Antero Midstream Q2 2025 Earnings Results & Report

Antero Midstream EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.24
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.23
• EPS Beat Rate: 4 of last 8 quarters

Antero Midstream Revenue Results

• Actual Revenue: $305.47 million
• Expected Revenue: $292.70 million
• Beat/Miss: Beat by +$12.77 million
• YoY Revenue Growth: +13.20%

Antero Midstream (NYSE:AM) (NYSE: AM) owns, operates and develops midstream energy infrastructure that supports natural gas, natural gas liquids and oil production in the Appalachian Basin. The company primarily serves Antero Resources Corporation, providing the gathering and processing services needed to move production from well sites into downstream markets.

Antero Midstream’s operations include natural gas gathering, compression and processing, as well as water handling and related services. Its water business provides infrastructure for the delivery and treatment of fresh and recycled water used in hydraulic fracturing and the collection and disposal of wastewater. The company’s assets are concentrated in the Marcellus and Utica shale areas of West Virginia and Ohio.

Antero Midstream originated as a master limited partnership formed to own and operate midstream assets supporting Antero Resources and was converted into a corporation in 2019. Through its integrated gathering, processing and water infrastructure, the company provides long-term logistical support for Appalachian energy production.

Antero Midstream Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: During Q2, the company invested $45 million in gathering, compression and water projects (bringing YTD spend to $82 million or 45% of the 2025 budget), with remaining capital focused on low-pressure gathering and water connects for 2026 development.
• Positive Sentiment: The compression reuse program has delivered over $50 million in savings to date and boosted five-year savings estimates from $60 million to over $85 million, yielding cumulative savings above $135 million—equivalent to two new compressor stations.
• Positive Sentiment: Second-quarter EBITDA rose 11% to $284 million and free cash flow after dividends jumped 90% to $82 million, enabling share repurchases, debt reduction (leverage down to 2.8x) and balance sheet strengthening.
• Positive Sentiment: 2025 free cash flow guidance was raised by $25 million, driven by a $10 million EBITDA boost, $5 million lower capital spend, $5 million in interest savings, and elimination of cash taxes through at least 2028.
• Positive Sentiment: Antero Midstream’s first-mile infrastructure uniquely connects low-cost Appalachian production to premium LNG markets while retaining optionality to local demand, backed by 20+ years of resource inventory and an investment-grade balance sheet.

Presentation

[Operator]

Welcome to the Antero Midstream 2Q 2025 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If any of you require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Justin Agnew, Vice President of Finance. Thank you. You may begin.

[Justin Agnew, VP of Finance at Antero Midstream]

Good morning, and thank you for joining us for Antero Midstream's second quarter investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&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 numbers. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. 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, Chairman, CEO and President at Antero Resources and Antero Midstream]

Thanks, Justin. Good morning, everyone. In my comments, I will discuss the progress on our 2025 capital projects and an update on our capital reuse savings. Brendan will then provide a recap of our second quarter results and increased 2025 guidance. Let me start on slide number three titled 2025 Capital Projects on Track. As depicted on this page, during the second quarter, we invested $45 million in gathering, compression, water, and the Stonewall Joint Venture projects. This brings our year-to-date capital investment to $82 million, or 45% of our updated 2025 capital budget at the midpoint of guidance. These projects included the completion of Tory Speed Compressor Stations and significant progress on the water system expansion to the southern portion of the Marcellus.

[Paul Rady, Chairman, CEO and President at Antero Resources and Antero Midstream]

The capital invested in the back half of the year will be weighted toward the third quarter as we take advantage of better weather conditions for construction. Importantly, the remaining capital will be focused on low-pressure gathering and water connects that set up the 2026 development plan. Before turning the call over to Brendan, I also want to provide an update on our compression reuse program on slide number four titled Exceeding Expectations on Reuse Savings. To date, we have realized over $50 million of savings through our reuse program, including $30 million at the Tory Speed Compressor Station. After successful proof of concept on three compressor stations, we're now increasing the future reuse savings estimates. As you can see on the left side of the page, our five-year savings estimate from 2026 to 2030 has increased from $60 million to over $85 million.

