What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 110 added, 111 removed, 592 unchanged (27% of the section changed)

2 unchanged sentences

STATEMENT OF CONSOLIDATED OPERATIONS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 (1)

17 unchanged sentences

Unrealized derivative instrument gain (loss) 4,010 ( 3,533 ) 18,487 ( 76,102 )

Interest income 1 2 2 9

Income from equity method interests, net 32,479 15,987 82,633 47,541

3 unchanged sentences

Financing costs, net of capitalized interest 2,674 413 7,887 978

NET INCOME (LOSS) BEFORE INCOME TAXES 73,841 16,034 96,330 ( 10,033 )

NET INCOME BEFORE INCOME TAXES 49,689 31,198 146,019 21,164

Current income tax benefit — — — ( 696 )

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 73,841 16,034 96,330 ( 9,337 )

NET INCOME INCLUDING NONCONTROLLING INTERESTS 49,689 31,198 146,019 21,860

Net income attributable to Preferred Unit limited partners 29,166 19,332 72,662 56,358

10 unchanged sentences

Refer to Note 1—Summary of Significant Accounting Policies , see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.

(2) Includes amounts of $ 1.5 million and $ 1.3 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $ 2.3 million and $ 2.8 million for the six months ended June 30, 2021 and 2020, respectively.

(2) Includes amounts of $ 1.5 million and $ 1.2 million associated with related parties for the three months ended September 30, 2021 and 2020, respectively, and $ 3.8 million and $ 4.0 million for the nine months ended September 30, 2021 and 2020, respectively.

Refer to Note 2—Transactions with Affiliates .

(3) Includes amounts of $ 2.3 million and $ 1.6 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $ 4.6 million and $ 3.6 million associated with related parties for the six months ended June 30, 2021 and 2020, respectively.

(3) Includes amounts of $ 2.2 million and $ 1.6 million associated with related parties for the three months ended September 30, 2021 and 2020, respectively, and $ 6.8 million and $ 5.1 million associated with related parties for the nine months ended September 30, 2021 and 2020, respectively.

Refer to Note 2—Transactions with Affiliates .

2 unchanged sentences

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 (1)

1 unchanged sentence

(In thousands)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS $ 73,841 $ 16,034 $ 96,330 $ ( 9,337 )

NET INCOME INCLUDING NONCONTROLLING INTERESTS $ 49,689 $ 31,198 $ 146,019 $ 21,860

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Share of equity method interests other comprehensive income (loss) — 681 630 ( 113 )

COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 73,841 16,424 96,960 ( 10,131 )

COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS 49,689 31,879 146,649 21,747

Comprehensive income attributable to Preferred Unit limited partners 29,166 19,332 72,662 56,358

6 unchanged sentences

CONSOLIDATED BALANCE SHEET

June 30, December 31,

September 30, December 31,

2021 2020 (1)

35 unchanged sentences

Class A Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at June 30, 2021 and December 31, 2020

$ 0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at September 30, 2021 and December 31, 2020

Class C Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at June 30, 2021 and December 31, 2020

$ 0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at September 30, 2021 and December 31, 2020

Additional paid-in capital — 122,222

8 unchanged sentences

STATEMENT OF CONSOLIDATED CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 (1)

1 unchanged sentence

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) including noncontrolling interests $ 96,330 $ ( 9,337 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income including noncontrolling interests $ 146,019 $ 21,860

Adjustments to reconcile net income to net cash provided by operating activities:

Unrealized derivative instrument (gain) loss ( 18,487 ) 76,102

8 unchanged sentences

Decrease in inventories 256 366

Increase in prepaid assets and other ( 689 ) ( 541 )

Increase in accounts receivable ( 923 ) ( 101 )

(Increase) decrease in prepaid assets and other ( 47 ) 72

(Increase) decrease in accounts receivable 1,033 ( 556 )

Decrease in revenue receivables (Note 2) 397 3,486

1 unchanged sentence

Increase in accrued expenses 9,425 11,145

Increase (decrease) in deferred charges, deferred credits, and other noncurrent liabilities ( 1,730 ) 1,382

Increase (decrease) in deferred charges and other noncurrent liabilities ( 1,577 ) 64

NET CASH PROVIDED BY OPERATING ACTIVITIES 158,395 137,447

5 unchanged sentences

Capitalized interest paid — ( 7,377 )

NET CASH USED IN INVESTING ACTIVITIES ( 11,288 ) ( 175,295 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,200 ( 301,280 )

CASH FLOWS FROM FINANCING ACTIVITIES:

15 unchanged sentences

(2) Includes $ 0.7 million due to Apache for the six months ended June 30, 2020, pursuant to the terms of the COMA (as defined herein).

