of May 16, 2024.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

Share Repurchase Program

On February 13, 2024, our Board of Directors authorized a share repurchase program that allows us to repurchase up to $500 million of shares of our outstanding common stock.

On February 13, 2024, our Board authorized a share repurchase program that allows us to repurchase up to $500 million of shares of our outstanding common stock.

During the year ended December 31, 2024, we repurchased approximately 2 million shares of our common stock through our share repurchase program for a total cost of $29 million.

As of December 31, 2024, we have $471 million remaining under our share repurchase program.

The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws.

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The exact number of shares to be repurchased by us is not guaranteed and the program may be suspended, modified or discontinued at any time without prior notice.

federal excise tax on certain repurchases of stock by publicly traded U.S.

corporations enacted as part of the Inflation Reduction Act of 2022 applies to our share repurchase program.

Market Conditions and Business Trends

Commodity Markets

Prices for natural gas, NGLs and oil decreased significantly during the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Benchmark prices for natural gas decreased significantly, while benchmark prices for oil remained relatively consistent and NGLs increased during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

While substantially all of our revenues are based on fixed-fee contracts that are not directly impacted by changes in commodity prices, commodity price changes do impact the revenues and cash flows of Antero Resources, and Antero Resources’ drilling and development plan does have a direct impact on our gathering, compression and water handling services, revenues and cash flows.

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However, due to Antero Resources’ improved liquidity and leverage position as compared to historical levels, we do not expect to experience significant variability in our throughput volumes resulting from volatile commodity prices.

Growth Incentive Fee Program with Antero Resources

Our 2019 gathering and compression agreement with Antero Resources included a growth incentive fee program whereby we agreed to provide quarterly fee rebates to Antero Resources through December 31, 2023, contingent upon Antero Resources achieving volumetric growth targets on low pressure gathering.

Antero Resources’ throughput gathered under the gathering and compression agreements acquired with the Crestwood assets was not considered in the low pressure gathering volume targets.

During the year ended December 31, 2022, Antero Resources earned $48 million in fee rebates by achieving the first level volumetric target during each quarter in 2022.

During the year ended December 31, 2023, Antero Resources earned $52 million in fee rebates by achieving the first level volumetric target during the first, second and third quarters of 2023 and the second level volumetric target during the fourth quarter of 2023.

The growth incentive fee rebate program expired on December 31, 2023.

Economic Indicators

The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through 2024.

For example, CPI for all urban consumers increased 8% from the year ended December 31, 2021 to the year ended December 31, 2022 and an additional 4% from the year ended December 31, 2022 to the year ended December 31, 2023 as compared to the Federal Reserve’s stated goal of 2%.

For example, CPI for all urban consumers increased 4.1% from the year ended December 31, 2022 to the year ended December 31, 2023 and an additional 2.9% from the year ended December 31, 2023 to the year ended December 31, 2024.

In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis.

Between March 2022 and December 2023, the Federal Reserve increased the federal funds interest rate by 5.25%.

Between March 2022 and July 2023, the Federal Reserve increased the federal funds interest rate by 5.25%.

During the second half of 2024, inflation rates began to approach the Federal Reserve’s stated goal of 2%, and the Federal Reserve decreased the federal funds rate by 1.0% between September and December 2024.

While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate.

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Although we expect that Antero Resources will continue to devote substantial resources to the development of oil and gas reserves, we have no control over this activity and Antero Resources has the ability to reduce or curtail such development at its discretion.

See Note 5—Revenue to the consolidated financial statements for more information on our gathering and compression agreements.

See Note 5—Revenue to our consolidated financial statements for additional information on our gathering and compression agreements.

● Water Handling.

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Our other fluid handling services include wastewater handling, blending and high-rate transfer services.

For other fluid handling

services provided by us, we charge Antero Resources a cost of service fee .

For other fluid handling services provided by us, we charge Antero Resources a cost of service fee .