[Paul Rady, Chairman, CEO and President at Antero Resources and Antero Midstream]

This brings the cumulative savings already achieved, plus the forecasted savings, to over $135 million. To put it in perspective, these savings approximate the cost of building two brand new 160 million cubic feet per day compressor stations. With that, let me turn it over to Brendan.

[Brendan Krueger, CFO at Antero Midstream]

Thanks, Paul. I will start with our second quarter financial results on slide five. During the second quarter, we generated $284 million of EBITDA, which was an 11% increase year-over-year. This was driven primarily by an increase in gathering and processing volumes, both of which set new company records. This EBITDA growth, combined with declining capital year over year, resulted in free cash flow after dividends of $82 million, which was almost a 90% increase compared to last year. We utilize this free cash flow for share repurchases and for debt reduction, which drove our leverage down to 2.8x as of June 30. Now let's move on to slide number six titled Increased 2025 Guidance. This slide illustrates the components that resulted in the $25 million increase in our free cash flow guidance.

[Brendan Krueger, CFO at Antero Midstream]

At the midpoint, we are increasing our adjusted EBITDA guidance by $10 million, driven by outperformance in our gathering and compression throughput. In addition, we are lowering our capital budget range, bringing the top end of the guidance down from $200 million to $190 million, a $5 million reduction at the midpoint. Our debt reduction efforts have also resulted in $5 million lower interest expense. Lastly, with the recently passed budget reconciliation bill, we are reducing our cash income taxes from a range of $0 to $10 million to $0. This is driven by a combination of reinstating bonus depreciation and interest deduction limitation improvements. Looking ahead, we do not expect to be a material cash taxpayer through at least 2028.

[Brendan Krueger, CFO at Antero Midstream]

I will finish my comments on slide seven titled Uniquely Positioned for LNG and Northeast Demand Growth. AM plays the critical role investing in first mile infrastructure connecting low-cost production to LNG facilities along the Gulf Coast. While most midstream companies can connect producers to local Appalachian markets, AM is uniquely positioned in the fact that it connects its investment-grade producer to premium-priced LNG markets while still maintaining significant optionality to connect into local markets should the demand growth warrant it. As you can see on the snapshot on the right-hand side of the page, additional projects in Appalachia continue to get announced, and we expect project announcements to accelerate given the regulatory support specifically in West Virginia for data center development.

[Brendan Krueger, CFO at Antero Midstream]

In the future, if there is a structural change in Northeast demand or production tied to direct sales, Antero Resources has over 10 years of dry gas locations that are substantially HPP and dedicated to AM that can supply that growing opportunity set. Importantly, with over 20 years of liquids-rich and dry gas inventory and an investment-grade balance sheet, Antero is one of the few companies that can be relied on to actually supply long-term agreements. In summary, we continue to execute on our organic growth plan, consistently delivering predictable earnings and pure leading capital efficiency. These attributes allow us to pay an attractive dividend, reduce absolute debt, and make opportunistic share repurchases, all of which continue to drive value for our shareholders. With that, operator, we are ready to take questions.

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of John Mackay with Goldman Sachs. Please proceed with your questions.

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

Hey, guys. Thank you for the time. I appreciate it. I wanted to start on some of your comments you made on the AR call. You know, you continued to talk about in-base and demand opportunities, also kind of saying that you'd want it to be kind of 9x pricing and to be disciplined on growth into these. Maybe can you spend a second talking about where AM could fit into this? Are there opportunities for AM specifically beyond just, you know, moving those, gathering those incremental AR volumes?

[Michael Kennedy, CFO at Antero Resources and Director]]

Yeah, I think great question, John. I think for AM, we look at the opportunities similar to Antero Resources in the sense Antero Resources could be a supplier. AM could build the infrastructure as needed. Obviously, we've got a large footprint with our current gathering and compression system in West Virginia and in Ohio. There are certainly opportunities where AM could be the one building the spur or have sort of take or pay contracts on those arrangements as well. We're looking at all of those items as potential solutions as it relates to this growing demand in the Northeast.