(2) Includes $ 0.8 million and $ 0.3 million due from Apache for the nine months ended September 30, 2021 and 2020, respectively, pursuant to the terms of the COMA (as defined herein).

Refer to Note 2—Transactions with Affiliates for more information.

6 unchanged sentences

(In thousands) (In thousands)

For the Quarter Ended June 30, 2020 (1)

Balance at March 31, 2020 (Revised) $ 573,861 $ 230,827 3,746 $ 1 12,500 $ 1 $ 451,037 $ ( 380,305 ) $ ( 539 ) $ 70,195

Net income (loss) 18,764 ( 1,779 ) — — — — — ( 951 ) — ( 951 )

Accumulated other comprehensive income — 300 — — — — — — 90 90

For the Quarter Ended September 30, 2020 (1)

Balance at June 30, 2020 (Revised) $ 592,625 $ 229,348 3,746 $ 1 12,500 $ 1 $ 451,037 $ ( 381,257 ) $ ( 449 ) $ 69,333

For the Quarter Ended June 30, 2021

Balance at March 31, 2021 $ 604,749 $ 662,432 3,746 $ 1 12,500 $ 1 $ 38,217 $ ( 369,253 ) $ — $ ( 331,034 )

Distributions paid to Preferred Unit limited partners ( 11,562 ) — — — — — — — — —

Net income 19,332 8,970 — — — — — 2,896 — 2,896

Accumulated other comprehensive income — 524 — — — — — — 157 157

Balance at September 30, 2020 (Revised) $ 600,395 $ 238,842 3,746 $ 1 12,500 $ 1 $ 451,037 $ ( 378,361 ) $ ( 292 ) $ 72,386

For the Quarter Ended September 30, 2021

Balance at June 30, 2021 $ 617,191 $ 863,063 3,746 $ 1 12,500 $ 1 $ — $ ( 506,200 ) $ — $ ( 506,198 )

Distributions payable to Preferred Unit limited partners ( 11,562 ) — — — — — — — — —

4 unchanged sentences

Change in redemption value of noncontrolling interests — ( 22,434 ) — — — — 5,620 16,814 — 22,434

Balance at June 30, 2021 $ 617,191 $ 863,063 3,746 $ 1 12,500 $ 1 $ — $ ( 506,200 ) $ — $ ( 506,198 )

Balance at September 30, 2021 $ 634,795 $ 837,158 3,746 $ 1 12,500 $ 1 $ — $ ( 484,142 ) $ — $ ( 484,140 )

(1) This period presented has been revised to reflect the Company’s fair value change of its underlying warrants.

11 unchanged sentences

(In thousands) (In thousands)

For the Six Months Ended June 30, 2020 (1)

For the Nine Months Ended September 30, 2020 (1)

Balance at December 31, 2019 (Revised) $ 555,599 $ 701,000 3,746 $ 1 12,500 $ 1 $ 17,327 $ ( 372,224 ) $ ( 266 ) $ ( 355,161 )

Distributions paid to Preferred Unit limited partners ( 11,562 ) — — — — — — — — —

Net income (loss) 56,358 ( 28,361 ) — — — — — ( 6,137 ) — ( 6,137 )

1 unchanged sentence

Accumulated other comprehensive loss — ( 87 ) — — — — — — ( 26 ) ( 26 )

Balance at June 30, 2020 (Revised) $ 592,625 $ 229,348 3,746 $ 1 12,500 $ 1 $ 451,037 $ ( 381,256 ) $ ( 449 ) $ 69,334

For the Six Months Ended June 30, 2021

Balance at September 30, 2020 (Revised) $ 600,395 $ 238,842 3,746 $ 1 12,500 $ 1 $ 451,037 $ ( 378,361 ) $ ( 292 ) $ 72,386

For the Nine Months Ended September 30, 2021

Balance at December 31, 2020 (Revised) $ 608,381 $ 575,125 3,746 $ 1 12,500 $ 1 $ 122,222 $ ( 369,433 ) $ ( 145 ) $ ( 247,354 )

7 unchanged sentences

Accumulated other comprehensive income — 485 — — — — — — 145 145

Balance at June 30, 2021 $ 617,191 $ 863,063 3,746 $ 1 12,500 $ 1 $ — $ ( 506,200 ) $ — $ ( 506,198 )

Balance at September 30, 2021 $ 634,795 $ 837,158 3,746 $ 1 12,500 $ 1 $ — $ ( 484,142 ) $ — $ ( 484,140 )

(1) This period presented has been revised to reflect the Company’s fair value change of its underlying warrants.

