Antero Midstream Corporation · NYSE:AM
Antero Midstream — Antero Midstream Partners — Merger or Acquisition (January 2019)
30 slides from Antero Midstream's merger presentation, Jan 9, 2019
Slide 1: Legal Disclaimer
Legal Disclaimer No Offer or Solicitation This presentation discusses a previously announced proposed business combination transaction between Antero Midstream Partners LP (“Antero Midstream”) and Antero Midstream GP LP (“AMGP”). This presentation is for informational purposes only and does not cons
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Antero Midstream Partners LP, and its subsidiaries (collectively, the “Partn
Slide 3: Antero Midstream At A Glance – Status Quo
Antero Midstream At A Glance – Status Quo 4 Market Cap ....... Enterprise Value ......... . LTM Adjusted EBITDA(1) .. % Gathering/Compression % Water .. .. .. .. .. Net Debt/LTM EBITDA .... Corporate Debt Rating . $4.6B $6.1B $665 MM 65% 35% 2.3x Ba2 / BB+ /BBB- Note: Equity market data as of 01/07/
Slide 4: 2019 Guidance
2019 Guidance 5 Guidance 2019 Guidance Net Income ($MM) $475 – $525 Adjusted EBITDA ($MM) $870 – $920 DCF ($MM) $680 – $730 Dividend per Share $1.23 – $1.25 DCF Coverage 1.1x – 1.2x Maintenance Capex at Midpoint ($MM) $65 Growth Capex at Midpoint ($MM) $710 Total Capex ($MM) $750 – $800 Antero midst
Slide 5: Long-Term Outlook – New AM
Long-Term Outlook – New AM 6 Antero midstream January 2019 presentation 18% Distributable Cash Flow CAGR Declining Leverage Profile to low to mid 2x Supportive of Previously Communicated Dividend Growth Targets $50 / $2.85 25% Distributable Cash Flow CAGR Declining Leverage Profile to low to mid 2x
Slide 6: AMGP/AM Simplification Transaction Summary
AMGP/AM Simplification Transaction Summary 7 1 2 Simplifies midstream structure and aligns all Antero equity holders Converts to C-Corp structure without IDRs Potentially broadens investor base and creates opportunity for inclusion in major equity indices Tax efficient and eliminates ~$375 MM of exp
Slide 7: Antero Family Simplified Pro Forma Structure
Antero Family Simplified Pro Forma Structure 8 Status Quo Structure Simplified Pro Forma Structure Midstream simplification transaction results in one publicly traded midstream infrastructure corporation with no IDRs and AR as its largest shareholder 1) Series B profits interest held by Antero manag
Slide 8: Highest DCF Growth Among Top Midstream
Highest DCF Growth Among Top 20 Midstream 9 New AM will be a unique midstream vehicle with scale, low leverage and high distributable cash flow growth all in a C-corp structure C-CORP Leverage MLP ENBRIDGE ONEOK KINDER MORGAN TRANSCANADA WILLIAMS ANTERO MIDSTREAM * * * * * * * TARGA RESOURCES * * PL
Slide 9: Strong, Growing & Supportive Sponsor
Strong, Growing & Supportive Sponsor
Slide 10: Largest Core Liquids-Rich Inventory in Appalachia
Largest Core Liquids-Rich Inventory in Appalachia 11 40% of Core Undrilled Liquids-Rich Locations are Held by Antero Core Liquids-Rich Appalachian Undrilled Locations(1) Note: Core outlines are based upon Antero geologic interpretation, well control, drilling activity, well economics and peer acreag
Slide 11: Undrilled Core Liquids-rich Inventory and Top NGL Producers
Undrilled Core Liquids-rich Inventory(1) Top U.S. C2+ NGL Producers - 2019E(2) Antero is the largest NGL producer in the U.S. and controls 40% of the core undrilled liquids-rich locations in Appalachia Over 2.5x Inventory of closest Appalachian competitor Most exposure to NGL prices Based on Antero
Slide 12: Premier Integrated Appalachian Midstream Assets
Premier Integrated Appalachian Midstream Assets
Slide 13: High Growth Midstream Throughput
High Growth Midstream Throughput 15 49% CAGR Low Pressure Gathering (MMcf/d) Compression (MMcf/d) Gas Processing (MMcf/d) Fresh Water Delivery (MBbl/d) 126% CAGR 32% CAGR AM high growth throughput driven by AR development plan and resource base 65% YoY Note: CAGRs represent 2014-2017 growth period w
Slide 14: Driving Northeast Value Chain Buildout
Driving Northeast Value Chain Buildout 16 ~$1.5B Organic Project Backlog ~$500MM JV Project Backlog FRESH WATER Delivery(1) Treatment(1) WASTE WATER Services(1) PRODUCED WATER WELL PAD LOW PRESSURE GATHERING HIGH PRESSURE GATHERING COMPRESSION GAS PROCESSING (50% INTEREST) REGIONAL GATHERING PIPELIN
Slide 15: Gathering and Compression Assets & Strategy
Gathering and Compression Assets & Strategy 17 Asset Strategy Historical Compression Utilization “Just-in-time” capital investment philosophy appropriately sizing infrastructure buildout for visible production growth from AR Eliminate “gas waiting on pipe” Target high asset utilization rates and con
Slide 16: New Joint Venture Processing Site
New Joint Venture Processing Site 18 ROVER MXP EQT TCO STONEWALL DOMINION To Chicago Markets To Northeast Markets To Atlantic Markets To Gulf Coast Markets Smithburg Complex Sherwood Complex Northeast Processing & Fractionation New Processing Site AM and MPLX are beginning civil construction on a ne