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

Maybe just on capital allocation, I think the first kind of two quarters of the year, or sorry, I guess you've talked about the buyback being kind of potentially 50% of, let's call it, excess free cash flow. It's kind of trending below that first two quarters of the year. It does look like it stepped up in July, but maybe just can you spend a second on how you think about allocating to the buyback versus the balance sheet? Is that 50% number still kind of the right ballpark?

[Michael Kennedy, CFO at Antero Resources and Director]]

Yeah, I mean, I think we think about that 50% in probably longer-term numbers. When we're given those comments, it's over a full year period, not kind of quarter to quarter here. The first quarter we had some working capital headwinds, so did not pay as much debt down in that first quarter. You saw in the second quarter we did pay a substantial amount of debt down. As you hit on in July, we certainly stepped up on the buyback there. I would say it really does ebb and flow, and we try to be opportunistic in those share repurchases and can be more aggressive at times. We see more value in the shares. I think for AM, we continue to see a lot of value in the share buyback. We also see the value of paying down debt accruing to the equity as well.

[Michael Kennedy, CFO at Antero Resources and Director]]

I think we're the lowest levered midstream name in the space, and we think that debt paydown does accrue to the equity still as we look at that today. We'll continue to look at both opportunities, and it'll change quarter to quarter.

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

All right, that's clear. Thank you. Appreciate the time.

[Michael Kennedy, CFO at Antero Resources and Director]]

Thanks, John.

[Paul Rady, Chairman, CEO and President at Antero Resources and Antero Midstream]

Thanks, John.

[Operator]

Thank you. Our next questions come from the line of Jeremy Tonet with JPMorgan. Please proceed with your questions.

[Jeremy Tonet, Equity Research Analyst and Managing Director at JPMorgan]

Hi, good morning.

[Michael Kennedy, CFO at Antero Resources and Director]]

Hi, good morning.

[Jeremy Tonet, Equity Research Analyst and Managing Director at JPMorgan]

Just wanted to dig in maybe a little bit more if you could with regards to in-base and demand opportunities. There's been some announcements recently at the Pennsylvania Energy and Innovation Summit. I think there's also been some announcements out of Meta with the new Albany facility. I was just wondering, related to these recent developments, do you see opportunities emerging specific to AM here over time?

[Michael Kennedy, CFO at Antero Resources and Director]]

Yeah, I think we talked a little bit about it in the first question there. West Virginia in particular is where we have our significant asset base for AM. West Virginia recently did pass this microgrid bill where, if you supply 70% of the power to a data center, you essentially kind of skip the line. There are a lot of benefits if you can fall under that microgrid bill. I think as mentioned in the previous question for AM, I think there's really two ways that AM plays a role. To the extent AR accelerates production to meet that specific demand, AM, of course, gets the benefit of the water, the low pressure, the compression, the high pressure fees.

[Michael Kennedy, CFO at Antero Resources and Director]]

The second piece is, of course, if AM participates in building out infrastructure for the supply, AM would then earn a fee with a potential third party on building that infrastructure out. I think I'd probably communicate what we did on the AR call, which is having lots of conversations. We've got a team internally working it, but no timeline in terms of when, if any announcements could be made. We're trying to go through this thoughtfully and to the extent something makes sense for the company, we'll come out with it. Otherwise, no plans in the medium term, intermediate term.

[Jeremy Tonet, Equity Research Analyst and Managing Director at JPMorgan]

Got it. Understood. Maybe just pivoting here to the Clearwater facility lawsuit. I don't know if there's any color you could shed on timeline at this point from a legal proceeding standing.

[Michael Kennedy, CFO at Antero Resources and Director]]

No, unfortunately not. I think nothing's changed from what we've put in our disclosure. They appealed to the Colorado Supreme Court and just waiting on the Colorado Supreme Court to come out with any sort of decision in terms of whether they take it or not. No change from that standpoint.