78 unchanged sentences

The Company has concluded that the previous accounting policy to account for its warrants as equity rather than as a liability was an immaterial error.

The Company has corrected this immaterial error by revising its consolidated financial statements as of and for the year ended December 31, 2020 and as of and for the three and six months ended June 30, 2020 and related notes included herein to include the effect of accounting for the warrants as a liability from the date of the Business Combination.

The Company has corrected this immaterial error by revising its consolidated financial statements as of and for the year ended December 31, 2020 and as of and for the three and nine months ended September 30, 2020 and the related notes included herein to include the effect of accounting for the warrants as a liability from the date of the Business Combination.

Note 12—Net Income (Loss) Per Share and Note 13—Fair Value Measurements have also been updated to reflect this revision.

In addition, management has also corrected previously identified immaterial errors related to income from its equity method interests unrelated to the SEC Staff Statement.

In addition, management has corrected previously identified immaterial errors related to income from its equity method interests, net unrelated to the SEC Staff Statement.

The impacts of this adjustment in fiscal year 2020, as presented in the accompanying financial statements, are as follows:

Statement of Consolidated Operations:

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

As Reported Change (1)

11 unchanged sentences

Diluted $ 0.30 $ 0.02 $ 0.32

Six Months Ended June 30, 2020

As Reported Change (1)

(1) All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.

Nine Months Ended September 30, 2020

As Reported Change As Revised

(In thousands)

Income from equity method interests, net $ 33,221 $ ( 1,667 ) $ 31,554

Warrants valuation adjustment $ — $ 1,668 $ 1,668

3 unchanged sentences

Net income (loss) attributable to common shareholders ( 36,166 ) 1,668 ( 34,498 )

Net income (loss) attributable to Apache limited partner ( 36,048 ) ( 1,283 ) ( 37,331 )

Net income (loss) attributable to Class A common shareholders ( 7,805 ) 1,668 ( 6,137 )

2 unchanged sentences

Diluted $ ( 2.23 ) $ 0.11 $ ( 2.12 )

(1) All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.

Statement of Consolidated Comprehensive Income (Loss):

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

As Reported Change (1)

4 unchanged sentences

Comprehensive income (loss) attributable to Class A Common Shareholders 2,460 593 3,053

Six Months Ended June 30, 2020

As Reported Change (1)

(1) All changes related to Income from equity method interests, net relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.

Nine Months Ended September 30, 2020

As Reported Change As Revised

(In thousands)

1 unchanged sentence

Comprehensive income (loss) including noncontrolling interests 20,079 1,668 21,747

Comprehensive income (loss) attributable to Apache limited partner ( 36,659 ) ( 1,283 ) ( 37,942 )

Comprehensive income (loss) attributable to Class A Common Shareholders ( 7,831 ) 1,668 ( 6,163 )

(1) All changes related to Income from equity method interests, net relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.

Consolidated Balance Sheet:

7 unchanged sentences

Statement of Consolidated Cash Flows:

Six Months Ended June 30, 2020

As Reported Change (1)

Nine Months Ended September 30, 2020

As Reported Change As Revised

(In thousands)

1 unchanged sentence

Net income (loss) including noncontrolling interests $ 20,192 $ 1,668 $ 21,860

Income from equity method interests, net ( 33,221 ) 1,667 ( 31,554 )

Warrants valuation adjustment — ( 1,668 ) ( 1,668 )

Net Cash Provided by Operating Activities 137,447 — 137,447

(1) All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.

Fair Value Measurements

18 unchanged sentences

If the Company does not utilize all of its fixed purchase volumes under this contract, then it will receive a credit based on a market rate for the related underutilization.

In conjunction with increased power pricing due to the Texas freeze event and underutilization of contractual electricity volumes, the Company recognized an estimated credit of approximately $ 2.5 million for the three months ended June 30, 2021 with a total credit of approximately $ 9.7 million being recognized for the six months ended June 30, 2021.

In conjunction with increased power pricing due to the Texas freeze event and underutilization of contractual electricity volumes, the Company recognized an estimated total credit of approximately $ 9.7 million for the six months ended June 30, 2021.