For other fluid handling services provided by third parties, we charge Antero Resources a fee based on our third-party out-of-pocket costs plus 3%.

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As of December 31, 2024, Antero Resources had disclosed estimated net proved reserves of 17.9 Tcfe, of which 59% was natural gas, 40% were NGLs and 1% was oil.

As of December 31, 2023, Antero Resources’ drilling inventory consisted of 1,588 gross identified potential horizontal well locations, all of which were on acreage dedicated to us, providing us with significant opportunity for future capital investments as Antero Resources’ drilling program continues.

See Note 5—Revenue to the consolidated financial statements for more information on our water services agreement.

Antero Resources’ has a vast drilling inventory of horizontal well locations in the Appalachian Basin, all of which are on acreage dedicated to us, providing us with significant opportunity for future capital investments as Antero Resources’ drilling program continues.

See Note 5—Revenue to our consolidated financial statements for additional information on our water services agreement.

Principal Components of Our Cost Structure

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Fresh water operating expenses consist primarily of labor, pigging, monitoring, repair and maintenance and contract services.

Fresh water operating costs vary with the miles of pipeline, number of pumping stations and to a lesser extent the number of well completions in the Appalachian Basin for which we deliver fresh water and number of impoundments in our water system.

Fresh water operating costs vary with the miles of pipeline, number of pumping stations and the number of well completions in the Appalachian Basin for which we deliver fresh water and number of impoundments in our water system.

Other fluid handling costs relate to contract services performed by us and third parties.

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Management believes these allocation methodologies are reasonable.

Equity-based compensation includes (i) costs allocated to Antero Midstream by Antero Resources for grants made prior to March 12, 2019 pursuant to the Antero Resources Corporation Long-Term Incentive Plan and (ii) costs related to the Antero Midstream Corporation Long-Term Incentive Plan.

Equity-based compensation includes costs related to the AM LTIP.

● Depreciation.

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If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to their estimated fair value.

We have typically financed a portion of our cash requirements with borrowings under our revolving credit facility and with senior unsecured notes.

Our interest expense also includes amortization of deferred financing costs incurred in connection with our revolving credit facility and senior notes and amortization of senior notes premiums.

See Note 8—Long-Term Debt to our consolidated financial statements and “—Capital Resources and Liquidity—Debt Agreements” for additional information on our debt agreements.

We have typically financed a portion of our cash requirements with borrowings under our Credit Facility and with senior unsecured notes.

Our interest expense also includes amortization of deferred financing costs incurred in connection with our Credit Facility and senior notes and amortization of senior notes premiums.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information on our debt agreements.

● Income tax expense .

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The amount of deferred income tax assets considered realizable, however, could change as we generate taxable income or as estimates of future taxable income are reduced.

See Note 7—Income Taxes to our consolidated financial statements for a discussion of our deferred income tax position and income tax expense.

See Note 7—Income Taxes to our consolidated financial statements for additional information on our deferred income tax position and income tax expense.

Results of Operations

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The water handling segment includes (i) two independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional waterways, and (ii) other fluid handling services, which include high rate transfer, wastewater transportation, disposal and blending.

See Note 16—Reportable Segments to our consolidated financial statements for additional information.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2024

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Loss on settlement of asset retirement obligations

Gain on asset sale

Loss (gain) on asset sale

Total operating expenses

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Revenue–third-party

Gathering—low pressure fee rebate

Amortization of customer relationships

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Accretion of asset retirement obligations

Loss on settlement of asset retirement obligations

Loss (gain) on asset sale

Loss on asset sale

Total operating expenses

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Equity in earnings of unconsolidated affiliates

Loss on early extinguishment of debt

Total other income (expense)

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The operating data for Antero Midstream is as follows:

Year Ended December 31,

Operating Data:

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* Not meaningful or applicable.

Total revenues increased by $122 million, from $920 million for the year ended December 31, 2022, to $1,042 million for the year ended December 31, 2023.

