Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. 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, 2024 at a reasonable assurance level.
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Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for us as defined in Rules 13a-15(f) and 15d- 15(f) of the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets;
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.
Under the supervision of, and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control—Integrated Framework in 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 in this Annual Report on Form 10-K.
Item 9 B. Other Information
None.
Item 9C. disclosure regarding foreign jurisdictions that prevent inspections
Not applicable.
PART III
Item 10. Director s, Executive Officers, and Corporate Governance
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 2025 Annual Meeting of Stockholders.
Code of Ethics
We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of our Corporate Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer and other persons performing similar functions by posting such information in the “Governance” subsection of our website at www.anteromidstream.com .
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Item 11. Executive Compensation
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 2025 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related STOCKHOLDER Matters
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 2025 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions and Director Independence
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 2025 Annual Meeting of Stockholders.
Item 14. Principal Accountant Fees and Services
Our independent registered accounting firm is KPMG LLP , Denver, CO , Auditor Firm ID: 185 .
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 2025 Annual Meeting of Stockholders.
PART IV
Item 15. Exhibit and Financial Statement Schedules
(a)(1) and (a)(2) Financial Statements and Financial Statement Schedules
The consolidated financial statements are listed on the Index to Financial Statements to this Annual Report on Form 10-K beginning on page F-1.
(a)(3) Exhibits.
Exhibit
Number
Description of Exhibit
2.1
Simplification Agreement, dated as of October 9, 2018, by and among AMGP GP LLC, Antero Midstream GP LP, Antero IDR Holdings LLC, Arkrose Midstream Preferred Co LLC, Arkrose Midstream NewCo Inc., Arkrose Midstream Merger Sub LLC, Antero Midstream Partners GP LLC and Antero Midstream Partners LP (incorporated by reference to Exhibit 2.1 to Antero Midstream GP LP’s Current Report on Form 8-K (Commission File No. 001-38075) filed on October 10, 2018).
3.1
Certificate of Conversion of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
3.2
Certificate of Incorporation of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
3.3
Certificate of Amendment to Certificate of Incorporation of Antero Midstream Corporation, dated June 8, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on June 8, 2023).
3.4
Amended and Restated Bylaws of Antero Midstream Corporation, dated February 14, 2023 (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 15, 2023).
3.5
Certificate of Designations of Antero Midstream Corporation, dated March 12, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
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4.1
Indenture, dated as of February 25, 2019, by and among Antero Midstream Partners LP, Antero Midstream Finance Corporation, the subsidiary 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 February 25, 2019).
4.2
Form of 5.75% Senior Note due 2027 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on February 25, 2019).
4.3
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).
4.4
Indenture, dated as of June 28, 2019, 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 June 28, 2019).
4.5
Form of 5.75% Senior Note due 2028 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on June 28, 2019).
4.6
Registration Rights Agreement, dated March 12, 2019, by and among the Company, Antero Resources Corporation, Arkrose Subsidiary Holdings LLC, Glen C. Warren, Jr., Canton Investment Holdings LLC, Paul M. Rady, Mockingbird Investments, LLC and the other holders named therein (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
4.7
Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.9 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 14, 2024).
4.8
Indenture, dated June 8, 2021, 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 June 8, 2021).
4.9
Form of 5.375% Senior Note due 2029 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on June 8, 2021).
4.10
Indenture, dated as of January 16, 2024, by and among Antero Midstream Partners LP, Antero Midstream Finance Corporation, the guarantors party thereto and Computer Trust Company, N.A., 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 January 16, 2024).
4.11
Form of 6.625% Senior Note due 2032 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on January 16, 2024).
10.1
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).
10.2
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 (incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 12, 2020).
10.3
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).
10.4**
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. 001-36719) filed on February 13, 2019).
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10.5
Amended and Restated Contribution Agreement, dated as of November 10, 2014, by and between Antero Resources Corporation and Antero Midstream Partners LP (incorporated by reference to Exhibit 10.1 to Antero Midstream Partners LP’s Current Report on Form 8-K (Commission File No. 001-36719) filed on November 17, 2014).
10.6
Second Amended and Restated Right of First Offer Agreement, dated as of February 13, 2018, by and between Antero Resources Corporation and Antero Midstream LLC (incorporated by reference to Exhibit 10.2 to Antero Midstream Partners LP’s Quarterly Report on Form 10-Q (Commission File No. 001-36719) filed on April 25, 2018).
10.7
License Agreement, dated as of November 10, 2014, by and between Antero Resources Corporation and Antero Midstream Partners LP (incorporated by reference to Exhibit 10.4 to Antero Midstream Partners LP’s Current Report on Form 8-K (Commission File No. 001-36719) filed on November 17, 2014).
10.8
First Amendment and Joinder Agreement, dated as of October 31, 2018 (incorporated by reference to Exhibit 10.1 to Antero Midstream Partners LP’s Current Report on Form 8-K (Commission File No. 001-36719) filed on November 2, 2018).
10.9
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).
10.10
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).
10.11
Second Amended and Restated Credit Facility, dated as of October 26, 2021, by and among Antero Midstream Partners LP, as Borrower, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent (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 27, 2021).
10.12†
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on March 12, 2019).
10.13†
Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Antero Midstream Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No. 001-38075) filed on July 31, 2019).
10.14†
Form of Performance Share Unit Grant Notice and Performance Share Unit 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 July 27, 2022).
10.15†
Form of Stock Award Grant Notice and Stock Award Agreement (Form for Non-Employee Directors) 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 26, 2023).
10.16
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 the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on October 10, 2018).
10.17†
Amended and Restated Antero Midstream Corporation Long Term Incentive Plan, dated June 5, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-38075) filed on June 6, 2024).
10.18
Third Amended and Restated Credit Agreement, dated July 30, 2024, among Antero Midstream Partners LP, as the Borrower, the Lenders party thereto and Wells Fargo Banks, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No. 001-38075) filed on July 31, 2024).
19.1*
Antero Midstream Corporation Insider Trading Policies.
21.1*
Subsidiaries of Antero Midstream Corporation.
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23.1*
Consent of KPMG LLP.
31.1*
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2*
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1*
Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2*
Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
97.1
Antero Midstream Corporation Incentive Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K (Commission File No. 001-38075) filed on February 14, 2024).
101*
The following financial information from this Form 10-K of Antero Midstream Corporation for the year ended December 31, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to the Consolidated Financial Statements, tagged as blocks of text.
104*
Cover Page Interactive Data File (embedded within the Inline XBRL document).
The exhibits marked with the asterisk symbol (*) are filed or furnished with this Annual Report on Form 10-K.
**
Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
†
Management contract or compensatory plan or arrangement
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ANTERO MIDSTREAM CORPORATION
By:
/s/ BRENDAN E. KRUEGER
Brendan E. Krueger
Chief Financial Officer, Vice President – Finance and Treasurer
Date:
February 12, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature
Title
Date
Chairman of the Board, Director,
/s/ PAUL M. RADY
President and Chief Executive Officer
February 12, 2025
Paul M. Rady
(principal executive officer)
Chief Financial Officer,
/s/ BRENDAN E. KRUEGER
Vice President – Finance and Treasurer
February 12, 2025
Brendan E. Krueger
(principal financial officer)
Senior Vice President – Accounting and
/s/ SHERI L. PEARCE
Chief Accounting Officer
February 12, 2025
Sheri L. Pearce
(principal accounting officer)
/s/ MICHAEL N. KENNEDY
Director and Senior Vice President – Finance
February 12, 2025
Michael N. Kennedy
/s/ NANCY E. CHISHOLM
Director
February 12, 2025
Nancy E. Chisholm
/s/ PETER A. DEA
Director
February 12, 2025
Peter A. Dea
/s/ W. HOWARD KEENAN, JR.
Director
February 12, 2025
W. Howard Keenan, Jr.
/s/ DAVID H. KEYTE
Director
February 12, 2025
David H. Keyte
/s/ BROOKS J. KLIMLEY
Director
February 12, 2025
Brooks J. Klimley
/s/ JANINE J. MCARDLE
Director
February 12, 2025
Janine J. McArdle
/s/ JOHN C. MOLLENKOPF
Director
February 12, 2025
John C. Mollenkopf
/s/ JEFFREY S. MUÑOZ
Director
February 12, 2025
Jeffrey S. Muñoz
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Audited Consolidated Financial Statements as of December 31, 2023 and 2024 and for the Years Ended December 31, 2022, 2023 and 2024
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations and Comprehensive Income
F-5
Consolidated Statements of Stockholders’ Equity
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
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, 2023 and 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, 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, 2024, 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, 2023 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
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. 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
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.
F-2
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of impairment triggering events for long-lived assets
As discussed in Note 2 to the consolidated financial statements, the Company evaluates property and equipment (collectively, long-lived assets) for impairment whenever events or changes in circumstances indicate that the related carrying values may not be recoverable (triggering events). The carrying value of property and equipment as of December 31, 2024 was $4 billion.
We identified the evaluation of impairment triggering events for long-lived assets as a critical audit matter. A higher degree of subjective auditor judgment was required to assess whether events or changes in circumstances indicate carrying values may not be recoverable.
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 related to the long-lived assets impairment process. This included a control related to the Company’s process to identify and assess impairment triggering events for long-lived assets and the underlying quantitative data used to perform the analysis. We evaluated the Company’s identification of impairment triggering events for long-lived assets and responses to the factors considered by:
● evaluating overall macro-economic conditions
● analyzing historical financial results for long-lived assets to identify significant degradations in the related cash flows
● evaluating the minimum volume commitments with Antero Resources Corporation and their impact on the recoverability of the long-lived assets
● examining external information on certain of the Company’s customers’ drilling plans to assess continued development.