Slide 17: Processing and Fractionation Assets & Strategy
Processing and Fractionation Assets & Strategy 19 Asset Strategy Processing and Fractionation Projects Support rich-gas and C3+ NGL volume growth at AR, investing “Just-in-time” capital along side MPLX Sherwood is the largest processing facility in the U.S Sherwood 10 was placed in service 10/31/18
Slide 18: Water Handling and Treatment Assets & Strategy
Water Handling and Treatment Assets & Strategy 20 Asset Strategy Due to the reliability of AM’s buried fresh water pipeline system, AM has a 100% track record of timely fresh water deliveries to AR’s completions 2019 Fresh Water Projects Growth Projects Miles/ Capacity In-Service Ohio River to Pione
Slide 19: 4-year Organic Project Backlog: 2019 - 2022
4-year Organic Project Backlog: 2019 - 2022 21 Marcellus Ohio Utica Compression Processing & Fractionation JV Low Pressure Gathering High Pressure Gathering Fresh Water $2.0B Project Backlog – By Area $2.0B Project Backlog – By Function 4-year identified project inventory of $2.0B “High-graded” orga
Slide 20: Antero Midstream Return on Invested Capital
Antero Midstream Return on Invested Capital 22 AM Return on Invested Capital (ROIC) 2017 ROIC of 15% in only fourth year of AM operations Future organic growth capital leverages existing trunklines and major gathering arteries Increasing Capital Efficiencies Actual Consensus Source: Factset consensu
Slide 21: Antero Midstream Return on Invested Capital
») Antero Midstream Retur nvested Capital ey 25% 2017 ROIC of 15% in only fourth year of AM operations 20% Future organic growth capital leverages existing trunklines and 12% major gathering 10% arteries 5% Fewer pads to service 7 reduces capital with |= same throughput 0% 2014A 2015A 2016A 2017A 20
Slide 22: Simplification Transaction Overview
Simplification Transaction Overview 24 AMGP to acquire 100% of outstanding common units of AM, including common units owned by AR Elimination of incentive distribution rights (“IDRs”) and Series B profits interest All-in consideration to AM public unitholders valued at $31.41/unit consisting of 1.63
Slide 23: Capital and Adjusted EBITDA Contribution - 2019
Capital and Adjusted EBITDA Contribution - 2019 25 Capital Expenditures ($MM) Adjusted EBITDA ($MM) Processing & Fractionation JV Gathering & Compression Water Gathering & Compression Water Processing & Fractionation JV Capital Budget: $775MM Adjusted EBITDA Guidance: $870- 920MM 2019 organic capita
Slide 24: Debt Maturity Profile Liquidity & Debt Term Structure
9/30/2018 Debt Maturity Profile Liquidity & Debt Term Structure AM Credit Facility AM Senior Notes Credit facility for AM extended its average debt maturity out to 2023 26 Antero Midstream: Liquidity and Balance Sheet No maturities until 2022 $650 $875 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900
Slide 25: Antero Midstream Project Economics
Antero Midstream Project Economics 27 AM Project Economics by Investment “Just-in-time” capital investment philosophy drives attractive project IRR’s 17% 12% 29% 12% - 30% % of 4-year Organic Project Backlog Weighted Avg: 25% IRR Organic Project Backlog with Peer-Leading Returns 30% 18% 15% 30% 15%
Slide 26: Maintenance Capital Methodology
Maintenance Capital Methodology APPENDIX 28 Maintenance Capital Calculation Methodology – Low Pressure Gathering Estimate the number of new well connections needed during the forecast period in order to offset the natural production decline and maintain the average throughput volume on our system ov
Slide 27: Antero Midstream Non-GAAP Measures
Antero Midstream Non-GAAP Measures APPENDIX 29 Non-GAAP Financial Measures and Definitions Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership’s performance. Antero Midstream defines Adjusted EBITDA as Net Income before interest expense, depreciation expense, impairme
Slide 28: Antero Midstream Non-GAAP Measures
Antero Midstream Non-GAAP Measures APPENDIX 30 Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP financial measures of Adjusted EBITDA and Distributable Cas
Slide 29: Antero Midstream Non-GAAP Measures
Antero Midstream Non-GAAP Measures 31 The following table reconciles net income to Adjusted EBITDA for the twelve months ended September 30, 2018 as used in this presentation (in thousands): The following table reconciles consolidated total debt to consolidated net debt (“Net Debt”) as used in this
Slide 30: Antero Midstream Non-GAAP Measures
» Antero Midstream Non-GAAP Measures a The following table reconciles consolidated total debt to consolidated net debt ("Net Debt") as used in this presentation (in thousands): ‘September 30, 2018 Bank credit facility s 875,000 |AM senior notes due 2024 650,000 16) tal debt 5 Tst68S4 ‘Cash and cash
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