(1) The average realized fees for the year ended December 31, 2024 include annual CPI-based adjustments of approximately 1.6%.

Total revenues increased by 6%, from $1.0 billion for the year ended December 31, 2023, to $1.1 billion for the year ended December 31, 2024.

Total revenues included amortization of customer relationships of $71 million during each of the years ended December 31, 2023 and 2024.

Gathering and processing revenues increased by 10%, from $805 million for the year ended December 31, 2023 to $889 million for the year ended December 31, 2024.

Water handling revenues increased by 11%, from $214 million for the year ended December 31, 2022 to $237 million for the year ended December 31, 2023.

Water handling revenues decreased by 8%, from $237 million for the year ended December 31, 2023 to $217 million for the year ended December 31, 2024.

These fluctuations primarily resulted from the following:

Gathering and Processing

● Low pressure gathering revenue increased $47 million period over period primarily due to increased throughput volumes of 114 Bcf, or 314 MMcf/d, and higher low pressure gathering rates as a result of annual CPI-based adjustments, partially offset by higher fee rebates of $4 million between periods.

Low pressure gathering volumes increased between periods primarily due to 86 additional wells being connected to our system since December 31, 2022 and 253 wells that were connected to the assets we acquired during the fourth quarter of 2022.

● Compression revenue increased $37 million period over period due to increased throughput volumes of 153 Bcf, or 418 MMcf/d, and higher compression rates as a result of the annual CPI-based adjustments.

Compression volumes increased between periods primarily due to the 86 additional wells connected to our system since December 31, 2022 and 12 compressor stations and 253 wells that were connected to the assets we acquired during the fourth quarter of 2022.

● High pressure gathering revenue increased $15 million period over period primarily due to increased throughput volumes of 41 Bcf, or 112 MMcf /d, and an increased high pressure gathering rate as a result of an annual CPI-based adjustment.

● Low pressure gathering revenue increased $59 million period over period primarily due to lower growth incentive rebates of $52 million due to the expiration of the program on December 31, 2023 and increased low pressure gathering rates as a result of annual CPI-based adjustments, partially offset by decreased throughput volumes of 3 Bcf, or 17 MMcf/d.

Low pressure gathering volumes decreased between periods primarily due to natural production decline from wells connected to our system, partially offset by 51 additional wells being connected to our system since December 31, 2023 .

● Compression revenue increased $6 million period over period due to increased throughput volumes of 7 Bcf, or 9 MMcf/d, and increased compression rates as a result of annual CPI-based adjustments.

Compression volumes increased between periods primarily due to 51 additional wells connected to our system since December 31, 2023 and two compressor stations that were acquired during the second quarter of 2024.

● High pressure gathering revenue increased $19 million period over period primarily due to increased throughput volumes of 34 Bcf, or 86 MMcf /d, our acquisition of 48 miles of high pressure gathering lines during the second quarter of 2024 and increased high pressure gathering rates as a result of an annual CPI-based adjustment.

The high pressure gathering volumes increased period over period primarily due to 51 additional wells being connected to our high pressure system since December 31, 2023.

The assets acquired during 2022 were already connected to high pressure systems operated by us or third parties prior to such acquisitions, and therefore, the 253 wells connected to the acquired assets did not increase the throughput on our high pressure gathering system.

Water Handling

● Fresh water delivery revenue increased $11 million period over period primarily due to a 3% increase to the fresh water delivery rate for our long-term contract with Antero Resources as a result of the annual CPI-based adjustment and higher fresh water delivery volumes of 1 MMBbl , or 4 MBbl/d.

Fresh water delivery volumes increased between periods due to higher well completions by Antero Resources.

● Other fluid handling services revenue increased $12 million period over period primarily due to increased costs, partially due to inflationary pressures that impact our cost plus 3% and cost of service rates during the year ended December 31, 2023, and higher other fluid handling volumes of 1 MMBbl, or 3 MBbl/d, between periods.