/s/ KPMG LLP
We have served as the Company’s auditor since 2016.
Denver, Colorado
February 12, 2025
F-3
Table of Contents
ANTERO MIDSTREAM CORPORATION
Consolidated Balance Sheets
(In thousands, except per share amounts)
December 31,
2023
2024
Assets
Current assets:
Cash and cash equivalents
$
66
—
Accounts receivable–Antero Resources
88,610
115,180
Accounts receivable–third party
952
832
Other current assets
1,500
2,052
Total current assets
91,128
118,064
Long-term assets:
Property and equipment, net
3,793,523
3,881,621
Investments in unconsolidated affiliates
626,650
603,956
Customer relationships
1,215,431
1,144,759
Other assets, net
10,886
13,348
Total assets
$
5,737,618
5,761,748
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable–Antero Resources
$
4,457
4,114
Accounts payable–third party
10,499
12,308
Accrued liabilities
80,630
83,555
Other current liabilities
831
635
Total current liabilities
96,417
100,612
Long-term liabilities:
Long-term debt
3,213,216
3,116,958
Deferred income tax liability, net
265,879
413,608
Other
10,375
15,399
Total liabilities
3,585,887
3,646,577
Stockholders' equity:
Preferred stock, $ 0.01 par value: 100,000 authorized as of December 31, 2023 and December 31, 2024
Series A non-voting perpetual preferred stock; 12 designated and 10 issued and outstanding as of December 31, 2023 and December 31, 2024
—
—
Common stock, $ 0.01 par value; 2,000,000 authorized; 479,713 and 479,422 issued and outstanding as of December 31, 2023 and December 31, 2024, respectively
4,797
4,794
Additional paid-in capital
2,046,487
2,019,830
Retained earnings
100,447
90,547
Total stockholders' equity
2,151,731
2,115,171
Total liabilities and stockholders' equity
$
5,737,618
5,761,748
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
ANTERO MIDSTREAM CORPORATION
Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
Year Ended December 31,
2022
2023
2024
Revenue:
Gathering and compression–Antero Resources
$
743,265
842,362
926,063
Water handling–Antero Resources
244,770
268,667
248,858
Water handling–third party
2,622
1,414
1,944
Amortization of customer relationships
( 70,672 )
( 70,672 )
( 70,672 )
Total revenue
919,985
1,041,771
1,106,193
Operating expenses:
Direct operating
180,254
213,165
217,976
General and administrative (including $ 19,654 , $ 31,606 and $ 44,332 of equity-based compensation in 2022, 2023 and 2024, respectively)
62,125
71,068
86,086
Facility idling
4,166
2,459
1,721
Depreciation
131,762
136,059
140,000
Impairment of property and equipment
3,702
146
332
Accretion of asset retirement obligations
222
177
189
Loss on settlement of asset retirement obligations
539
805
—
Loss (gain) on asset sale
( 2,251 )
6,030
723
Total operating expenses
380,519
429,909
447,027
Operating income
539,466
611,862
659,166
Other income (expense):
Interest expense, net
( 189,948 )
( 217,245 )
( 207,027 )
Equity in earnings of unconsolidated affiliates
94,218
105,456
110,573
Loss on early extinguishment of debt
—
—
( 14,091 )
Total other expense
( 95,730 )
( 111,789 )
( 110,545 )
Income before income taxes
443,736
500,073
548,621
Income tax expense
( 117,494 )
( 128,287 )
( 147,729 )
Net income and comprehensive income
$
326,242
371,786
400,892
Net income per common share–basic
$
0.68
0.77
0.83
Net income per common share–diluted
$
0.68
0.77
0.83
Weighted average common shares outstanding:
Basic
478,232
479,378
480,822
Diluted
480,300
482,372
485,247
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
ANTERO MIDSTREAM CORPORATION
Consolidated Statements of Stockholders’ Equity
(In thousands)
Additional
Retained Earnings
Preferred
Common Stock
Paid-In
(Accumulated
Total
Stock
Shares
Amount
Capital
Deficit)
Equity
Balance at December 31, 2021
$
—
477,495
$
4,775
2,414,398
( 132,475 )
2,286,698
Dividends to stockholders
—
—
—
( 322,401 )
( 110,974 )
( 433,375 )
Equity-based compensation
—
—
—
19,654
—
19,654
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes
—
1,002
10
( 6,911 )
—
( 6,901 )
Net income and comprehensive income
—
—
—
—
326,242
326,242
Balance at December 31, 2022
—
478,497
4,785
2,104,740
82,793
2,192,318
Dividends to stockholders
—
—
—
( 81,352 )
( 354,132 )
( 435,484 )
Equity-based compensation
—
—
—
31,606
—
31,606
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes
—
1,216
12
( 8,507 )
—
( 8,495 )
Net income and comprehensive income
—
—
—
—
371,786
371,786
Balance at December 31, 2023
—
479,713
4,797
2,046,487
100,447
2,151,731
Dividends to stockholders
—
—
—
( 47,945 )
( 390,151 )
( 438,096 )
Equity-based compensation
—
—
—
44,332
—
44,332
Issuance of common stock upon vesting of equity-based compensation awards, net of common stock withheld for income taxes
—
1,611
16
( 15,014 )
—
( 14,998 )
Repurchases and retirement of common stock
—
( 1,902 )
( 19 )
( 8,030 )
( 20,641 )
( 28,690 )
Net income and comprehensive income
—
—
—
—
400,892
400,892
Balance at December 31, 2024
$
—
479,422
$
4,794
2,019,830
90,547
2,115,171
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
ANTERO MIDSTREAM CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Year Ended December 31,
2022
2023
2024
Cash flows provided by (used in) operating activities:
Net income
$
326,242
371,786
400,892
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
131,762
136,059
140,000
Accretion of asset retirement obligations
222
177
189
Impairment of property and equipment
3,702
146
332
Deferred income tax expense
117,494
134,664
147,729
Equity-based compensation
19,654
31,606
44,332
Equity in earnings of unconsolidated affiliates
( 94,218 )
( 105,456 )
( 110,573 )
Distributions from unconsolidated affiliates
120,460
131,835
135,660
Amortization of customer relationships
70,672
70,672
70,672
Amortization of deferred financing costs
5,716
5,979
6,004
Settlement of asset retirement obligations
( 5,454 )
( 1,258 )
( 795 )
Loss on settlement of asset retirement obligations
539
805
—
Loss (gain) on asset sale
( 2,251 )
6,030
723
Loss on early extinguishment of debt
—
—
14,091
Changes in assets and liabilities:
Accounts receivable–Antero Resources
( 3,354 )
( 2,458 )
( 26,571 )
Accounts receivable–third party
723
359
748
Income tax receivable
—
940
—
Other current assets
( 313 )
( 2,041 )
( 781 )
Accounts payable–Antero Resources
782
( 1,267 )
( 54 )
Accounts payable–third party
7,973
( 7,766 )
3,722
Accrued liabilities
( 747 )
8,251
17,674
Net cash provided by operating activities
699,604
779,063
843,994
Cash flows provided by (used in) investing activities:
Additions to gathering systems, facilities and other
( 227,561 )
( 130,305 )
( 141,832 )
Additions to water handling systems
( 71,363 )
( 53,428 )
( 30,515 )
Additional investments in unconsolidated affiliate
—
( 262 )
( 2,393 )
Return of investment in unconsolidated affiliate
17,000
—
—
Acquisition of gathering systems and facilities
( 216,726 )
( 266 )
( 69,992 )
Cash received in asset sales
5,726
1,087
1,342
Change in other assets
( 98 )
( 32 )
( 2 )
Change in other liabilities
( 804 )
—
659
Net cash used in investing activities
( 493,826 )
( 183,206 )
( 242,733 )
Cash flows provided by (used in) financing activities:
Dividends to common stockholders
( 432,825 )
( 434,846 )
( 437,634 )
Dividends to preferred stockholders
( 550 )
( 550 )
( 550 )
Repurchases of common stock
—
—
( 28,690 )
Issuance of Senior Notes
—
—
600,000
Redemption of Senior Notes
—
—
( 560,862 )
Payments of deferred financing costs
( 302 )
—
( 12,793 )
Borrowings on Credit Facility
1,269,300
1,037,700
1,565,000
Repayments on Credit Facility
( 1,034,500 )
( 1,189,600 )
( 1,710,800 )
Employee tax withholding for settlement of equity-based compensation awards
( 6,901 )
( 8,495 )
( 14,998 )
Net cash used in financing activities
( 205,778 )
( 595,791 )
( 601,327 )
Net increase (decrease) in cash and cash equivalents
—
66
( 66 )
Cash and cash equivalents, beginning of period
—
—
66
Cash and cash equivalents, end of period
$
—
66
—
Supplemental disclosure of cash flow information:
Cash paid during the period for interest
$
183,079
213,955
189,908
Cash received during the period for income taxes
$
—
9,626
104
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment
$
( 17,003 )
1,288
( 13,416 )
See accompanying notes to consolidated financial statements.
F-7
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements
(1) Organization
Antero Midstream Corporation together with its consolidated subsidiaries (the “Company” or “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. Antero Midstream provides midstream services to Antero Resources under long-term contracts. The Company’s corporate headquarters is located in Denver, Colorado.
The Company’s gathering and processing assets consist of high and low pressure gathering pipelines, compressor stations and processing and fractionation plants that collect and process natural gas and NGLs from Antero Resources’ wells in the Appalachian Basin. The Company’s water handling assets include two independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional waterways, which portions of these systems are also utilized to transport flowback and produced water. The Company’s water handling assets also include other flowback and produced water treatment facilities.