The Company did not recognize any additional credit during the three months ended September 30, 2021.

These amounts are recorded on the statement of consolidated operations in “Other income.” The related power credit will offset the Company’s future monthly power payments and is recorded in “Prepaid assets and other” for the current portion and “Deferred charges and other” for the long-term portion on the consolidated balance sheet.

No credits were recorded for the three and six months ended June 30, 2020.

The Company has no remaining performance obligations related to these credits as of June 30, 2021.

No credits were recorded for the three and nine months ended September 30, 2020.

The Company has no remaining performance obligations related to these credits as of September 30, 2021.

TRANSACTIONS WITH AFFILIATES

5 unchanged sentences

The Company has no employees and receives certain operational, maintenance, and management services from Apache under the COMA.

Under the COMA, the Company incurred operations and maintenance expenses of $ 1.5 million and $ 1.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2.3 million and $ 2.8 million for the six months ended June 30, 2021 and 2020, respectively.

The Company incurred general and administrative expenses from affiliates of $ 2.3 million and $ 1.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 4.6 million and $ 3.6 million for the six months ended June 30, 2021 and 2020, respectively.

Under the COMA, the Company incurred operations and maintenance expenses of $ 1.5 million and $ 1.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 3.8 million and $ 4.0 million for the nine months ended September 30, 2021 and 2020, respectively.

The Company incurred general and administrative expenses from affiliates of $ 2.2 million and $ 1.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 6.8 million and $ 5.1 million for the nine months ended September 30, 2021 and 2020, respectively.

These costs were primarily related to expenses associated with the COMA.

Further information on this related-party agreement in place during the period is provided below.

Additional information regarding the COMA is provided below.

Construction, Operations and Maintenance Agreement

9 unchanged sentences

Distributions to Apache

In December of 2020 and May of 2021, the Company’s Board of Directors declared a cash dividend of $ 1.50 per share on the Company’s Class A Common Stock, with each dividend declared totaling $ 5.6 million.

The dividends were paid to stockholders during the first and second quarters of 2021.

In December 2020, May 2021, and August 2021, the Company’s Board of Directors declared a cash dividend of $ 1.50 per share on the Company’s Class A Common Stock, with each dividend declared totaling $ 5.6 million.

The dividends were paid to stockholders during the first, second and third quarters of 2021.

Each dividend included payment of approximately $ 0.5 million to Apache due to its 9.8 percent ownership of the Company’s Class A Common Stock.

The Class A Common Stock dividends were funded by distributions from Altus Midstream to its common unitholders of $ 1.50 per Common Unit, totaling $ 24.4 million for both the first and second quarters of 2021.

The Class A Common Stock dividends were funded by distributions from Altus Midstream to its common unitholders of $ 1.50 per Common Unit, totaling $ 24.4 million for each of the first, second and third quarters of 2021.

For each distribution, $ 5.6 million, as noted above, was paid to the Company to fund the cash dividend payments to Class A Common stockholders, and the balance of $ 18.8 million was paid to Apache due to its 76.9 percent ownership of outstanding Common Units.

2 unchanged sentences

The following table presents a disaggregation of the Company’s revenue.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

9 unchanged sentences

Total revenues $ 34,548 $ 40,172 $ 104,287 $ 113,152

There have been no significant changes to the Company’s contracts with customers during the three and six months ended June 30, 2021 and 2020.

There were no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2020, except that the Company entered into a new Gas Processing Agreement with Apache in October 2021, which superseded the prior agreement.

Payments under all contracts with customers are typically due one month after physical delivery of the product or service has been rendered.

Revenue receivables from the Company’s contracts with Apache totaled $ 11.0 million and $ 11.4 million as of June 30, 2021 and December 31, 2020, respectively, as presented on the Company’s consolidated balance sheet.

Accounts receivable from the Company’s contracts with third parties totaled $ 2.0 million and $ 1.0 million as of June 30, 2021 and December 31, 2020, respectively, as presented on the Company’s consolidated balance sheet.

Revenue receivables from the Company’s contracts with Apache totaled $ 11.0 million and $ 11.4 million as of September 30, 2021 and December 31, 2020, respectively, as presented on the Company’s consolidated balance sheet.

Accounts receivable from the Company’s contracts with third parties totaled nil and $ 1.0 million as of September 30, 2021 and December 31, 2020, respectively, as presented on the Company’s consolidated balance sheet.