● Fresh water delivery revenue decreased $16 million period over period primarily due to decreased fresh water delivery volumes of 4 MMBbl , or 12 MBbl/d, partially offset by an increase to the fresh water delivery rate for our long-term contract with Antero Resources as a result of the annual CPI-based adjustment.

Fresh water delivery volumes decreased between periods due to fewer wells serviced by our fresh water delivery system as a result of the timing of well completions by Antero Resources.

● Other fluid handling services revenue decreased $4 million period over period primarily due to decreased wastewater handling services and lower high rate transfer volumes during the year ended December 31, 2024, partially offset by higher blending cost of service fees between periods.

Direct operating expenses.

Direct operating expenses increased by 2% , from $ 213 million for the year ended December 31, 2023 to $218 million for the year ended December 31, 2024.

Gathering and processing direct operating expenses increased 26% from $ 76 million for the year ended December 31, 2022 to $96 million for the year ended December 31, 2023 primarily due to 12 compressor stations that were acquired during the fourth quarter of 2022 and increased heavy maintenance expense between periods.

Water handling direct operating expenses increased by 13% , from $ 104 million for the year ended December 31, 2022 to $117 million for the year ended December 31, 2023 primarily due to higher wastewater trucking expenses, an increased number of locations connected to our water blending system and higher fresh water volumes between periods.

Gathering and processing direct operating expenses increased by 8% from $ 96 million for the year ended December 31, 2023 to $103 million for the year ended December 31, 2024 primarily due to increased high pressure gathering and compression volumes between periods and our acquisition of two compressor stations and 48 miles of high pressure gathering lines during the second quarter of 2024.

Water handling direct operating expenses decreased by 2% , from $ 117 million for the year ended December 31, 2023 to $115 million for the year ended December 31, 2024 primarily due to decreased fresh water and other fluid handling volumes between periods, partially offset by increased pipeline maintenance, repair and monitoring activities.

General and administrative (excluding equity-based compensation) expenses.

General and administrative expenses (excluding equity-based compensation expense) decreased 7% , from $ 42 million for the year ended December 31, 2022 to $39 million for the year ended December 31, 2023 primarily due to lower legal costs associated with the Veolia legal matter between periods and lower costs allocated to us from Antero Resources.

See Note 15—Contingencies to our consolidated financial statements for additional information.

General and administrative expenses (excluding equity-based compensation expense) increased by 6% , from $ 39 million for the year ended December 31, 2023 to $42 million for the year ended December 31, 2024 primarily due to higher costs allocated to us from Antero Resources.

Equity-based compensation expenses.

Equity-based compensation expenses increased by 61% from $20 million for the year ended December 31, 2022 to $32 million for the year ended December 31, 2023 primarily due to an increase in the annual equity awards granted during the years ended December 31, 2022 and 2023 as compared to prior years, which were temporarily and significantly reduced during 2020 and supplemented by our cash awards program.

Our equity awards vest over three or four year service periods, and our equity incentive program began returning to normal levels in 2021.

Equity-based compensation expenses increased by 40% from $32 million for the year ended December 31, 2023 to $44 million for the year ended December 31, 2024 primarily due to annual equity-based awards granted during the first quarter of 2024.

Our equity-based awards vest over three or four year service periods.

See Note 10—Equity-Based Compensation to our consolidated financial statements for additional information.

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Depreciation expense increased by 3% from $136 million for the year ended December 31, 2023 to $140 million for the year ended December 31, 2024.

This increase was primarily due to $4 million for our assets acquired during the fourth quarter of 2022 and $3 million related to assets placed in service between periods, partially offset by $3 million of lower expense related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations between periods.

Impairment of property and equipment expense.

Impairment of property and equipment expense of $4 million for the year ended December 31, 2022 was primarily due to (i) a write-down of the Clearwater Facility related to the retirement obligation for the facility and (ii) cancelled projects.

Impairment of property and equipment expense during the year ended December 31, 2023 related to cancelled projects.