Antero Midstream also has a 50 % equity interest in the Joint Venture and a 15 % equity interest in a gathering system of Stonewall. See Note 14—Investments in Unconsolidated Affiliates.
(2) Summary of Significant Accounting Policies
(a)
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with GAAP. 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, 2023 and December 31, 2024, and the results of the Company’s operations and its cash flows for the years ended December 31, 2022, 2023 and 2024. The Company has no items of other comprehensive income; therefore, net income is equal to comprehensive income.
Certain costs of doing business incurred and charged to the Company by Antero Resources have been reflected in the accompanying consolidated financial statements. These costs include general and administrative expenses provided to the Company by Antero Resources in exchange for:
● business services, such as payroll, accounts payable and facilities management;
● corporate services, such as finance and accounting, legal, human resources, investor relations and public and regulatory policy; and
● employee compensation.
Transactions between the Company and Antero Resources have been identified in the consolidated financial statements (see Note 4—Transactions with Affiliates).
(b)
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Antero Midstream Corporation and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the Company’s consolidated financial statements.
Investments in entities for which the Company exercises significant influence, but not control, are accounted for under the equity method. The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as Antero Midstream’s ownership interest, representation on the Board of Directors and participation in the policy-making decisions of equity method investees. 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 of unconsolidated affiliates on the Company’s consolidated statements of operations and comprehensive income 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 and the 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.
F-8
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
The Company accounts for distributions received from equity method investees under the “nature of the distribution” approach. 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).
(c)
Use of Estimates
The preparation of the consolidated financial statements and notes in conformity with GAAP requires that management formulate estimates and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingent liabilities. Items subject to estimates and assumptions include the useful lives of property and equipment, evaluating impairments of long-lived and intangible assets, as well as the valuation of accrued liabilities and deferred and current income taxes, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.
(d)
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments. From time to time, the Company may be in the position of a “book overdraft” in which outstanding checks exceed cash and cash equivalents. The Company classifies book overdrafts in accounts payable within its consolidated balance sheets, and classifies the change in accounts payable associated with book overdrafts as an operating activity within its consolidated statements of cash flows.
(e)
Property and Equipment
Property and equipment primarily consists of (i) gathering pipelines, (ii) compressor stations, (iii) the wastewater treatment facility (the “Clearwater Facility”), (iv) other flowback and produced water facilities and (v) 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. Maintenance and repair costs are expensed as incurred.
Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives and salvage values of assets. The depreciation of fixed assets recorded under operating lease agreements is included in depreciation expense. 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 makes estimates with respect to useful lives and salvage values that management believes are reasonable. The Company reviews the estimated useful lives of its assets to determine if any changes are necessary as circumstances warrant.
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. Generally, the basis for making such assessments is undiscounted future cash flow projections for the assets being assessed. If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to the estimated fair values, which are based on discounted future cash flows using assumptions as to revenues, costs and discount rates typical of third-party market participants, which is a Level 3 fair value measurement.
During the years ended December 31, 2022 and 2024, the Company acquired certain Marcellus gas gathering and compression assets and Utica compression assets. These transactions were accounted for as asset acquisitions in accordance with FASB ASC Topic 805-50, Business Combinations, Related Issues (“ASC 805-50”). Accordingly, the acquired assets were recorded based upon the cash consideration paid, with all value assigned to Property and equipment in the consolidated balance sheets. See Note 6— Property and Equipment for additional information on asset acquisitions.
(f)
Investments in Unconsolidated Affiliates
The Company uses the equity method of accounting to account for its investments in the Joint Venture and Stonewall. The Company uses the equity method to account for its investments in companies if the investment provides the Company with the ability to exercise significant influence over, but not control of, the operating and financial policies of the investee. The Company’s judgment regarding the level of influence over each equity method investee includes considering key factors such as the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions of the investee and material
F-9
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
intercompany transactions. Such investments are included in the investments in unconsolidated affiliates on the Company’s consolidated balance sheets.
Income (loss) from investees that are accounted for under the equity method is included in equity in earnings (loss) of unconsolidated affiliates on the Company’s consolidated statements of operations and comprehensive income and cash flows. When the Company records its proportionate share of net income (loss), it is recorded to equity in earnings (loss) of unconsolidated affiliates in the consolidated statements of operations and comprehensive income and the carrying value of that investment on its consolidated balance sheet. Distributions received from equity method investees are recorded as reductions to the carrying value of the investment on the consolidated balance sheet. The Company’s equity in earnings (loss) of unconsolidated affiliates is adjusted for basis differences recognized due to the difference between the cost of the equity method investment and the amount of underlying equity in the net assets as of March 12, 2019. Basis difference are amortized into equity in earnings (loss) of unconsolidated affiliate on the Company’s consolidated statements of operations and comprehensive income over the remaining useful lives of the underlying assets and liabilities.
The Company accounts for distributions received from equity method investees under the “nature of the distribution” approach. 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 provided by operating activities) or a return of investment (classified as cash provided by investing activities).
(g)
Intangible Assets
Amortization of intangible assets with definite lives is calculated using the straight-line method, which is reflective of the benefit pattern in which the estimated economic benefit is expected to be received over the estimated useful life of the intangible asset. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. 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.
(h)
Income Taxes
The Company recognizes deferred income 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. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred income tax assets will not be realized. The Company regularly reviews its tax positions in each significant taxing jurisdiction during the process of evaluating its tax provision. The Company makes adjustments to its tax provision when: (i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position; and/or (ii) a tax position is effectively settled with a tax authority at a differing amount.
(i)
Asset Retirement Obligations
The Company’s asset retirement obligations include its obligation to close, maintain and monitor landfill cells and support facilities. 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. For the Company’s individual landfill cells, the required closure and post-closure obligations under the terms of its permits and its intended operation of the landfill cell are triggered and recorded when the cell is placed into service and salt is initially disposed in the landfill cell. The fair value is based on the total estimated costs to close the landfill cell and perform post-closure activities once the landfill cell has reached capacity and is no longer accepting salt. Retirement obligations are increased each year to reflect the passage of time by accreting the balance at the weighted average credit-adjusted risk-free rate that is used to calculate the recorded liability, with accretion charged to direct costs. Actual cash expenditures to perform closure and post-closure activities reduce the retirement obligation liabilities as incurred. After initial measurement, asset retirement obligations are adjusted at the end of each period to reflect changes, if any, in the estimated future cash flows underlying the obligation. Landfill retirement assets are capitalized as the related retirement obligations are incurred, and are amortized on a units-of-consumption basis as the disposal capacity is consumed. During the year ended December 31, 2021, the Company commenced closure and reclamation operations on the landfill, and such closure and reclamation operations were substantially complete as of December 31, 2024.
F-10
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
Asset retirement obligations are recorded for water impoundments and wastewater pits when an abandonment date is identified. The Company records the fair value of its water impoundment and wastewater pit retirement obligations as liabilities in the period in which the regulatory obligation to retire a specific asset is triggered. The fair value is based on the total reclamation costs of the assets. Retirement obligations are increased each year to reflect the passage of time by accreting the balance at the weighted average credit-adjusted risk-free rate that is used to calculate the recorded liability, with accretion charged to direct costs. Actual cash expenditures to perform remediation activities reduce the retirement obligation liabilities as incurred. After initial measurement, asset retirement obligations are adjusted at the end of each period to reflect changes, if any, in the estimated future cash flows underlying the obligation. 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 (i) 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 or (ii) intends to operate and maintain its assets as long as supply and demand for natural gas exists, which the Company expects to continue into the foreseeable future.
(j)
Litigation and Other Contingencies
A liability is recorded for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. The Company regularly reviews contingencies to determine the adequacy of our accruals and related disclosures. The ultimate amount of losses, if any, may differ from these estimates. Any contingency that could result in a gain is recorded when realized.
The Company accrues losses associated with environmental obligations when such losses are probable and can be reasonably estimated. Accruals for estimated environmental losses are recognized no later than at the time a remediation feasibility study or an evaluation of response options, is complete. These accruals are adjusted as additional information becomes available or as circumstances change. Future environmental expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded separately as assets at their undiscounted value when receipt of such recoveries is probable.
As of December 31, 2023 and December 31, 2024, the Company had not recorded any liabilities for litigation, environmental or other contingencies.
(k) Dividends
Preferred and common dividends declared are recorded as a reduction of retained earnings to the extent that retained earnings were available at the close of the quarter prior to the dividend declaration date, with any excess recorded as a reduction of additional paid-in capital.
(l) Treasury Share Retirement
The Company periodically retires treasury shares acquired through share repurchases and returns those shares to the status of 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 retained 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.
(m)
Revenue Recognition
The Company 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, 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 other fluid handling services provided by third parties, the third-party costs the Company incurs plus 3 % or (iv) in the case of other fluid handling services 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. The Company includes lease revenue within revenues by service. See Note 5—Revenue.
F-11
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(n)
Equity-Based Compensation
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’s equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to additional paid-in capital. 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. Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period. See Note 10—Equity-Based Compensation.
(o)
Fair Value Measures
The FASB ASC Topic 820, Fair Value Measurements and Disclosures , clarifies the definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long- lived assets). The fair value is the price that the Company estimates would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize inputs to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. 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 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. 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. See Note 13—Fair Value Measurement.
(p)
Recently Adopted or Issued Accounting Standards
Reportable Segments
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to improve reportable segment disclosures primarily through enhanced disclosure of reportable segment expenses. This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 in this Annual Report on Form 10-K for the year ended December 31, 2024, and it did not have a material impact on the Company’s consolidated financial statements.
