Antero Midstream Q1 2025 Earnings Report

Antero Midstream EPS Results

• Actual EPS: $0.25
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.21

Antero Midstream Revenue Results

• Actual Revenue: $291.13 million
• Expected Revenue: $277.79 million
• Beat/Miss: Beat by +$13.34 million
• YoY Revenue Growth: +4.30%

Antero Midstream Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 12:00PM ET

Antero Midstream (NYSE:AM) owns, operates, and develops midstream energy assets in the Appalachian Basin. It operates in two segments, Gathering and Processing, and Water Handling. The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources' wells in West Virginia and Ohio. The Water Handling segment delivers fresh water from sources, including the Ohio River, local reservoirs, and various regional waterways; uses water handling systems to transport flowback and produced water; and offers pumping stations, water storage, and blending facilities. The company was founded in 2002 and is headquartered in Denver, Colorado.

Antero Midstream Q1 2025 Earnings Call Transcript

Key Takeaways

• Antero Midstream placed the new Torrey’s Peak compressor station into service in March—ahead of schedule—and achieved reuse savings of approximately $30 million at that station and over $50 million across three projects, with an additional $60 million expected over the next five years.
• All large-diameter high-pressure gathering pipelines and associated materials through 2026 have been secured, meaning tariffs and macroeconomic headwinds will have an immaterial impact on the 2025–2026 capital budget.
• Growing natural gas demand in the Appalachian region—driven by power generation, data centers and favorable state incentives—positions Antero Midstream, with its investment-grade counterparty and extensive midstream and water infrastructure, to support decades of future projects.
• First-quarter results included $274 million of EBITDA (up 3% year-over-year), a record 1.65 Bcf/d of processing volumes, and $79 million of free cash flow after dividends (up 7%), which funded debt reduction and $29 million of share repurchases, lowering leverage to 2.9×.
• With leverage below three times and a best-in-class 17% reinvestment rate of CapEx to EBITDA, Antero Midstream has the flexibility to allocate about 65% of EBITDA toward dividends, further debt reduction and share buybacks—nearly double its C-Corp peers.

Presentation

[Operator]

Please note that today's conference is being recorded.

[Operator]

At this time, I'll now turn the conference over to Justin Agnew, Vice President, Finance and Investor Relations. Justin, you may begin.

[Justin Agnew, VP - Finance & IR at Antero Midstream]

Good morning, and thank you for joining us for Antero Midstream's first quarter investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then I'll open it up for Q and A. I would also like to direct you to the homepage of our website at www.anteromidstream.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may also contain certain non GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.

[Justin Agnew, VP - Finance & IR at Antero Midstream]

Joining me on the call today are Paul Rady, Chairman, CEO and President of Antero Resources and Antero Midstream Brendan Krueger, CFO of Antero Midstream and Michael Kennedy, CFO of Antero Resources and Director of Antero Midstream. With that, I'll turn the call over to Paul.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

Thanks, Justin. Good morning, everyone. In my comments, I will discuss our 2025 capital projects and outlook for natural gas demand. Brendan will then walk through our first quarter results, capital efficiency and return of capital to shareholders. But let me begin with Slide three titled 2025 capital budget on track.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

The right hand side of the slide shows our new Torrey's Peak compressor station. We placed this station online in March ahead of our initial expectation of a second quarter in service date. Importantly, this station was our third compressor station which was constructed with relocated underutilized units. The reuse savings have totaled approximately $30,000,000 at Torrey's Peak and over $50,000,000 across all three stations that we've done this with. Looking ahead, we expect over $60,000,000 of additional reuse savings over the next five years.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

As you can see on the top left portion of the page, we do not have any large diameter high pressure gathering pipelines in the 2025 capital budget. Additionally, we have already secured materials, pricing and lead times for all our steel and high density polyethylene pipelines through 2026. As a result, we see immaterial impacts on our 2025 and 2026 capital budget from tariffs and other macroeconomic headlines. Now let's move on to slide number four titled Growth in Appalachia Gas Demand. The Appalachian Region has quickly become a focal point for natural gas fired power generation, data centers and behind the meter projects.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