Loss (gain) on asset sale.

Gain on asset sale of $2 million for the year ended December 31, 2022 was primarily due to (i) the sale of four compressor engines, (ii) reimbursement of certain cancelled project costs and (iii) sales of miscellaneous equipment and excess pipe inventory.

Loss on asset sale of $6 million for the year ended December 31, 2023 was primarily due to sales of miscellaneous equipment.

This increase was primarily due to $5 million related to assets placed in service between periods and $1 million for our assets acquired during the second quarter of 2024, partially offset by $2 million of lower expense between periods related to our program to repurpose underutilized compressor units to expand existing or construct new compressor stations.

Loss on asset sale.

Loss on asset sale of $6 million and $1 million for the years ended December 31, 2023 and 2024, respectively, was primarily due to sales of miscellaneous equipment.

Interest expense.

Interest expense increased by 14%, from $190 million for the year ended December 31, 2022 to $217 million for the year ended December 31, 2023 primarily due to increased interest rates on our Credit Facility due to higher benchmark rates during the year ended December 31, 2023 and higher average borrowings on our Credit Facility between periods as a result of our asset acquisitions during the fourth quarter of 2022.

Interest expense decreased by 5%, from $217 million for the year ended December 31, 2023 to $207 million for the year ended December 31, 2024 primarily due to lower Credit Facility borrowings between periods and the repurchase and redemption of $550 million principal amount of the 2026 Notes during the year ended December 31, 2024, partially offset by the issuance of $600 million principal amount of 2032 Notes during the year ended December 31, 2024.

Equity in earnings of unconsolidated affiliates.

Equity in earnings in unconsolidated affiliates increased by 12%, from $94 million for the year ended December 31, 2022 to $105 million for the year ended December 31, 2023 primarily due to increased processing and fractionation volumes and higher processing and fractionation fees as a result of annual CPI-based adjustments.

Equity in earnings in unconsolidated affiliates increased by 5%, from $105 million for the year ended December 31, 2023 to $111 million for the year ended December 31, 2024 primarily due to increased processing and fractionation volumes and higher processing and fractionation fees as a result of annual CPI-based adjustments between periods .

Loss on early extinguishment of debt.

During the year ended December 31, 2024, we repurchased or otherwise fully redeemed the $550 million aggregate principal amount of our 2026 Notes at a weighted average premium of 101.975% of the principal amount thereof, plus accrued and unpaid interest, and recognized a loss on early debt extinguishment of $14 million.

There was no loss on early extinguishment of debt for the year ended December 31, 2023.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

Income tax expense.

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This income tax expense increase was primarily due to higher pre-tax income between periods.

The increase in our effective tax rate between periods was primarily due to changes in apportionment of state income taxes during the year ended December 31, 2024.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2023

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Capital resources and liquidity are provided by operating cash flows, available borrowings under our Credit Facility and capital market transactions.

See Note 8—Long-Term Debt to our consolidated financial statements.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

We expect that the combination of these capital resources will be adequate to meet our working capital requirements, capital expenditures program and expected quarterly cash dividends for at least the next 12 months.

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The dividend was paid on February 12, 2025 to stockholders of record as of January 29, 2025.

Our Board also declared a cash dividend of $137,500 on our Series A Preferred Stock that was paid on February 14, 2024 in accordance with their terms.

Our Board also declared a cash dividend of $137,500 on our Series A Preferred Stock that will be paid on February 14, 2025 in accordance with their terms.

As of December 31, 2024, there were dividends in the amount of $68,750 accumulated in arrears on our Series A Preferred Stock.

See Note 11—Cash Dividends and Note 12—Equity and Net Income Per Common Share to our consolidated financial statements for additional information.

We expect our future cash requirements relating to working capital, capital expenditures, acquisitions and quarterly cash dividends to our stockholders will be funded from cash flows internally generated from our operations or borrowings under the Credit Facility.

As of December 31, 2024, we did not have any off-balance sheet arrangements.