In accordance with the provisions of ASC Topic 606, “Revenue from Contracts with Customers,” variable market prices for each short-term sale are allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations.

2 unchanged sentences

Property, plant and equipment, at carrying value, is as follows:

June 30, December 31,

September 30, December 31,

(In thousands)

6 unchanged sentences

Total property, plant and equipment, net $ 189,383 $ 195,836

(1) Included in gathering, processing, and transmissions systems and facilities are compressors under lease to Apache totaling $ 10.1 million and $ 6.2 million, net as of June 30, 2021 and December 31, 2020, respectively.

(1) Included in Gathering, processing, and transmissions systems and facilities are compressors under lease to Apache totaling $ 10.1 million and $ 6.2 million, net as of September 30, 2021 and December 31, 2020, respectively.

The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated.

5 unchanged sentences

Altus Midstream may increase commitments up to an aggregate $ 1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders.

As of June 30, 2021, there were $ 657.0 million of borrowings and a $ 2.0 million of letter of credit outstanding under this facility.

As of September 30, 2021, there were $ 657.0 million of borrowings and a $ 2.0 million of letter of credit outstanding under this facility.

As of December 31, 2020, there were $ 624.0 million of borrowings and no letters of credit were outstanding under this facility.

4 unchanged sentences

The Leverage Ratio is the ratio of (1) the consolidated indebtedness of Altus Midstream and its restricted subsidiaries to (2) EBITDA (as defined in the Amended Credit Agreement) of Altus Midstream and its restricted subsidiaries for the 12-month period ending immediately before the determination date.

At June 30, 2021, the base rate margin was 0.05 percent, the LIBOR margin was 1.05 percent, and the facility fee was 0.20 percent.

At September 30, 2021, the base rate margin was 0.05 percent, the LIBOR margin was 1.05 percent, and the facility fee was 0.20 percent.

In addition, a commission is payable quarterly to the lenders on the face amount of each outstanding letter of credit at a per annum rate equal to the LIBOR margin then in effect.

6 unchanged sentences

to it on a pro forma basis, result in a Leverage Ratio greater than (i) 5.00 :1.00 or (ii) for a specified period after a qualifying acquisition, 5.50 :1.00.

The Leverage Ratio as of June 30, 2021 was less than 4.00 :1.00.

The Leverage Ratio as of September 30, 2021 was less than 4.00 :1.00.

The terms of Altus Midstream’s Preferred Units also contain certain restrictions on distributions on Altus Midstream LP’s Common Units, including the Common Units held by the Company, and any other units that rank junior to the Preferred Units with respect to distributions or distributions upon liquidation.

5 unchanged sentences

Lenders may also accelerate payment maturity and terminate lending and issuance commitments if Altus Midstream undergoes a specified change in control or has specified pension plan liabilities in excess of the stated threshold.

Altus Midstream was in compliance with the terms of the Amended Credit Agreement as of June 30, 2021.

Altus Midstream was in compliance with the terms of the Amended Credit Agreement as of September 30, 2021.

Financing Costs, Net of Capitalized Interest

The following table presents the components of Altus Midstream’s financing costs, net of capitalized interest:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities at June 30, 2021 and December 31, 2020:

June 30, December 31,

The following table provides detail of the Company’s other current liabilities at September 30, 2021 and December 31, 2020:

September 30, December 31,

(In thousands)

Accrued taxes other than income $ 10,263 $ 165

Accrued product purchases 2,340 996

Accrued operations and maintenance expense 1,558 926

Accrued incentive compensation 1,102 1,466

Accrued capital costs 1,093 360

Accrued operations and maintenance expense 236 926

Accrued professional and consulting fees 216 421

Other 1,891 2,696

3 unchanged sentences

These accruals are adjusted as additional information becomes available or circumstances change.

As of June 30, 2021 and December 31, 2020, there were no accruals for loss contingencies.

As of September 30, 2021 and December 31, 2020, there were no accruals for loss contingencies.

The Company is subject to governmental and regulatory controls arising in the ordinary course of business.

1 unchanged sentence

Environmental Matters

As an owner of infrastructure assets and with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment.

These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages.

2 unchanged sentences

Additionally, there can be no assurance that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered.

The Company is not aware of any environmental claims existing as of June 30, 2021, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

The Company is not aware of any environmental claims existing as of September 30, 2021, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

Contractual Obligations

7 unchanged sentences

Additionally, the Company is required to fund its pro-rata portion of any future capital expenditures for the development of the pipeline projects as referenced in Note 8—Equity Method Interests .