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to improve income tax disclosures primarily through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income tax (expense) benefit and income taxes paid, net disclosures by federal, state and foreign jurisdictions, among others. This ASU is effective for annual reporting periods beginning after December 15, 2024, although early adoption is permitted. ASU 2023-09 should be applied on a prospective basis, although retrospective application is permitted. The Company is evaluating the impact that ASC 2023-09 will have on the consolidated financial statements and the transition method it plans to use for adoption . The Company plans to adopt ASU 2023-09 in the Annual Report on Form 10-K for the year ending December 31, 2025.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to improve the disclosure about certain operating expenses primarily through enhanced disclosure of cost of sales and selling, general and administrative expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 can be applied on either a prospective or a retrospective basis at the Company’s election. The Company is evaluating the impact that ASU 2024-03 will have on the consolidated financial statements and its plans for adoption, including its transition method and adoption date.
F-12
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(3) Intangibles
All customer relationships are subject to amortization and are amortized over a weighted-average period of 17 years , which reflects the remaining economic life of the relationships as of December 31, 2024. The Company recorded amortization expense of $ 71 million for each of the years ended December 31, 2022, 2023 and 2024.
The carrying amount of customer relationships were as follows:
December 31,
(in thousands)
2023
2024
Gross carrying value of customer relationships
$
1,555,000
1,555,000
Accumulated amortization of customer relationships
( 339,569 )
( 410,241 )
Customer relationships
$
1,215,431
1,144,759
Future amortization expense as of December 31, 2024 is as follows (in thousands):
Year ending December 31, 2025
$
70,672
Year ending December 31, 2026
70,672
Year ending December 31, 2027
70,672
Year ending December 31, 2028
70,672
Year ending December 31, 2029
70,672
Thereafter
791,399
Total
$
1,144,759
(4) Transactions with Affiliates
(a)
Revenues
Substantially all revenues earned during the years ended December 31, 2022, 2023 and 2024 were earned from Antero Resources, under various agreements for gathering and compression and water handling services. Revenues earned from gathering and compression services consist of lease income.
(b)
Accounts receivable—Antero Resources and Accounts payable—Antero Resources
Accounts receivable—Antero Resources represents amounts due from Antero Resources, primarily related to gathering and compression services and water handling services. Accounts payable—Antero Resources represents amounts due to Antero Resources for general and administrative and other costs.
(c)
Allocation of Costs Charged by Antero Resources
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 $ 14 million, $ 18 million and $ 20 million during the years ended December 31, 2022, 2023 and 2024, 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. For the years ended December 31, 2022, 2023 and 2024, general and administrative expense includes costs charged to the Company by Antero Resources of $ 30 million, $ 29 million and $ 32 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. 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. For further information on equity-based compensation, see Note 10—Equity-Based Compensation.
F-13
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(5) Revenue
All of the Company’s gathering and compression revenues are derived from operating lease agreements, and all of the Company’s water handling revenues are derived from service contracts with customers. The Company earned substantially all of its revenues from Antero Resources.
(a)
Gathering and Compression
The Company’s gathering and compression service agreements with Antero Resources include: (i) the 2019 gathering and compression agreement, (ii) the Marcellus gathering and compression agreement, (iii) the Utica compression agreement and (iv) the Mountaineer gathering and compression agreement. The 2019 gathering and compression agreement, Marcellus gathering and compression agreement and Mountaineer gathering and compression agreement have initial terms through 2038, 2031 and 2026, respectively, and the Utica compression agreement has two acreage dedications, one of which expired in 2024 and one that expires in 2030. Upon expiration of the Marcellus gathering and compression service agreement, the Utica compression agreement and the Mountaineer gathering and compression agreement, the Company will continue to provide gathering and compression services under the 2019 gathering and compression agreement. Pursuant to the gathering and compression agreements, Antero Resources has dedicated substantially all of its current and future acreage in West Virginia, Ohio and Pennsylvania to the Company for gathering and compression services. The Company also has an option to gather and compress natural gas produced by Antero Resources on any additional undedicated acreage it acquires during the term of the 2019 gathering and compression agreement outside of West Virginia, Ohio and Pennsylvania on the same terms and conditions as the 2019 gathering and compression agreement. Upon completion of the initial contract term in 2038, the 2019 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 notice from either the Company or Antero Resources to the other party on or before the 180 th day prior to the anniversary of such agreement.
The 2019 gathering and compression agreement included a growth incentive fee program whereby low pressure gathering fees were reduced from 2020 through 2023 to the extent Antero Resources achieved certain quarterly volumetric targets during such time. Only Antero Resources’ throughput gathered under the 2019 gathering and compression agreement was considered in low pressure gathering volume targets. For the years ended December 31, 2022 and 2023, Antero Resources earned fee rebates of $ 48 million and $ 52 million, respectively. The growth incentive fee rebate program expired on December 31, 2023.
Under the gathering and compression agreements, the Company receives, where applicable, a low pressure gathering fee, a high pressure gathering fee and a compression fee, substantially all of which are subject to annual CPI-based adjustments (or, in the case of the 2019 gathering and compression agreement, the option in certain cases to elect a cost of service fee when such assets are placed in-service). In addition, under the 2019 gathering and compression agreement, the Company receives a reimbursement for certain variable costs, such as electricity and operating expenses.
The Company determined that its gathering and compression agreements are operating leases as Antero Resources obtains substantially all of the economic benefit of the assets and has the right to direct the use of the assets. Each gathering and compression system is an identifiable asset, and consists of a network of assets that may include underground low pressure pipelines that connect and deliver gas from specific well pads to compressor stations to compress the gas before delivery to underground high pressure pipelines that transport the gas to a third-party pipeline, third-party processing plant or a Joint Venture processing plant. Each compression system is an identifiable asset, and consists of a network of assets that include compressor stations that connect to underground high pressure pipelines that transport the gas to a third-party pipeline, third-party processing plant or a Joint Venture processing plant. Each set of assets in an agreement is considered to be a single lease due to the interrelated network of the assets required to provide services under each respective agreement. When a modification to an agreement occurs, the Company reassesses the classification of the lease. The Company accounts for its lease and non-lease components as a single lease component as the lease component is the predominant component. The non-lease components consist of operating, oversight and maintenance of the gathering systems, which are performed on time-elapsed measures.
The 2019 gathering and compression agreement, the Marcellus gathering and compression agreement and the Mountaineer gathering and compression agreement include certain fixed fee provisions. If and to the extent Antero Resources requests that the Company construct new low pressure lines, high pressure lines and/or compressor stations, the 2019 gathering and compression agreement contains options at the Company’s election for either (i) minimum volume commitments that require Antero Resources to utilize or pay for 75 % of the high pressure gathering capacity and 70 % of the compression capacity of such new construction for 10 years or (ii) a cost of service fee that allows the Company to earn a 13 % rate of return on such new construction over seven years , which election is made individually for each piece of equipment placed in service. The Marcellus gathering and compression
F-14
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
agreement provides for a minimum volume commitment that requires Antero Resources to utilize or pay for 25 % of the compression capacity for a period of 10 years from the in-service date. The Mountaineer gathering and compression agreement provides for monthly minimum compression and gathering fees for each compressor station or high pressure gathering line, respectively, for a period of 12 years commencing 90 days after such asset’s in-service date. All lease payments under the minimum volume commitments, cost of service fees and minimum gathering and compression fees are considered to be in-substance fixed lease payments (“minimum lease payments”) under the gathering and compression agreements. As of December 31, 2024, the minimum lease payments for the 2019 gathering and compression agreement and Mountaineer gathering and compression agreement end in 2034 and 2026, respectively. As of January 1, 2025, there are no minimum lease payments for the Marcellus gathering and compression agreement.
The Company recognizes lease income from its minimum lease payments under its gathering and compression agreements on a straight-line basis. Additional variable operating lease income is earned when volumes in excess of the minimum commitments or fees are delivered under the contract. The Company recognizes variable lease income when low pressure volumes are delivered to a compressor station, compression volumes are delivered to a high pressure line and high pressure volumes are delivered to a processing plant or transmission pipeline, as applicable. Minimum volume commitments for each of the 2019 gathering and compression agreement and Marcellus gathering and compression agreement are aggregated such that each agreement has a single minimum volume commitment for the respective service each year. The Mountaineer gathering and compression agreement minimum compression and gathering fees are not subject to aggregation and are determined on a monthly basis for each compressor station and gathering line, respectively, subject to such agreement. The Company invoices the customer the month after each service is performed, and payment is due in the same month. The Company is not party to any leases that have not commenced.
Minimum future lease cash flows to be received by the Company under the gathering and compression agreements as of December 31, 2024 are as follows (in thousands):
Year ending December 31, 2025
$
322,417
Year ending December 31, 2026
305,977
Year ending December 31, 2027
240,637
Year ending December 31, 2028
171,218
Year ending December 31, 2029
111,302
Thereafter
169,431
Total
$
1,320,982
(b)
Water Handling
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. The initial term of the water services agreement runs to 2035. 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 notice from either the Company or Antero Resources to the other party on or before the 180 th day prior to the anniversary of such agreement. Under the agreement, the Company receives a fixed fee for fresh water deliveries by pipeline directly to the well site, subject to annual CPI-based adjustments. In addition, the Company also provides other fluid handling services. These operations, along with the Company’s fresh water delivery systems, support well completion and production operations for Antero Resources. These services are provided by the Company directly or through third-parties with which the Company contracts. For these other fluid handling services provided by third parties, Antero Resources reimburses the Company’s third-party out-of-pocket costs plus 3 % . For these other fluid handling services provided by the Company, the Company charges Antero Resources a cost of service fee . As of December 31, 2024, the Company had minimum future revenues for its cost of service fees of $ 34 million to be received and recognized by the Company under the water services agreement during 2025 through 2031 related to unsatisfied performance obligations.