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Net cash used in financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Year Ended December 31, 2023 Compared to Year Ended December 31, 2024

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Net cash provided by operating activities was $779 million and $844 million for the years ended December 31, 2023 and 2024, respectively.

The increase in cash flows provided by operations between periods was primarily due to (i) higher revenues in the gathering and processing and water handling segments, (ii) higher distributions from unconsolidated affiliates and (iii) a $10 million tax refund received during the year ended December 31, 2023, partially offset by higher direct operating and interest expenses and changes in working capital between periods.

The increase in cash provided by operations between periods was primarily due to higher gathering and processing revenues and increased distributions from our equity method investments during the year ended December 31, 2024, partially offset by lower water handling revenues between periods.

Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations” for additional information on the period over period changes in our gathering and processing and water handling revenues.

Investing Activities.

Net cash flows used in investing activities decreased by $311 million from $494 million for the year ended December 31, 2022 to $183 million for the year ended December 31, 2023 primarily due to decreased asset acquisitions of $217 million and capital spending for our gathering systems and facilities, water handling systems and other assets of $115 million, partially offset by decreased return of investment in the Joint Venture of $17 million and asset sale proceeds of $5 million during the year ended December 31, 2022.

The capital spending for our gathering systems, facilities and other and water handling systems decreased between periods primarily as a result of fewer capital projects during the year ended December 31, 2023.

Net cash used in investing activities was $183 million and $243 million for the years ended December 31, 2023 and 2024, respectively.

The increase in cash used in investing activities between periods was primarily due to our acquisition of gathering and compression assets during the second quarter of 2024 of $70 million, before closing adjustments, and increased capital spending for our gathering systems and facilities of $12 million, partially offset by decreased capital spending for our water handling systems of $23 million between periods.

During the year ended December 31, 2023, we expanded our gathering systems and facilities by building 17 miles of pipeline and adding capacity to one existing compressor station and water handling systems by building buried and surface pipelines of 6 miles and 9 miles, respectively.

During the year ended December 31, 2024, we expanded our gathering systems and facilities by building 29 miles of pipeline and one new compressor station and water handling systems by building buried and surface pipelines of 1 mile and 17 miles, respectively.

Financing Activities.

Net cash used in financing activities was $596 million and $601 million for the years ended December 31, 2023 and 2024, respectively.

The increase in cash flows used in financing activities between periods was primarily due to net repayments on our Credit Facility of $152 million during the year ended December 31, 2023, as compared to net borrowings on our Credit Facility of $235 million during the year ended December 31, 2022.

The increase in cash used in financing activities between periods was primarily due to our repurchases and redemption of the 2026 Notes of $561 million, repurchases of approximately 2 million shares of our common stock for $29 million and payments for the 2032 Notes and New Credit Facility deferred financing costs of $13 million during the year ended December 31, 2024, partially offset by the issuance of the 2032 Notes of $600 million during the year ended December 31, 2024.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2023

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Water handling systems

Investments in (return of investment in) unconsolidated affiliates

Investments in unconsolidated affiliates

Total capital expenditures

Our 2024 capital budget is $150 million to $170 million.

On February 12, 2025, we announced a 2025 capital budget with a range of $170 million to $200 million.

This capital budget supports Antero Resources’ maintenance capital program for 2025.

Our capital budgets may be adjusted as business conditions warrant.

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Debt Agreements

Credit Facility

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

The Credit Facility provides for borrowing under either Adjusted Term Secured Overnight Financing Rate (“SOFR”) or the Base Rate (as each term is defined in the Credit Facility).

The Credit Facility has lender commitments of $1.25 billion and matures on October 26, 2026;

provided that if on November 17, 2025 any of the 7.875% senior notes due May 15, 2026 (the “2026 Notes”) are outstanding, the Credit Facility will mature on such date.

As of December 31, 2023, we had $630 million of borrowings and no letters of credit outstanding under the Credit Facility.