Over a decade ago, we recognized the significant low cost resource base in Appalachia. Fast forward to today and these announcements further validate positioning. These projects will require a significant amount of gas supply for decades to come. In addition, statewide regulations have been leading to faster approval times and attractive incentives to build in the region. AM is well positioned with an investment grade upstream counterparty, twenty years of dedicated inventory and one of the largest natural gas and water systems in the region that can be supportive of future projects.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

While these projects generally have a longer lead time in nature, they highlight the long term opportunity set for natural gas focused midstream companies such as AHEM. I'll finish my comments on slide number five titled Natural Gas Demand Estimates Continue to Increase. This slide illustrates the upward momentum in natural gas demand estimates to power data centers. In just the last six months, the expectations for the power required for data centers by 02/1930 has doubled as shown on the chart on the left hand side of the page. The right hand side illustrates the percentage of data centers expected to be powered by natural gas, which has increased from 50% to 70%.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

This compounding effect supports significant growth in natural gas demand over the next several years. With that, I'll turn the call over to Brendan Kruger, CFO for Antero Midstream.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Thanks, Paul. I will begin my comments on slide number six titled First Quarter Highlights. During the first quarter, we generated $274,000,000 of EBITDA, which was a 3% increase year over year. This was driven primarily by an increase in gathering and processing volumes, the latter of which set a company record at 1.65 Bcf a day. Looking forward to the remainder of 2025, we expect further increases in gathering volumes to drive low to mid single digit year over year growth in gathering volumes in 2025 versus 2024.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

During the first quarter, free cash flow after dividends was $79,000,000 a 7% increase year over year. This was the eleventh consecutive quarter generating free cash flow after dividends and the second straight quarter above that $75,000,000 mark. We utilized this free cash flow to reduce absolute debt and repurchase over $29,000,000 of shares during the quarter. Importantly, our leverage declined towards 2.9 times as of March 31. Next, let's move on to Slide seven titled Low Debt and Capital Efficient Business Model.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

This slide compares AM's leverage and capital efficiency to other companies in the midstream industry. In addition to lowering our overall risk profile, our debt reduction efforts have reduced our leverage below three times, well below the C Corp peer average. Looking at capital expenditures as a percent of EBITDA, which highlights overall capital efficiency, AM is best in class with a 17% reinvestment rate. This is a result of our just in time capital investment philosophy and visibility into our primary customers development plan. With low debt and leverage and an attractive reinvestment rate, AM has the capacity to return a significant amount of capital to shareholders.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

As highlighted on the bottom chart, based on consensus estimates, AM has the ability to allocate approximately 65% of its EBITDA for dividends, additional debt reduction and share repurchases. This is nearly double the C Corp average in the midstream space. I'll finish my comments on Slide eight titled Well Positioned to Enhance Shareholder Returns to elaborate on those return of capital opportunities. The last several years have been focused on debt reduction and accretive bolt on acquisitions. Looking ahead, our low debt and capital efficiency have positioned us well to pay an attractive dividend, repurchase shares and be opportunistic on M and A opportunities should they arise.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

We believe this flexible approach directs capital to the highest rate of return opportunities that will accrue directly to our shareholders. This capital allocation flexibility is beneficial during times where we see opportunities in the equity relative to our current and future cash flow profile, which have been largely unaffected by the recent macro volatility. In fact, we believe the medium to longer term outlook is only getting brighter. With that, operator, we are ready to take questions.

[Operator]

Thank you. We'll now be conducting a question and answer session. Session. Thank you. Thank you.

[Operator]

Our first question is from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Hi, good morning.

[Justin Agnew, VP - Finance & IR at Antero Midstream]

Good morning.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Good morning.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Just wanted to touch on a bit more I guess for the potential for in basin demand growth, which could help with AR's outlook as far as looking for more growth there. How do you see this opportunity set shaping up over time given the rich resource and the favorable attributes of the region?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. I think there's quite a few projects that have already been announced and I think we see quite a few discussions continuing to take place around local power demand, particularly the power data centers, but other industrial uses as well in the region. You're seeing it in Ohio and Pennsylvania and I think there's been a lot of momentum lately in West Virginia as well in terms of getting some bills passed in West Virginia. So a lot of momentum. Where that ultimately plays out, I think it's still a bit early, but we're well positioned given the significant infrastructure we have in place both on gathering and water side with Antero Midstream and AR is of course well positioned to participate in that as well.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

So we like where we're at, a lot of conversations happening, but still early in some of those conversations.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. Thank you for that. And then I know on the AR call, talked a bit about the LPG market. But just wondering if you could talk a bit here, guess, the outlook for propane and I guess AR strategy to mitigate that risk and how that impacts AF?