The Company satisfies its performance obligations and recognizes revenue when (i) the fresh water volumes have been delivered to the hydration unit of a specified well pad or (ii) other fluid handling services have been completed . The Company invoices the customer the month after water services are performed, and payment is due in the same month. For services contracted through third-party providers, the Company’s performance obligation is satisfied when the service to be performed by the third-party provider has been completed. The Company invoices the customer after the third-party provider billing is received, and payment is due in the same month.
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Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
Transaction Price Allocated to Remaining Performance Obligations
The Company’s water service agreement with Antero Resources has a term greater than one year. The Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under this contract, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.
The Company also performs water services for third-party customers and such contracts 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.
Contract Balances
Under the Company’s water service contracts, the Company invoices customers after the performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s water service contracts do not give rise to contract assets or liabilities.
(c)
Disaggregation of Revenue
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. See Note 16—Reportable Segments for additional information.
Year Ended December 31,
(in thousands)
2022
2023
2024
Reportable Segment
Type of service
Gathering—low pressure
$
368,996
$
420,002
427,074
Gathering and Processing (1)
Gathering—low pressure fee rebate
( 48,000 )
( 51,500 )
—
Gathering and Processing (1)
Compression
210,329
246,952
252,984
Gathering and Processing (1)
Gathering—high pressure
211,940
226,908
246,005
Gathering and Processing (1)
Fresh water delivery
153,546
164,641
149,072
Water Handling
Other fluid handling
93,846
105,440
101,730
Water Handling
Amortization of customer relationships
( 37,086 )
( 37,086 )
( 37,086 )
Gathering and Processing
Amortization of customer relationships
( 33,586 )
( 33,586 )
( 33,586 )
Water Handling
Total
$
919,985
$
1,041,771
1,106,193
Type of contract
Per unit fixed fee
$
791,265
$
893,862
926,063
Gathering and Processing (1)
Gathering—low pressure fee rebate
( 48,000 )
( 51,500 )
—
Gathering and Processing (1)
Per unit fixed fee
154,993
166,055
151,016
Water Handling
Cost plus 3 %
71,490
81,125
69,095
Water Handling
Cost of service fee
20,909
22,901
30,691
Water Handling
Amortization of customer relationships
( 37,086 )
( 37,086 )
( 37,086 )
Gathering and Processing
Amortization of customer relationships
( 33,586 )
( 33,586 )
( 33,586 )
Water Handling
Total
$
919,985
$
1,041,771
1,106,193
(1) Revenue related to the gathering and processing segment is classified as lease income related to the gathering and compression systems.
The Company’s receivables from its contracts with customers and operating leases as of December 31, 2023 and December 31, 2024 were $ 89 million and $ 115 million, respectively.
F-16
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(6) Property and Equipment
(a) Summary of Property and Equipment
Property and equipment, net consisted of the following items:
Estimated
December 31,
(in thousands)
Useful Lives
2023
2024
Land
n/a
$
31,668
31,237
Gathering systems and facilities
40- 50 years (1)
3,345,845
3,553,934
Permanent buried pipelines and equipment
7- 20 years
646,469
653,891
Surface pipelines and equipment
1- 7 years
90,871
110,677
Heavy trucks and equipment
3- 5 years
5,157
4,413
Above ground storage tanks
5- 10 years
5,130
5,131
Other assets
3 - 20 years
8,110
8,111
Construction-in-progress
n/a
192,852
184,680
Total property and equipment
4,326,102
4,552,074
Less accumulated depreciation
( 532,579 )
( 670,453 )
Property and equipment, net
$
3,793,523
3,881,621
(1) Gathering systems and facilities are recognized as a single-leased asset with no residual value.
(b) Asset Acquisitions
2022 Acquisitions
On October 25, 2022, the Company acquired certain Marcellus gas gathering and compression assets from Crestwood for $ 205 million in cash, before closing adjustments. These assets included 72 miles of dry gas gathering pipelines and nine compressor stations with approximately 700 MMcf/d of compression capacity. The cash consideration for this asset acquisition was allocated to land and gathering systems and facilities, included in Property and equipment in the consolidated balance sheets, for $ 3 million and $ 202 million, respectively.
On December 21, 2022, the Company acquired certain Utica compression assets from EnLink for $ 10 million in cash, before closing adjustments. These assets included four compressor stations with approximately 380 MMcf/d of compression capacity. The acquired compression assets are interconnected with the Company’s existing low pressure and high pressure gathering systems and service Antero Resources’ production. The cash consideration for this asset acquisition was allocated to gathering systems and facilities included in Property and equipment in the consolidated balance sheets.
2024 Acquisition
On May 1, 2024, the Company 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. 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 the Company’s low pressure and high pressure gas gathering systems at the time of acquisition and service Antero Resources’ production. Substantially all of the cash consideration for this asset acquisition was allocated to gathering systems and facilities, included in property and equipment, net in the consolidated balance sheets.
(7) Income Taxes
Income tax expense consisted of the following:
Year Ended December 31,
(in thousands)
2022
2023
2024
Current income tax benefit
$
—
( 6,377 )
—
Deferred income tax expense
117,494
134,664
147,729
Total income tax expense
$
117,494
128,287
147,729
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Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
Income tax expense differs from the amount that would be computed by applying the U.S. statutory federal income tax rate of 21 % to income before taxes as a result of the following:
Year Ended December 31,
(in thousands)
2022
2023
2024
Federal income tax expense
$
93,185
105,015
115,210
State income tax expense, net of federal effect
20,891
18,740
26,520
Equity-based compensation
1,027
4,086
4,597
Charitable contributions
—
—
2,576
Change in valuation allowance
2,582
5
( 2,350 )
Other
( 191 )
441
1,176
Total income tax expense
$
117,494
128,287
147,729
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 income tax assets and liabilities is as follows:
December 31,
(in thousands)
2023
2024
Deferred income tax assets:
NOL carryforwards
$
115,284
117,854
Equity-based compensation
2,864
3,359
Charitable contributions
2,587
237
Total deferred income tax assets
120,735
121,450
Valuation allowance
( 2,587 )
( 237 )
Deferred income tax assets, net
118,148
121,213
Deferred income tax liability:
Investment in Antero Midstream Partners
384,027
534,821
Total deferred income tax liability
384,027
534,821
Deferred income tax liability, net
$
( 265,879 )
( 413,608 )
In assessing the realizability of the deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will be realized based on a more-likely-than-not standard of judgment. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the Company’s temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon the projections of future taxable income over the periods in which the deferred income tax assets are deductible, management believed that the Company will not realize the benefits of certain of these deductible differences related to charitable contributions. As such, as of December 31, 2023 and 2024, the Company has recorded a full valuation allowance for its charitable contributions.
The calculation of the Company’s tax assets and liabilities involves uncertainties in the application of complex tax laws and regulations. The Company gives financial statement recognition to those tax positions that it believes are more-likely-than-not to be sustained upon examination by the IRS or state revenue authorities. As of December 31, 2023 and 2024, the Company did not have any uncertain tax positions.
As of December 31, 2024, the Company has U.S. federal and state NOL carryforwards before the effect of income taxes of $ 438 million and $ 505 million, respectively, which have no expiration date. Tax years 2021 through 2024 remain open to examination by the IRS. The Company and its subsidiaries file tax returns with various state taxing authorities and those returns remain open to examination for tax years 2020 through 2024.
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ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(8) Long-Term Debt
Long-term debt consisted of the following items:
December 31,
(in thousands)
2023
2024
Credit Facility (a)
$
630,100
484,300
7.875 % senior notes due 2026 (b)
550,000
—
5.75 % senior notes due 2027 (c)
650,000
650,000
5.75 % senior notes due 2028 (d)
650,000
650,000
5.375 % senior notes due 2029 (e)
750,000
750,000
6.625 % senior notes due 2032 (f)
—
600,000
Total principal
3,230,100
3,134,300
Unamortized debt premium
1,291
882
Unamortized debt issuance costs
( 18,175 )
( 18,224 )
Total long-term debt
$
3,213,216
3,116,958
(a)
Credit Facility
On July 30, 2024, Antero Midstream Partners, an indirect, wholly owned subsidiary of Antero Midstream Corporation, as borrower (the “Borrower”), amended and restated its senior secured revolving credit facility with a syndicate of banks. References to the (i) “Prior Credit Facility” refer to the credit facility in effect for periods prior to July 30, 2024, (ii) “New Credit Facility” refer to the credit facility in effect on or after July 30, 2024 and (iii) “Credit Facility” refer to the Prior Credit Facility and New Credit Facility, collectively.
Lender commitments under the Credit Facility were $ 1.25 billion as of December 31, 2023 and 2024. The New Credit Facility matures on July 30, 2029; provided that if on the date that is 91 days prior to the stated maturity of any outstanding senior unsecured notes of the Borrower, including the 2027 Notes (as defined below), the 2028 Notes (as defined below) and the 2029 Notes (as defined below), the outstanding principal amount of such notes is greater than or equal to $ 50 million and the sum of (A) the outstanding principal amount of loans, undrawn letters of credit, and drawn but unreimbursed amounts with respect to letters of credit, in each case, then outstanding under the New Credit Facility plus (B) the amount by which (1) the outstanding principal amount of such notes on such date exceeds (2) consolidated unrestricted cash of the Borrower exceeds 85 % of the Aggregate Commitments (as defined in the New Credit Facility), the New Credit Facility will mature on such date. As of December 31, 2024, the Credit Facility had an available borrowing capacity of $ 766 million.