We have a choice of borrowing at Adjusted Term SOFR or at the base rate.

Principal amounts borrowed are payable on the maturity date with such borrowings bearing interest that is payable (i) with respect to base rate loans, quarterly and (ii) with respect to SOFR Loans, the last day of each Interest Period (as defined below);

provided that if any Interest Period for a SOFR Loan exceeds three months, interest will be payable on the respective dates that fall every three months after the beginning of such Interest Period.

SOFR Loans bear interest at a rate per annum equal to the rate for SOFR rate loans for three or six months (the “Interest Period”) plus an applicable margin ranging from 150 to 250 basis points (subject to certain exceptions), depending on the leverage ratio then in effect.

Base rate loans bear interest at a rate per annum equal to the greatest of (i) the agent bank’s reference rate, (ii) the federal funds effective rate plus 50 basis points and (iii) the rate for one month SOFR Rate loans plus 100 basis points, plus an applicable margin ranging from 50 to 150 basis points (subject to certain exceptions) depending on the leverage ratio then in effect.

The Credit Facility is guaranteed by our subsidiaries and is secured by mortgages on substantially all of Antero Midstream Partners’ and its subsidiaries’ properties.

The Credit Facility contains restrictive covenants that may limit our ability to, among other things:

● incur additional indebtedness;

● sell assets;

● make loans to others;

● make investments and acquisitions;

● enter into mergers;

● make certain restricted payments;

● incur liens;

● engage in certain other transactions without the prior consent of the lenders.

The Credit Facility also requires us to maintain the following financial ratios (subject to certain exceptions):

● a consolidated interest coverage ratio, which is the ratio of our consolidated EBITDA to its consolidated current interest charges of at least 2.5 to 1.0 at the end of each fiscal quarter;

● a consolidated total leverage ratio, which is the ratio of consolidated debt to consolidated EBITDA, of not more than 5.00 to 1.00 at the end of each fiscal quarter;

provided that, at our election (the “Financial Covenant Election”), the consolidated total leverage ratio shall be no more than 5.25 to 1.0;

● after a Financial Covenant Election, a consolidated senior secured leverage ratio covenant rather than the consolidated total leverage ratio covenant, which is the ratio of consolidated senior secured debt to consolidated EBITDA, of not more than 3.75 to 1.0.

We were in compliance with the applicable covenants and ratios as of December 31, 2023.

See Note 8—Long-Term Debt to the consolidated financial statements for more information.

The following table summarizes the material terms of our senior unsecured notes as of December 31, 2023:

Outstanding principal (in thousands)

Interest rate

Maturity date

March 1, 2027

January 15, 2028

June 15, 2029

Interest payment dates

Make-whole redemption date (1)

March 1, 2025

January 15, 2026

June 15, 2026

(1) On or after these dates, we may redeem the applicable series of senior notes, in whole or in part, at a redemption price equal to 100% of the principal amount redeemed, together with accrued and unpaid interest up to the redemption date.

Prior to such date, we may, in certain circumstances, redeem the notes at a redemption price that includes an applicable premium as defined in the indentures to such notes.

See Note 8—Long-Term Debt to the consolidated financial statements for more information.

We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, open market purchases, privately negotiated transactions or otherwise.

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The amounts involved could be material.

See Note 8—Long-Term Debt to the consolidated financial statements for more information.

We were in compliance with all covenants and ratios applicable to our debt agreements as of December 31, 2023 and 2024.

See Note 8—Long-Term Debt to our consolidated financial statements for additional information.

Critical Accounting Estimates

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The amount of deferred income tax assets considered realizable could change based upon the amounts of taxable income actually generated, or as estimates of future taxable income change.

As of December 31, 2023, we have recognized a valuation allowance of $3 million related to charitable contributions.

The calculation of deferred income tax assets and liabilities involves uncertainties in the application of complex tax laws and regulations.

3 unchanged sentences

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 7. Management’s Discussion and Analysis