At June 30, 2021 and December 31, 2020, there were no other material contractual obligations related to the entities included in the consolidated financial statements other than the performance of asset retirement obligations and required credit facility fees discussed in Note 5—Debt and Financing Costs .

At September 30, 2021 and December 31, 2020, there were no other material contractual obligations related to the entities included in the consolidated financial statements other than the performance of asset retirement obligations and required credit facility fees discussed in Note 5—Debt and Financing Costs .

EQUITY METHOD INTERESTS

As of June 30, 2021, the Company owned the following equity method interests in Permian Basin long-haul pipeline entities.

As of September 30, 2021, the Company owned the following equity method interests in Permian Basin long-haul pipeline entities.

For each of the equity method interests, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the equity method interests.

The table below presents the ownership percentage held by the Company for each entity:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Ownership Amount Amount

5 unchanged sentences

$ 1,537,907 $ 1,555,182

As of June 30, 2021 and December 31, 2020, unamortized basis differences included in the equity method interest balances were $ 37.1 million and $ 37.7 million, respectively.

As of September 30, 2021 and December 31, 2020, unamortized basis differences included in the equity method interest balances were $ 36.8 million and $ 37.7 million, respectively.

These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities.

Unamortized basis differences will be amortized into net income over the useful lives of the underlying pipeline assets.

The following table presents the activity in the Company’s equity method interests for the six months ended June 30, 2021:

The following table presents the activity in the Company’s equity method interests for the nine months ended September 30, 2021:

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

5 unchanged sentences

Accumulated other comprehensive income — 630 — — 630

Balance at June 30, 2021 $ 277,785 $ 167,399 $ 635,526 $ 473,675 $ 1,554,385

Balance at September 30, 2021 $ 276,093 $ 164,497 $ 632,720 $ 464,597 $ 1,537,907

Summarized Financial Information

The following table represents aggregated selected income statement data for the Company’s equity method interests (on a 100 percent basis):

Six Months Ended June 30,

Nine Months Ended September 30,

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

18 unchanged sentences

The redemption value is determined based on a 5-day volume weighted average closing price of the Class A Common Stock ( 5-day VWAP) as defined in the Amended LPA, a Level 1 non-recurring fair value measurement.

At June 30, 2021 and December 31, 2020, the redeemable noncontrolling interest was recorded based on the redemption value as of the balance sheet date of $ 863.1 million and $ 575.1 million, respectively.

At September 30, 2021 and December 31, 2020, the redeemable noncontrolling interest was recorded based on the redemption value as of the balance sheet date of $ 837.2 million and $ 575.1 million, respectively.

For further discussion of Apache’s right to receive additional shares of Class A Common Stock, and other outstanding equity instruments that may impact ownership interests and the limited partner interests of Altus Midstream in future periods, see Note 12—Net Income (Loss) Per Share .

4 unchanged sentences

Common Stock Dividend

In December 2020 and May 2021, the Company’s Board of Directors declared a cash dividend of $ 1.50 per share on the Company’s Class A Common Stock, with each dividend declared totaling $ 5.6 million.

The dividends were paid to stockholders during the first and second quarters of 2021.

The dividends were paid to stockholders during the first, second and third quarters of 2021.

Each dividend included payment of approximately $ 0.5 million to Apache due to its 9.8 percent ownership of the Company’s Class A Common Stock.

12 unchanged sentences

The total adjustment is limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end is equal to the greater of (a) the sum of (i) the carrying amount of the Preferred Units determined in accordance with ASC 810, plus (ii) the fair value of the embedded derivative liability and (b) the accreted value of the net transaction price.

Activity related to the Preferred Units for the year ended December 31, 2020 and six months ended June 30, 2021 is as follows:

Activity related to the Preferred Units for the year ended December 31, 2020 and nine months ended September 30, 2021 is as follows:

Units Outstanding Financial Position (2)

12 unchanged sentences

Redeemable noncontrolling interest — Preferred Units:

at June 30, 2021 660,694 $ 617,191

at September 30, 2021 660,694 $ 634,795

Embedded derivative liability (1)

1 unchanged sentence

See Note 13—Fair Value Measurements for discussion of the fair value changes in the embedded derivative liability during the period.

(2) The Preferred Units are redeemable at Altus Midstream’s option at a redemption price (the Redemption Price), which as of June 30, 2021 is calculated as the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital.