[David Cannelongo, Senior Vice President of Liquids Marketing & Transportation at Antero Resources]

Yes. Is Dave Canelongo. Just touching on the propane strategy, I mean, I think we will reiterate our confidence in the long term outlook for that product. I mean, there's really no true substitute for it in the res comp markets. Folks can go back to solid fuels, but that's obviously a huge reduction in the quality of holding standards that they've moved to.

[David Cannelongo, Senior Vice President of Liquids Marketing & Transportation at Antero Resources]

So you'll continue to see that market grow. There's really nothing else that's going to reach those markets in the billions of people that are prime candidates for switching to LPG. So the res comp market growth is very steady and sticky. And then on the petrochemical side, we've talked a lot about PDHs in the past and there's a question out there around whether or not with the tariff landscape of China will reduce propane imports, naphtha cracking will increase. And I just want to kind of make the point that cracking naphtha, the steam cracker is not a replacement for propane and PDH.

[David Cannelongo, Senior Vice President of Liquids Marketing & Transportation at Antero Resources]

PDH is going to produce around 85% of propylene when you put it into the unit. And when you crack naphtha, you're going get about 15% of propylene out of it. So they're really not substitute type of products for what people are looking for. And I think the reason why you've seen the global market go to PDH is that propylene is a product they need and want for the types of ultimate products that are being manufactured around the world. And so cracking naphtha is not really going to accomplish that for you in the long run.

[David Cannelongo, Senior Vice President of Liquids Marketing & Transportation at Antero Resources]

And we think this will we'll continue to see growing petrochemical demand for propane because it's such a unique product and what it can deliver to those petrochemical companies and the ultimate consumers.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. That makes sense. And this might be a bit premature, but on the other side of the cycle, just wondering what's the outlook for the JV here? It continues to run above nameplate. And if the propane market grows over time, could there be more liquid rich production in the basin?

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

And could that lead to would you want to participate in any expansions there in the JV on the frac side?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. Mean, I think today where we're at, I think we're comfortable. We're running about 4% over nameplate. I think historically you've seen those run as high as 10% over nameplate. So there's still some room those facilities.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

And I think just depending on where prices move and long term outlook for gas and liquids, we'll reevaluate down the road. But I think as we sit here today, comfortable with the position we're in, in a maintenance capital mode on the AR side.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. I'll leave it there. Thank you.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

Thanks.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Thanks, Jeremy.

[Operator]

The next question is from the line of Naomi Marfrieda with UBS. Please proceed with your questions.

[Naomi Marfatia, Associate Director - Equity Research at UBS Group]

Hi, thanks for taking my questions. Just a follow-up on your commentary on data centers. You all gave a good rundown in your prepared remarks, but just curious if you could provide any additional details on how conversations are heading about commercialization and how AM could benefit from the trend?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. I don't think today as we sit here, anything more to say on that. We're continuing to have these conversations. As I mentioned, AM, with the infrastructure it has, could certainly participate through additional infrastructure build out to the necessary demand areas. But again, too early to give any more specifics on that as we sit here today.

[Naomi Marfatia, Associate Director - Equity Research at UBS Group]

Got it. And then my second question is related to capital allocation. You all have done buybacks since the last two quarters and the leverage is below three times target. How should we think about your strategy on M and A or bolt ons now that you're on most of the gathering and compression in West Virginia?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. So on the overall allocation there, we are below three times. I think we continue to see that portfolio approach both paying down debt and buying back shares accrue to the equity. At what level does that stop accruing on the debt side? I don't think we've reached that yet.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

So it will likely be a continued approach going forward. And then on the M and A side, always looking at opportunities. Over the past few years, we've added some very strategic bolt on acquisitions that support AR. And so we'll continue to look at opportunities like that. And we're well positioned given our balance sheet profile to capitalize on some of those opportunities should present, but always looking out there and well positioned.

