Antero Midstream NYSE: AM reported first-quarter 2026 results that management said reflected continued execution on strategic initiatives, including closing what it described as the company’s largest acquisition to date and delivering year-over-year growth in both adjusted EBITDA and free cash flow despite adverse winter weather.
Management highlights acquisition and winter operations
CEO and President Michael Kennedy said the first quarter “was an exciting quarter” as the company “successfully navigated adverse winter weather conditions and delivered another quarter of EBITDA and free cash flow growth.” Kennedy also said the company closed its largest acquisition in February “ahead of our initial expectations.”
CFO Justin Agnew said the company took over operations of the newly acquired assets “right in the middle of winter storm Gerri” and emphasized operational performance during the storm. “We did not experience any outages during the storm, highlighting the benefit of integrated planning and communication between the upstream and midstream businesses,” Agnew said.
Kennedy pointed to “recent geopolitical events and data center announcements” as reinforcing what he characterized as “significant demand growth for U.S. energy, both domestic and abroad,” adding that Antero Midstream is focused on “enhancing connectivity within our operating areas, particularly in the dry gas area and the newly acquired assets.”
First-quarter financial results and cash flow
Agnew reported adjusted EBITDA of $288 million for the first quarter, up 5% year over year. He attributed the increase to higher “gathering, compression, and processing volumes.”
Agnew also detailed the company’s free cash flow generation and deployment:
- Free cash flow before dividends: $192 million
- Free cash flow after dividends: $85 million, an 8% year-over-year increase
- Uses of cash flow: financing “a portion of the acquisition” and “opportunistically repurchase shares on the open market”
Despite what Agnew described as “a $1.1 billion acquisition and share repurchases,” he said the company ended the quarter with leverage “in the low three times range” and “over $800 million of liquidity.”
Looking ahead, Agnew said the company expects capital expenditures to rise over the next few quarters as construction activity picks up seasonally, “in line with our full year budget.” He added that the company expects “gradual EBITDA growth throughout the year,” driven by “increasing gathering and freshwater delivery volumes.” Agnew said this profile is expected to result in “declining leverage throughout the year towards 3.0 times at year-end 2026,” consistent with the company’s long-term target.
Agnew said the company remains on track to meet its 2026 guidance, which he said “remains unchanged.”
Growth projects: dry gas compression and water system integration
Kennedy outlined several operational initiatives underway in 2026. He said the company commissioned a dry gas compression expansion at the end of the first quarter, describing it as supporting “our first dry gas Marcellus pad in over a decade.” He added that the station “utilized relocated and repurposed units.”
In addition, Kennedy said Antero Midstream began “initial water system integration efforts” during the first quarter. The company is investing to connect its water system to the acquired water system, which Kennedy said is “on track to be completed by year-end” and is expected to allow Antero Midstream to “begin servicing completions on the acquired assets in 2027.”
On activity levels, Kennedy said there were “currently three rigs running on AM dedicated acreage,” with one on the rich gas system, one on the dry gas system, and one on the acquired blended system. He said the development program is “balanced and consistent,” is expected to deliver “low-cost volume growth,” and is expected to drive “high single-digit EBITDA growth for the foreseeable future.”
Q&A: demand opportunities, timelines, and integration capital
During the Q&A session, Goldman Sachs analyst John Mackay asked about potential opportunity for the company from in-basin demand projects, including data center-related developments. Kennedy said Antero Midstream is involved in discussions given the infrastructure needs of such projects.
“AM is participating in all of those ’cause the vast majority of these need some infrastructure,” Kennedy said, citing laterals off existing pipe as well as water and other buildouts. He described the company as “the industrial builder of Northern West Virginia,” pointing to its experience building gathering, compression, processing, and water systems and emphasizing integrated development with Antero Resources.
Asked about timeline considerations for supporting a larger project, Kennedy said the projects being discussed are mainly in-state, so timelines “wouldn’t be that long,” and he characterized the build cycle as “year 1, 2, 3, not five years out.”
Mackay also asked how Antero Midstream’s high single-digit growth outlook relates to upstream activity. Kennedy said the high single-digit EBITDA growth is expected “off the base business,” adding that it comes “just from integrating the water system in 2027” and “just servicing” Antero Resources from a water perspective. He added that if Antero Resources executes on a program with “three rigs, two completions,” and completes wells rather than building drilled-but-uncompleted inventory, Antero Midstream could see EBITDA growth “in excess of that high single-digit” in 2027 and 2028.
UBS analyst Ivan Scotto asked about capital requirements to fully integrate the acquired HG assets and progress to date. Kennedy estimated the cost at “$25 million,” and said the process was “probably at halfway through.” He said the water system work started in the first quarter and “that’ll be done by year-end.” He also said the gathering system was “almost all already fully integrated,” adding, “I think it was $5 million to connect that,” and that the work is “really around the water.”
Scotto also asked where management sees the most opportunity for incremental returns. Kennedy pointed to “data center, local power projects,” while also stating that the base business delivers strong returns. “Our base business delivers, you know, very high rates return,” Kennedy said, adding that it is “in the high teens, 20% return on invested capital on the base,” and that the company believes incremental returns will come from building off existing infrastructure and its relationship with Antero Resources.
Management concluded the call without additional questions.
About Antero Midstream NYSE: AM
Antero Midstream Corporation is a publicly traded midstream service provider that was established in 2014 as a spin-off from Antero Resources. Headquartered in Denver, Colorado, the company owns, operates and develops midstream infrastructure to support the gathering, compression, processing, transportation and storage of natural gas, natural gas liquids (NGLs) and crude oil. Antero Midstream plays a critical role in connecting upstream production in the Appalachian Basin to end-market pipelines and processing facilities.
The company's core operations include a network of gathering pipelines and compression stations that serve the Marcellus and Utica shale formations across West Virginia, Pennsylvania and Ohio.
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