[Jeremy Tonet, Equity Research Analyst and Managing Director at JPMorgan]

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

[Michael Kennedy, CFO at Antero Resources and Director]]

Thanks, Jeremy.

[Operator]

Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next questions come from the line of Ned Baramoff with Wells Fargo. Please proceed with your questions.

[Ned Baramoff, Analyst at Wells Fargo]

Hi, thanks for taking the questions. Processing volumes ticked up well above capacity in the second quarter. Given AR' development plan assumes a higher mix of liquids-rich wells going into the fourth quarter, I would imagine utilization will increase even further from here. Could you maybe talk about the threshold above nameplate that would potentially trigger a decision to add another processing plant at the joint venture? It seems that running 5%-10% above nameplate is not really a trigger, but just curious at what utilization levels you would have to make that decision.

[Michael Kennedy, CFO at Antero Resources and Director]]

Yeah, I think there's still some room there. You can typically run these about 10% over nameplate. At the one-sixth related to the JV, you'd be 160 over nameplate. You've got another 80 or 90 still above that. No imminent needs to increase processing capacity. I think it was talked about in the AR call. There's also pads that get layered in over the next couple of years that are leaner as well. You'd expect that to stay in a similar ballpark as you look forward here.

[Ned Baramoff, Analyst at Wells Fargo]

Understood. Quick question on cash taxes. The earnings press release indicated an expected reversal of cash taxes paid year to date in the second half of the year. Could you maybe talk about your cash tax expectations longer term? When do you think AM will be a full cash taxpayer?

[Michael Kennedy, CFO at Antero Resources and Director]]

Yeah, you know, as we look out at least over the five years, we're not expected to be a full cash taxpayer. I think, as I mentioned in prepared remarks, do not expect to be a material cash taxpayer through at least 2028. We'll see after that. The bill overall was favorable for AM in the sense it reduced at least the next five years by about $150 million in terms of deferred taxes. A nice benefit of getting that bill passed.

[Ned Baramoff, Analyst at Wells Fargo]

Understood. Thank you.

[Michael Kennedy, CFO at Antero Resources and Director]]

Thank you, Ned.

[Operator]

Thank you. Our next questions come from the line of Wade Suki with Capital One. Please proceed with your questions.

[Wade Suki, Equity Analyst at Capital One]

Good morning, everyone. Thank you for taking my questions. I'm just wondering if you might be able to speak to sort of inorganic opportunities, what you're seeing in the asset market out there. Any color you could give would be great. Thank you.

[Michael Kennedy, CFO at Antero Resources and Director]]

Good question. We've had some bolt-on acquisitions that we've completed over the last several years. We'll continue to look at opportunities like that where there's bolt-on opportunities in and around our current asset base. Nothing immediate to talk about there, but we're always looking at opportunities there.

[Wade Suki, Equity Analyst at Capital One]

Great. Thank you so much. Appreciate it.

[Paul Rady, Chairman, CEO and President at Antero Resources and Antero Midstream]

Thanks, Wade.

[Justin Agnew, VP of Finance at Antero Midstream]

Thanks, Wade.

[Operator]

Thank you. This now concludes our question-and-answer session. I would now like to turn the floor back over to Justin Agnew for any closing comments.

[Justin Agnew, VP of Finance at Antero Midstream]

Thanks, operator, and thanks to everybody for joining today's conference call. Please feel free to reach out with any follow-up questions.

[Operator]

Thank you. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Participants

Executives

• Michael Kennedy, CFO
• Paul Rady, Chairman, CEO and President
• Brendan Krueger, CFO
• Justin Agnew, VP of Finance

Analysts

• Ned Baramoff, Analyst at Wells Fargo
• John Mackay, VP of Equity Research at Goldman Sachs
• Jeremy Tonet, Equity Research Analyst and Managing Director at JPMorgan
• Wade Suki, Equity Analyst at Capital One