[Naomi Marfatia, Associate Director - Equity Research at UBS Group]

Great. I'll leave it there. Thank you.

[Naomi Marfatia, Associate Director - Equity Research at UBS Group]

Thanks. Thank you.

[Operator]

The next question is from the line of John McKay with Goldman Sachs. Please proceed with your question.

[John Mackay, VP - Equity Research at Goldman Sachs]

Hey, team. I appreciate the comments on the LPG side of things. I guess I'd just be curious to kind of ask it in maybe a more direct way. I mean, from an AM perspective, we obviously care about the volume side. Like how much softer would pricing need to get to see a kind of production response from AR that would hit AM's volumes?

[Michael Kennedy, Director & SVP - Finance, CFO of Antero Resources at Antero Midstream]

Yes. You really can't get there, John. This is Mike Kennedy. We actually sensitized it to COVID prices and it still wasn't there. If you have natural gas prices where they're at, we still have substantial free cash flow.

[Michael Kennedy, Director & SVP - Finance, CFO of Antero Resources at Antero Midstream]

So and even if we don't, we wouldn't have we don't have any debt really. So we would continue to run our two rig, one plus completion crew program really absent any sort of commodity price dislocation, we continue to run it regardless.

[John Mackay, VP - Equity Research at Goldman Sachs]

That's clear. That's helpful. Thank you. And then you guys have done a lot on, I guess, can kind of say self help side of things, the compressor stations, etcetera. Understand there aren't a ton more assets kind of inside the fence to buy.

[John Mackay, VP - Equity Research at Goldman Sachs]

But is there anything else you can do on kind of optimizing the cost side? We've seen some of your peers kind of more in the Permian talk about maybe some self powering projects. Anything like that on the radar for you guys?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. I mean, I think we've talked about some of these in the past just around AR and being the largest consumer of power in the state, certainly there's opportunities to potentially look at behind the meter on those things. But those are again in probably the early parts of conversation whether they move forward still early at this point. So but there opportunities, but they're both on kind of in and around where we look today. That's all I'd say at this point.

[John Mackay, VP - Equity Research at Goldman Sachs]

That's interesting. Thanks for the time guys. Appreciate it.

[Operator]

The next

[Operator]

question is from the line of Zach Van Everend with TPH. Please proceed with your question.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Hey guys, thanks for taking my question. Just a quick one on water. You guys serviced 28 wells this quarter. I know you mentioned a lot of those or eight of those were kind of to the back of the quarter. Are you still expecting to service the 70 to 75 you guys had in your guidance, which would kind of point towards a step down for maybe Q2?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

We're still looking at that similar number. I think those 8,000,000 most of that volume we tried to highlight it will fall into that second quarter. So if you look at 1Q to 2Q, I'd expect a pretty similar level of volume. You had the second completion crew running for a month in the first quarter and you'll have it running for a month in the second quarter. So should expect similar volumes there.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Okay. That's helpful. And then on the lateral length, still expecting the $13,200 I know the AR length of completed came in a little bit higher, but is that still a good average to look at?

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Yes. That's a good number to think about.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Appreciate it. Thanks guys.

[Brendan Krueger, CFO, VP of Finance & Treasurer at Antero Midstream]

Thanks Zach.

[Paul Rady, President, Chairman & CEO at Antero Midstream]

Thanks.

[Operator]

Thank you. At this time, I'll hand the floor back to Justin Agnew for closing remarks.

[Justin Agnew, VP - Finance & IR at Antero Midstream]

Thank you, operator, and thank you everyone for joining today's conference call. Please feel free to reach out with any follow-up questions.

[Operator]

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Participants

Executives

• Justin Agnew, VP - Finance & IR
• Paul Rady, President, Chairman & CEO
• Brendan Krueger, CFO, VP of Finance & Treasurer
• Michael Kennedy, Director & SVP - Finance, CFO of Antero Resources

Analysts

• Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan
• David Cannelongo, Senior Vice President of Liquids Marketing & Transportation at Antero Resources
• Naomi Marfatia, Associate Director - Equity Research at UBS Group
• John Mackay, VP - Equity Research at Goldman Sachs
• Zack Van Everen, Director - Equity Research at TPH&Co