The New Credit Facility contains negative and affirmative covenants applicable to the Borrower and its restricted subsidiaries customary for credit facilities of this type, including, among other things, limitations on: liens; indebtedness; investments; fundamental changes, such as mergers, consolidations, liquidations and dissolutions; the disposition of assets; transactions with affiliates that are not on arms’-length terms; prepayments and amendments of certain indebtedness; and swap and hedge transactions.
The Credit Facility permits distributions to the holders of the Borrower’s equity interests in accordance with the cash distribution policy adopted by the board under the partnership agreement of the Borrower, provided that no event of default exists or would be caused thereby, and only to the extent permitted by the Borrower’s organizational documents.
The New Credit Facility also requires the Borrower to maintain the following financial ratios:
● other than during an Investment Grade Period (as defined in the New Credit Facility) 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, which may be exercised only once, during a period that is not an Investment Grade Period (the “Financial Covenant Election”), the consolidated total leverage ratio shall be no more than 5.25 to 1.0; and
● after a Financial Covenant Election, a consolidated senior secured leverage ratio covenant in addition to the 5.25 to 1.0 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.
F-19
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
The Borrower was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2023 and 2024.
The New Credit Facility provides for borrowing under either the Adjusted Term SOFR plus a 0.10 % credit adjustment spread and subject to a 0.00 % floor or the Base Rate (as each term is defined in the Credit Facility). Principal amounts borrowed are payable on the maturity date with such borrowings bearing interest that is payable with respect to (i) base rate loans, quarterly and (ii) SOFR Loans at the end of the applicable interest period if three months (or shorter, if applicable), or every three months if the applicable interest period is longer than three months. During any period that is not an Investment Grade Period (as defined in the New Credit Facility), the interest margin is determined with reference to the Borrower’s then-current consolidated total leverage ratio, which for SOFR loans range from 1.50 % to 2.50 % . During any period that is not an Investment Grade Period, commitment fees on the unused portion of the New Credit Facility are due quarterly at rates ranging from 0.25 % to 0.375 % . During an Investment Grade Period, the interest margin is determined by reference to our corporate family rating, which for SOFR loans range from 1.125 % to 2.000 % . During an Investment Grade Period, the commitment fees on the unused portion of the New Credit Facility are determined by reference to our corporate family rating, which range from 0.125 % to 0.300 %.
As of December 31, 2023, the Borrower had outstanding borrowings under the Prior Credit Facility of $ 630 million with a weighted average interest rate of 7.08 % . As of December 31, 2024, the Borrower had outstanding borrowings under the New Credit Facility of $ 484 million with a weighted average interest rate of 6.09 % . No letters of credit were outstanding under the Credit Facility as of December 31, 2023 and 2024.
(b)
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 at par. Interest on the 2026 Notes was payable on May 15 and November 15 of each year. During the year ended December 31, 2024, the Issuers repurchased or otherwise fully redeemed $ 550 million aggregate principal amount of its 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, which included the write-off of all unamortized debt issuance costs. The 2026 Notes were fully retired as of May 16, 2024.
(c)
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, 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. The 2027 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 2027 Notes is payable on March 1 and September 1 of each year. Antero Midstream Partners may redeem all or part of the 2027 Notes at any time at redemption prices ranging from 100.958 % as of December 31, 2024 to 100.00 % on or after March 1, 2025. 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.
(d) 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. The 2028 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2028 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 2028 Notes is payable on January 15 and July 15 of each year. Antero Midstream Partners may redeem all or part of the 2028 Notes at any time at redemption prices ranging from 101.917 % as of December 31, 2024 to 100.00 % on or after January 15, 2026. 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.
F-20
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(e)
5.375 % Senior Notes Due 2029
On June 8, 2021, the Issuers issued $ 750 million in aggregate principal amount of 5.375 % senior notes due June 15, 2029 (the “2029 Notes”) at par. The 2029 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2029 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 2029 Notes is payable on June 15 and December 15 of each year. Antero Midstream Partners may redeem all or part of the 2029 Notes at any time at redemption prices ranging from 102.688 % as of December 31, 2024 to 100.00 % on or after June 15, 2026. If Antero Midstream Partners undergoes a change of control followed by a rating decline, the holders of the 2029 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2029 Notes at a price equal to 101 % of the principal amount of the 2029 Notes, plus accrued and unpaid interest.
(f)
6.625 % Senior Notes Due 2032
On January 16, 2024, the Issuers issued $ 600 million in aggregate principal amount of 6.625 % senior notes due February 1, 2032 at par. The 2032 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2032 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. The net proceeds from the 2032 Notes were used to repay outstanding borrowings on the Prior Credit Facility. Interest on the 2032 Notes is payable on February 1 and August 1 of each year. Antero Midstream Partners may redeem all or part of the 2032 Notes at any time on or after February 1, 2027 at redemption prices ranging from 103.313 % on or after February 1, 2027 to 100.00 % on or after February 1, 2029. In addition, prior to February 1, 2027, Antero Midstream Partners may redeem up to 35 % of the aggregate principal amount of the 2032 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 106.625 % of the principal amount of the 2032 Notes, plus accrued and unpaid interest. At any time prior to February 1, 2027, Antero Midstream Partners may also redeem the 2032 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2032 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 2032 Notes will have the right to require Antero Midstream Partners to repurchase all or a portion of the 2032 Notes at a price equal to 101 % of the principal amount of the 2032 Notes, plus accrued and unpaid interest.
(g)
Senior Notes Guarantors
The Company and each of the Company’s wholly owned subsidiaries (except for the Issuers) has fully and unconditionally guaranteed the 2027 Notes, 2028 Notes, 2029 Notes and 2032 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 (i) 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, (ii) 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 (iii) in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the applicable Senior Notes.
During the years ended December 31, 2022, 2023 and 2024, all of the Company’s assets and operations are attributable to the Issuers and its guarantors.
F-21
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(9) Accrued Liabilities
Accrued liabilities consisted of the following items:
December 31,
(in thousands)
2023
2024
Capital expenditures
$
22,195
10,980
Operating expenses
12,060
14,536
Interest expense
37,565
48,808
Ad valorem taxes
6,521
6,258
Other
2,289
2,973
Total accrued liabilities
$
80,630
83,555
(10) Equity-Based Compensation
(a) Summary of Equity-Based Compensation
Effective March 12, 2019, the Board of Directors of Antero Midstream Corporation (the “Board”) adopted the Antero Midstream Corporation Long Term Incentive Plan under which awards may be granted to employees, directors, and other service providers of the Company and its affiliates. On June 5, 2024, that Company’s stockholders approved the AM LTIP. This amendment increased the number of shares of the Company’s common stock reserved for awards from 15,398,901 shares to 28,735,901 shares, and extended the term of the plan from March 12, 2029 to June 5, 2034. The AM LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), 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. As of December 31, 2024, a total of 16,302,531 shares were available for future grant under the AM LTIP.
The Company’s equity-based compensation expense, by type of award, is as follows:
Year Ended December 31,
(in thousands)
2022
2023
2024
Restricted stock units
$
16,039
24,409
33,666
Performance share units
2,770
6,266
9,669
Equity awards issued to directors
845
931
997
Total expense
$
19,654
31,606
44,332
The total fair value of the Company’s vested equity awards for the years ended December 31, 2022, 2023 and 2024 were $ 18 million, $ 22 million and $ 37 million, respectively.
(b) Restricted Stock Unit Awards
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. 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. The weighted average grant date fair value per share for RSUs granted during the years ended December 31, 2022, 2023 and 2024 were $ 11.28 , $ 10.59 and $ 13.45 , respectively.
A summary of the RSU awards activity is as follows:
Weighted Average
Number
Grant Date
of Units
Fair Value
Total awarded and unvested—December 31, 2023
5,877,170
$
10.28
Granted
2,476,696
13.45
Vested
( 2,641,854 )
9.97
Forfeited
( 69,751 )
12.12
Total awarded and unvested—December 31, 2024
5,642,261
$
11.79
F-22
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
As of December 31, 2024, unamortized equity-based compensation expense of $ 40 million related to the unvested RSUs is expected to be recognized over a weighted average period of 1.7 years.
(c) Performance Share Unit Awards
Performance Share Unit Awards Based on Return on Invested Capital
In April 2019, the Company granted performance share units (“PSUs”) to certain of its employees and executive officers that vest based on the Company’s actual return on invested capital (“ROIC”) (as defined in the award agreement) over a three-year period as compared to a targeted ROIC (“2019 ROIC PSUs”). The number of shares of the Company’s common stock that could be earned with respect to the 2019 ROIC PSUs ranged from zero to 200 % of the target number of the 2019 ROIC PSUs originally granted. The performance condition for the 2019 ROIC PSUs was met at 200 % of target as of December 31, 2021. During the year ended December 31, 2022, the 2019 ROIC PSUs vested and converted into approximately 0.3 million shares of the Company’s common stock.
In April 2022, the Company granted PSUs to certain of its employees and executive officers that vest based on the Company’s actual ROIC (as defined in the award agreement) over a three-year period concluding on December 31, 2024 as compared to a targeted ROIC (“2022 ROIC PSUs”). The number of shares of the Company’s common stock that can be earned with respect to the 2022 ROIC PSUs ranges from zero to 200 % of the target number of 2022 ROIC PSUs originally granted. The performance condition related to 2022 ROIC PSUs was met at 200 % of target as of December 31, 2024. During the first quarter of 2025, the 2022 ROIC PSUs will vest and convert into approximately 0.9 million shares of common stock.
