Antero Midstream NYSE: AM reported record adjusted EBITDA in the second quarter of 2026, supported by higher gathering volumes and the first full-quarter contribution from its recently acquired HG Midstream assets. Management also outlined plans to expand its intrastate pipeline network in West Virginia as it seeks to capture anticipated regional demand growth from power generation and data center development.
Chief Executive Officer and President Michael Kennedy said the company gathered more than 4.1 billion cubic feet per day of natural gas during the quarter, nearly 20% higher than a year earlier. He attributed the increase to the successful integration of the HG Midstream assets.
“This increased scale, premier footprint, and strong balance sheet positions Antero Midstream to capture the abundant opportunities that are beginning to materialize in the region,” Kennedy said.
Record EBITDA and Free Cash Flow
Chief Financial Officer Justin Agnew said second-quarter adjusted EBITDA reached a company record of $289 million, up 2% from the prior-year period, driven by increased gathering volumes. The company expects high-single-digit sequential EBITDA growth in the third quarter as volumes rise, keeping it on track to meet its full-year EBITDA guidance.
Antero Midstream invested $47 million of capital during the quarter and generated $80 million of free cash flow after dividends. Agnew said the quarter marked the company’s 12th consecutive quarter of positive free cash flow after dividends.
The company also received more than $370 million in damages and interest from Veolia in July. On a pro forma basis for those proceeds, Antero Midstream’s leverage was 2.8 times as of June 30, below its target of three times.
Agnew said the proceeds, along with cash on hand and unused credit-facility capacity, position the company to call its nearest-term 2028 debt maturity at par. The company would replace that debt with lower-cost, prepayable borrowings under its credit facility, leaving no near-term maturities while retaining significant liquidity, he said.
East Side Express Pipeline Plans
Management highlighted the start of construction on East Side Express, Antero Midstream’s first intrastate regional pipeline. Kennedy described the project as a large-diameter, east-to-west pipeline intended to improve connectivity between the company’s dry-gas gathering system and downstream markets.
Kennedy said the project is expected to require $200 million to $300 million of capital investment over the next two to three years, or roughly $100 million annually. The pipeline is expected to have capacity of 1.5 billion to 2 billion cubic feet per day and seven interconnects with long-haul pipelines.
Antero Resources will underwrite East Side Express through its acreage dedication and development plans, Kennedy said. The project also could create opportunities to serve third-party volumes and access multiple downstream pipelines.
Construction and phased deployment are expected to extend into a 2028-to-2029 timeframe. Kennedy said additional infrastructure projects could overlap with East Side Express beginning in 2027, though not in 2026.
West Virginia Opportunity Set
Kennedy said Antero Midstream is evaluating several billion dollars of potential infrastructure investments in West Virginia, with a project backlog of about 15 opportunities. The company intends to be selective, focusing on near-term projects that are actionable, accretive to free cash flow and capable of producing attractive returns.
He said the opportunities include regional pipelines and laterals serving proposed gas-fired power plants and data centers. Kennedy cited a planned 2-gigawatt combined-cycle power plant in Doddridge County, West Virginia, that would be accessed by Antero Midstream’s joint-venture pipeline.
While some projects could involve third parties, Kennedy said Antero Resources is likely to be the supplier for most of the potential developments. About half of the projects on the company’s current list involve Antero Resources, he said.
“We have 1 million acres dedicated to us from AR,” Kennedy said. “We have all these demand projects and power plants within that acreage or close to it.”
Management also discussed the company’s water infrastructure. Kennedy said Antero Resources benefits from a closed-loop water system that provides freshwater distribution and produced-water disposal and reuse. Antero Midstream is connecting the HG water system, a project that management said is expected to support high-single-digit EBITDA growth in 2027.
Production and Volume Outlook
Kennedy said early results from Antero Resources’ return to the dry-gas Marcellus were encouraging. According to the company’s presentation, estimated ultimate recoveries from the new development area were more than 60% higher than offset wells completed when the area was previously developed more than a decade ago.
He said the results reflect productivity gains from enhanced completion designs and support the long-term resource base underlying Antero Midstream’s growth outlook.
Addressing potential production curtailments by Antero Resources to better align output with gas prices, Kennedy said the expected impact on Antero Midstream would not be material. He noted that the company gathered 4.1 billion cubic feet per day during the quarter and characterized the potential reduction as too small to “move the needle” for the midstream business.
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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