As of June 30, 2021, the Redemption Price would have been based on a 1.3 times multiple of invested capital, which was $ 812.5 million, less certain cash distributions.

(2) The Preferred Units are redeemable at Altus Midstream’s option at a redemption price (the Redemption Price), which as of September 30, 2021 is calculated as the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital.

As of September 30, 2021, the Redemption Price would have been based on a 1.3 times multiple of invested capital, which was $ 812.5 million, less certain cash distributions.

This was greater than using an 11.5 percent internal rate of return, which would equate to a redemption value of $ 729.8 million.

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In the first quarter of 2020, the Company recorded a current income tax benefit of $ 0.7 million associated with a net operating loss carryback claim.

During the three and six months ended June 30, 2021, the Company’s effective income tax rate was primarily impacted by a decrease in valuation allowance.

During the three and six months ended June 30, 2020, the Company’s effective income tax rate was primarily impacted by the net operating loss carryback claim under the CARES Act and an increase in valuation allowance.

During the three and nine months ended September 30, 2021, the Company’s effective income tax rate was primarily impacted by a decrease in valuation allowance.

During the three and nine months ended September 30, 2020, the Company’s effective income tax rate was primarily impacted by the net operating loss carryback claim under the CARES Act and an increase in valuation allowance.

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements.

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The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock, (ii) an assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock and (iii) an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock.

The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance of shares are met.

The computation of basic and diluted net income (loss) per share for the periods presented in the consolidated financial statements is shown in the table below.

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 (1)

Income Shares Per Share Loss Shares Per Share

Income Shares Per Share Income Shares Per Share

(In thousands, except per share data)

Net income (loss) attributable to Class A common shareholders $ 11,663 3,746 $ 3.11 $ ( 951 ) 3,746 $ ( 0.25 )

Net income attributable to Class A common shareholders $ 5,244 3,746 $ 1.40 $ 2,896 3,746 $ 0.77

Effect of dilutive securities:

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Diluted (2)(3) :

Net income (loss) attributable to Class A common shareholders $ 42,834 32,588 $ 1.31 $ ( 951 ) 3,746 $ ( 0.25 )

Six Months Ended June 30,

Net income attributable to Class A common shareholders $ 20,523 16,246 $ 1.26 $ 34,730 109,855 $ 0.32

Nine Months Ended September 30,

2021 2020 (1)

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(2) The effect of an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock would have been anti-dilutive for the three and six months ended June 30, 2020.

(2) The effect of an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock would have been anti-dilutive for the three months ended September 30, 2021 and the nine months ended September 30, 2020.

(3) The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented.

(4) The effect of the exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for the three months ended June 30, 2020 and six months ended June 30, 2021.

Further discussion of the Preferred Units and associated embedded features can be found in Note 10—Series A Cumulative Redeemable Preferred Units and Note 13—Fair Value Measurements , respectively.

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the Company’s private and public warrants and an embedded derivative liability related to the issuance of Preferred Units.

The Company bifurcated and recognized the embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Amended LPA.

The valuation of the embedded derivative (using an income approach) was based on a range of factors, including expected future interest rates using the Black-Karasinski model, the Company’s imputed interest rate, interest rate volatility, the expected timing of periodic cash distributions, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units.

The Company recorded an unrealized gain of $ 31.0 million and an unrealized loss of $ 10.6 million for the three months ended June 30, 2021 and 2020, respectively, and an unrealized gain of $ 14.5 million and an unrealized loss of $ 72.6 million for the six months ended June 30, 2021 and 2020, respectively, which are recorded in “Unrealized derivative instrument gain (loss)” in the statement of consolidated operations.

The Company bifurcated and recognized an embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Amended LPA.

The valuation of the embedded derivative (using an income approach) is based on a range of factors, including expected future interest rates using the Black-Karasinski model, the Company’s imputed interest rate, interest rate volatility, the expected timing of periodic cash distributions, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units.

The Company recorded an unrealized gain of $ 4.0 million and an unrealized loss of $ 3.5 million for the three months ended September 30, 2021 and 2020, respectively, and an unrealized gain of $ 18.5 million and an unrealized loss of $ 76.1 million for the nine months ended September 30, 2021 and 2020, respectively, which are recorded in “Unrealized derivative instrument gain (loss)” in the statement of consolidated operations.

Altus has classified these recurring fair value measurements as Level 3 in the fair value hierarchy.