In March 2023, the Company granted PSUs to certain of its employees and executive officers that vest based on the Company’s actual ROIC (as defined in the award agreement) over a three-year period concluding on December 31, 2025 as compared to a targeted ROIC (“2023 ROIC PSUs”). The number of shares of the Company’s common stock that can be earned with respect to the 2023 ROIC PSUs ranges from zero to 200 % of the target number of 2023 ROIC PSUs originally granted. The likelihood of achieving the performance conditions related to 2023 ROIC PSUs was probable as of December 31, 2024.
In March 2024, the Company granted PSUs to certain of its executive officers that vest based on the Company’s actual ROIC (as defined in the award agreement) over a three-year period concluding on December 31, 2026 as compared to a targeted ROIC (“2024 ROIC PSUs”). The number of shares of the Company’s common stock that can be earned with respect to the 2024 ROIC PSUs ranges from zero to 200 % of the target number of 2024 ROIC PSUs originally granted. The likelihood of achieving the performance conditions related to 2024 ROIC PSUs was probable as of December 31, 2024.
Summary Information for Performance Share Unit Awards
PSU awards vest subject to the satisfaction of certain performance and service requirements. Expense related to each PSU award is recognized on a straight-line basis over the performance period of the entire award. The grant date fair value of these awards was based on the closing price of the Company’s common stock on the date of the grant, assuming target achievement of the performance condition. Expense related to PSU awards is recognized based on the number of shares of the Company’s common stock that are expected to be issued at the end of the measurement period, and such expense is reversed if the likelihood of achieving the performance condition decreases. The grant date fair value per share for PSUs granted during the years ended December 31, 2022, 2023 and 2024 were $ 11.05 , $ 10.58 and $ 13.44 , respectively.
A summary of the PSU awards activity is as follows:
Weighted Average
Number
Grant Date
of Units
Fair Value
Total awarded and unvested—December 31, 2023
952,101
$
10.90
Granted
350,237
13.44
Total awarded and unvested—December 31, 2024
1,302,338
$
11.59
As of December 31, 2024, unamortized equity-based compensation expense of $ 12 million related to the unvested PSUs is expected to be recognized over a weighted average period of 1.6 years.
F-23
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(11) Cash Dividends
The Company paid cash dividends for the quarter indicated as follows (in thousands, except per share data):
Dividends
Period
Record Date
Dividend Date
Dividends
per Share
Q4 2021
January 26, 2022
February 9, 2022
$
108,149
$
0.2250
*
February 14, 2022
February 14, 2022
138
*
Q1 2022
April 27, 2022
May 11, 2022
109,296
0.2250
*
May 16, 2022
May 16, 2022
137
*
Q2 2022
July 27, 2022
August 10, 2022
107,675
0.2250
*
August 15, 2022
August 15, 2022
138
*
Q3 2022
October 26, 2022
November 9, 2022
107,705
0.2250
*
November 14, 2022
November 14, 2022
137
*
Total 2022
$
433,375
Q4 2022
January 25, 2023
February 8, 2023
$
108,364
$
0.2250
*
February 14, 2023
February 14, 2023
138
*
Q1 2023
April 26, 2023
May 10, 2023
110,607
0.2250
*
May 15, 2023
May 15, 2023
137
*
Q2 2023
July 26, 2023
August 9, 2023
107,900
0.2250
*
August 14, 2023
August 14, 2023
138
*
Q3 2023
October 25, 2023
November 8, 2023
107,975
0.2250
*
November 14, 2023
November 14, 2023
137
*
Total 2023
$
435,396
Q4 2023
January 24, 2024
February 7, 2024
$
107,918
$
0.2250
*
February 14, 2024
February 14, 2024
138
*
Q1 2024
April 24, 2024
May 8, 2024
112,818
0.2250
*
May 15, 2024
May 15, 2024
137
*
Q2 2024
July 24, 2024
August 7, 2024
108,516
0.2250
*
August 14, 2024
August 14, 2024
138
*
Q3 2024
October 23, 2024
November 6, 2024
108,382
0.2250
*
November 14, 2024
November 14, 2024
137
*
Total 2024
$
438,184
*
Dividends are paid in accordance with the terms of the Series A Preferred Stock (as defined below) as discussed in Note 12—Equity and Net Income Per Common Share.
On January 14, 2025, the Board announced the declaration of a cash dividend on the shares of AM common stock of $ 0.2250 per share for the quarter ended December 31, 2024. The dividend was paid on February 12, 2025 to stockholders of record as of January 29, 2025 . 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 $ 137,500 on the shares of Series A Preferred Stock of Antero Midstream that will be paid on February 14, 2025 in accordance with the terms of the Series A Preferred Stock, which are discussed in Note 12—Equity and Net Income Per Common Share. As of December 31, 2024, there were dividends in the amount of $ 68,750 accumulated in arrears on the Company’s Series A Preferred Stock.
F-24
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(12) Equity and Net Income Per Common Share
(a) Preferred Stock
The Board authorized 100,000,000 shares of preferred stock on March 12, 2019, and issued 10,000 shares of preferred stock designated as " 5.5 % Series A Non-Voting Perpetual Preferred Stock" (the "Series A Preferred Stock"), to The Antero Foundation on that date. 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 the Company’s 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 Company’s 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.
(b) Weighted Average Common Shares Outstanding
The following is a reconciliation of the Company’s basic weighted average common shares outstanding to diluted weighted average common shares outstanding:
Year Ended December 31,
(in thousands)
2022
2023
2024
Basic weighted average number of common shares outstanding
478,232
479,378
480,822
Add: Dilutive effect of RSUs
1,050
1,668
2,345
Add: Dilutive effect of PSUs
91
528
1,417
Add: Dilutive effect of Series A Preferred Stock
927
798
663
Diluted weighted average number of common shares outstanding
480,300
482,372
485,247
There were no anti-dilutive securities outstanding during the years ended December 31, 2022, 2023 and 2024.
(c) Net Income Per Common Share
Net income per common share—basic for each period is computed by dividing the net income or loss attributable to the Company by the basic weighted average number of common shares outstanding during the period. Net income per common share—diluted for each period is computed after giving consideration to the potential dilution from outstanding equity-based awards, calculated using the treasury stock method. During periods in which the Company incurs a net loss, diluted weighted average common shares outstanding are equal to basic weighted average common shares outstanding because the effect of all equity-based awards is anti-dilutive.
Year Ended December 31,
(in thousands, except per share amounts)
2022
2023
2024
Net income
$
326,242
371,786
400,892
Less preferred stock dividends
( 550 )
( 550 )
( 550 )
Net income available to common shareholders
$
325,692
371,236
400,342
Net income per common share–basic
$
0.68
0.77
0.83
Net income per common share–diluted
$
0.68
0.77
0.83
Weighted average common shares outstanding–basic
478,232
479,378
480,822
Weighted average common shares outstanding–diluted
480,300
482,372
485,247
F-25
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(13) Fair Value Measurement
The carrying values on the consolidated balance sheets 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 carrying value of the amounts under the Credit Facility as of December 31, 2023 and December 31, 2024 approximated fair value because the variable interest rates are reflective of current market conditions.
The fair value and carrying value of the Company’s Senior Notes is as follows:
December 31, 2023
December 31, 2024
(in thousands)
Fair Value (1)
Carrying Value (2)
Fair Value (1)
Carrying Value (2)
2026 Notes
$
565,785
546,631
—
—
2027 Notes
642,655
647,313
646,750
648,082
2028 Notes
641,030
645,702
644,410
646,684
2029 Notes
720,000
743,470
730,425
744,516
2032 Notes
—
—
602,220
593,376
Total
$
2,569,470
2,583,116
2,623,805
2,632,658
(1) Fair values are based on Level 2 market data inputs.
(2) Carrying values are presented net of unamortized debt issuance costs and debt premium.
(14) Investments in Unconsolidated Affiliates
(a) Summary of Investments in Unconsolidated Affiliates
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. MarkWest operates the Joint Venture assets, which consist of processing plants in West Virginia and a one -third interest in two MarkWest fractionators in Ohio.
The Company also 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 following table is a reconciliation of the Company’s investments in these unconsolidated affiliates:
Total Investment
in Unconsolidated
(in thousands)
Joint Venture
Stonewall
Affiliates
Balance as of December 31, 2022
$
526,652
126,115
652,767
Additional investments
—
262
262
Equity in earnings of unconsolidated affiliates (1)
98,194
7,262
105,456
Distributions from unconsolidated affiliates
( 116,025 )
( 15,810 )
( 131,835 )
Balance as of December 31, 2023
508,821
117,829
626,650
Additional investments
—
2,393
2,393
Equity in earnings of unconsolidated affiliates (1)
102,474
8,099
110,573
Distributions from unconsolidated affiliates
( 120,930 )
( 14,730 )
( 135,660 )
Balance as of December 31, 2024
$
490,365
113,591
603,956
(1)
As adjusted for the amortization of the difference between the cost of the equity investments in the Joint Venture and Stonewall and the amount of the underlying equity in the net assets of the Joint Venture and Stonewall as of March 12, 2019.
F-26
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(b) Summarized Financial Information of Unconsolidated Affiliates
The following tables present summarized financial information for the Company’s investments in unconsolidated affiliates:
Combined Balance Sheets
December 31,
(in thousands)
2023
2024
Current assets
$
68,894
79,680
Noncurrent assets
1,460,004
1,412,844
Total assets
$
1,528,898
1,492,524
Current liabilities
$
7,711
9,319
Noncurrent liabilities
4,028
3,630
Noncontrolling interest
146,094
139,368
Partners' capital
1,371,065
1,340,207
Total liabilities and partners' capital
$
1,528,898
1,492,524
Statements of Combined Operations
Year Ended December 31,
(in thousands)
2022
2023
2024
Revenues
$
357,730
388,717
407,553
Operating expenses
153,383
156,678
163,134
Income from operations
204,347
232,039
244,419
Net income attributable to unconsolidated affiliates, including noncontrolling interest
248,458
269,471
284,190
Net income attributable to unconsolidated affiliates
257,458
278,545
293,252
(15) Contingencies
The Company is currently involved in a consolidated lawsuit with Veolia Water Technologies, Inc. (“Veolia”) relating to the Clearwater Facility.
On March 13, 2020, Antero Treatment, a wholly owned subsidiary of the Company, filed suit against Veolia in the district court of Denver County, Colorado (the “Court”), asserting claims of fraud, breach of contract and other related claims. Antero Treatment alleges that Veolia failed to meet its contractual obligations to design and build a “turnkey” wastewater disposal facility under a Design/Build Agreement dated August 18, 2015 (the “DBA”), and that Veolia fraudulently concealed certain miscalculations and design flaws during contract negotiations and continued to conceal and fraudulently misrepresent the impact of certain design changes post-execution of the DBA. On March 13, 2020, Veolia filed a separate suit against the Company, Antero Resources, and certain of the Company’s wholly owned subsidiaries (collectively, the “Antero Defendants”) in Denver County, Colorado. In its lawsuit, Veolia asserted breach of contract and equitable claims against the Antero Defendants for alleged failures under the DBA. Veolia’s suit was consolidated into the action filed by Antero Treatment.
Veolia and the Antero Defendants each filed partial motions to dismiss and motions for summary judgment directed at certain claims asserted by the opposing party. A bench trial on the remaining claims was held from January 24 through February 10, 2022 and concluded on February 24, 2022. At trial, Antero Treatment sought damages from Veolia of $ 450 million, which represents the Company’s out-of-pocket costs associated with the Clearwater Facility project. In the alternative, Antero Treatment sought damages related to multiple breaches of the DBA, totaling $ 370 million. Also at trial, Veolia sought monetary damages of $ 118 million, including alleged delay and extra-contractual costs and a contract balance relating to an allegation that Antero Defendants improperly terminated the DBA.
F-27
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
On January 3, 2023, the Court found that Antero Treatment had prevailed on its claims for breach of contract and fraud, and awarded $ 242 million in damages to Antero Treatment, plus pre- and post-judgment interest and reasonable costs and attorneys’ fees. The Court also found in Antero Defendants’ favor on all of Veolia’s affirmative claims. On January 27, 2023, the Court entered judgment in favor of Antero Treatment in the amount of $ 309 million in damages, which includes pre-judgment interest. On April 10, 2023, the Court issued an order identifying an error in its previously entered judgment, and on May 3, 2023, the Court entered an amended final judgment in favor of Antero Treatment in the amount of $ 280 million in damages, which includes pre-judgment interest through April 30, 2023. On May 26, 2023, Veolia filed a notice of appeal of the final judgment, and on June 9, 2023, Antero Treatment filed a notice of cross-appeal. Oral argument at the Colorado Court of Appeals occurred on October 15, 2024. On December 9, 2024, the District Court awarded Antero Treatment approximately $ 19 million in attorneys’ fees and costs. On December 19, 2024, the Colorado Court of Appeals affirmed the District Court’s May 3, 2023 judgment and associated damages award, and remanded the case to the District Court for purposes of calculating appellate attorneys’ fees and costs owed to the Company by Veolia. On January 27, 2025, Veolia filed a notice of appeal of the District Court’s December 9th award of attorneys’ fees and costs. The December 9, 2024 decision by the District Court and the December 19, 2024 decision by the Colorado Court of Appeals each remain subject to appeal.
(16) Reportable Segments
The Company’s operations, which are located in the United States, are organized into two reportable segments: (i) gathering and processing and (ii) water handling. These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services (including the expertise required for these operations), production processes and distribution methods. The Company’s Chairman of the Board, Director, Chief Executive Officer and President was determined to be the Company’s chief operating decision maker (“CODM”). The CODM evaluates the performance of the Company’s business segments based on operating income. The CODM considered the Company’s actual operating income as compared to the operating income for (i) the relevant prior period actual results, (ii) budget and (iii) guidance on a monthly basis for purposes of evaluating performance of each segment and making decisions about allocating capital and other resources to each segment. Interest expense is primarily managed and evaluated on a consolidated basis. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the consolidated financial statements.
(a) Summary of Reportable Segments
Gathering and Processing
The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in West Virginia and Ohio. The gathering and processing segment also includes equity in earnings from the Company’s investments in the Joint Venture and Stonewall.
Water Handling
The Company’s water handling segment includes two independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional waterways. Portions of these water handling systems are also utilized to transport flowback and produced water. The water handling systems consist of permanent buried pipelines, surface pipelines and water storage facilities, as well as pumping stations, blending facilities and impoundments to transport water throughout the systems used to deliver water for well completions.
F-28
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
(b) Reportable Segments Financial Information
The summarized operating results of the Company’s reportable segments are as follows:
Year Ended December 31, 2022
Gathering and
Water
Consolidated
(in thousands)
Processing
Handling
Unallocated (1)
Total
Revenues:
Revenue–Antero Resources
$
743,265
244,770
—
988,035
Revenue–third-party
—
2,622
—
2,622
Amortization of customer relationships
( 37,086 )
( 33,586 )
—
( 70,672 )
Total revenues
706,179
213,806
—
919,985
Operating expenses:
Direct operating
75,889
104,365
—
180,254
General and administrative (excluding equity-based compensation)
24,578
13,080
4,813
42,471
Equity-based compensation
14,394
4,415
845
19,654
Facility idling
—
4,166
—
4,166
Depreciation
81,390
50,372
—
131,762
Impairment of property and equipment
1,130
2,572
—
3,702
Other (2)
( 2,120 )
630
—
( 1,490 )
Total operating expenses
195,261
179,600
5,658
380,519
Operating income
$
510,918
34,206
( 5,658 )
539,466
Equity in earnings of unconsolidated affiliates
$
94,218
—
—
94,218
Additions to property and equipment
$
227,561
71,363
—
298,924
(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.
(2)
Amounts include charges for accretion of asset retirement obligations, loss on settlement of asset retirement obligations and loss (gain) on sale of assets, as applicable, which represent segment operating expenses that are not considered significant .
F-29
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
Year Ended December 31, 2023
Gathering and
Water
Consolidated
(in thousands)
Processing
Handling
Unallocated (1)
Total
Revenues:
Revenue–Antero Resources
$
842,362
268,667
—
1,111,029
Revenue–third-party
—
1,414
—
1,414
Amortization of customer relationships
( 37,086 )
( 33,586 )
—
( 70,672 )
Total revenues
805,276
236,495
—
1,041,771
Operating expenses:
Direct operating
95,507
117,658
—
213,165
General and administrative (excluding equity-based compensation)
22,532
12,497
4,433
39,462
Equity-based compensation
23,313
7,362
931
31,606
Facility idling
—
2,459
—
2,459
Depreciation
83,409
52,650
—
136,059
Impairment of property and equipment
133
13
—
146
Other (2)
6,039
973
—
7,012
Total operating expenses
230,933
193,612
5,364
429,909
Operating income
$
574,343
42,883
( 5,364 )
611,862
Equity in earnings of unconsolidated affiliates
$
105,456
—
—
105,456
Additions to property and equipment
$
130,305
53,428
—
183,733
(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.
(2)
Amounts include charges for accretion of asset retirement obligations, loss on settlement of asset retirement obligations and loss (gain) on sale of assets, as applicable, which represent segment operating expenses that are not considered significant .
Year Ended December 31, 2024
Gathering and
Water
Consolidated
(in thousands)
Processing
Handling
Unallocated (1)
Total
Revenues:
Revenue–Antero Resources
$
926,063
248,858
—
1,174,921
Revenue–third-party
—
1,944
—
1,944
Amortization of customer relationships
( 37,086 )
( 33,586 )
—
( 70,672 )
Total revenues
888,977
217,216
—
1,106,193
Operating expenses:
Direct operating
103,053
114,923
—
217,976
General and administrative (excluding equity-based compensation)
28,814
8,279
4,661
41,754
Equity-based compensation
35,535
7,800
997
44,332
Facility idling
—
1,721
—
1,721
Depreciation
84,398
55,602
—
140,000
Impairment of property and equipment
332
—
—
332
Other (2)
—
912
—
912
Total operating expenses
252,132
189,237
5,658
447,027
Operating income
$
636,845
27,979
( 5,658 )
659,166
Equity in earnings of unconsolidated affiliates
$
110,573
—
—
110,573
Additions to property and equipment
$
141,832
30,515
—
172,347
(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.
(2)
Amounts include charges for accretion of asset retirement obligations, loss on settlement of asset retirement obligations and loss (gain) on sale of assets, as applicable, which represent segment operating expenses that are not considered significant .
F-30
Table of Contents
ANTERO MIDSTREAM CORPORATION
Notes to Consolidated Financial Statements (Continued)
The summarized total assets of the Company’s reportable segments are as follows:
Year Ended December 31, 2023
Gathering and
Water
Consolidated
(in thousands)
Processing
Handling
Unallocated (1)
Total
Investments in unconsolidated affiliates
$
626,650
—
—
626,650
Total assets
4,691,827
1,045,725
66
5,737,618
(1) Certain assets that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.
Year Ended December 31, 2024
Gathering and
Water
Consolidated
(in thousands)
Processing
Handling
Unallocated (1)
Total
Investments in unconsolidated affiliates
$
603,956
—
—
603,956
Total assets
4,769,825
991,923
—
5,761,748
(1)
Certain assets that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.
F-31
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.