As of the June 30, 2021 valuation date, the Company used the forward B-rated Energy Bond Yield curve to develop the following key unobservable inputs used to value this embedded derivative:

As of the September 30, 2021 valuation date, the Company used the forward B-rated Energy Bond Yield curve to develop the following key unobservable inputs used to value this embedded derivative:

Quantitative Information About Level 3 Fair Value Measurements

Fair Value at June 30, 2021 Valuation Technique Significant Unobservable Inputs Range/Value

Fair Value at September 30, 2021 Valuation Technique Significant Unobservable Inputs Range/Value

(In thousands)

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Interest Rate Volatility 38.03 %

A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative liability at June 30, 2021, while a one percent decrease would lead to a similar decrease in value as of June 30, 2021.

The assumed expected timing until exercise of the exchange option at June 30, 2021 was 4.95 years.

A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative liability at September 30, 2021, while a one percent decrease would lead to a similar decrease in value as of September 30, 2021.

The assumed expected timing until exercise of the exchange option at September 30, 2021 was 4.70 years.

The Company has additional embedded derivatives in the Preferred Units related to the exchange option and redemption features that are accounted for separately from the Preferred Units.

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These assumptions are estimated utilizing historical trends of the Company’s common stock, public warrants and other factors.

The Company has recorded a liability of $ 1.3 million and $ 0.9 million as of June 30, 2021 and December 31, 2020, respectively, in “Other noncurrent liabilities” included in its consolidated balance sheet and approximately $ 0.2 million of income and $ 0.4 million of expense for the three months ended June 30, 2021 and 2020, respectively, and $ 0.4 million of expense and $ 1.5 million of income for the six months ended June 30, 2021 and 2020, respectively, reflected as “Total other income (loss)” in its statement of consolidated operations related to the fair value changes of the underlying warrants.

The Company has recorded a liability of $ 0.7 million and $ 0.9 million as of September 30, 2021 and December 31, 2020, respectively, in “Other noncurrent liabilities” included in its consolidated balance sheet and approximately $ 0.7 million and $ 0.2 million of income for the three months ended September 30, 2021 and 2020, respectively, and $ 0.2 million and $ 1.7 million of income for the nine months ended September 30, 2021 and 2020, respectively, reflected as “Total other income (loss)” in its statement of consolidated operations related to the fair value changes of the underlying warrants.

The carrying amounts reported on the consolidated balance sheet for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature.

The carrying amount of Altus Midstream’s revolving credit facility approximates fair value because the interest rate is variable and reflective of market rates.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the six months ended June 30, 2021 or year ended December 31, 2020.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the nine months ended September 30, 2021 or year ended December 31, 2020.

SUBSEQUENT EVENTS

Common Stock Dividend

On August 3, 2021, the Company’s Board of Directors declared a cash dividend of $ 1.50 per share on the Company’s Class A Common Stock, totaling $ 5.6 million, to be paid on September 30, 2021, to stockholders of record as of the close of business on August 27, 2021.

On November 2, 2021, the Company’s Board of Directors declared a cash dividend of $ 1.50 per share on the Company’s Class A Common Stock, totaling $ 5.6 million, to be paid on December 30, 2021, to stockholders of record as of the close of business on November 30, 2021.

The common stock dividend will be funded by a distribution from Altus Midstream to its common unitholders of $ 1.50 per Common Unit, totaling $ 24.4 million, of which $ 5.6 million is payable to the Company and the balance is payable to Apache.

Altus Midstream Company and BCP Raptor Holdco LP Business Combination

On October 21, 2021, the Company announced that it will combine with privately-owned BCP Raptor Holdco LP (BCP) in an all-stock transaction, pursuant to the Contribution Agreement dated as of that same date and entered into by and among ALTM, Altus Midstream, New BCP Raptor Holdco, LLC (the Contributor), and BCP (the Contribution Agreement).

BCP is the parent company of EagleClaw Midstream, which includes EagleClaw Midstream Ventures, the Caprock Midstream and Pinnacle Midstream businesses, and a 26.7 % interest in the Permian Highway Pipeline.

As consideration for the transaction, the Company will issue 50 million Class C common shares (and Altus Midstream will issue corresponding Common Units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital.

The transaction is expected to close during the first quarter 2022 following completion of customary closing conditions, including approval by the Company’s shareholders and regulatory reviews.

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

What changed 10-Q

Item 1. Financial Statements