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(1) Business and Organization
Antero Midstream Partners LP (the “Partnership”) is a growth-oriented master limited partnership formed by Antero Resources Corporation (“Antero Resources”) to own, operate and develop midstream energy infrastructure primarily to service Antero Resources’ increasing production and completion activity in the Appalachian Basin’s Marcellus Shale and Utica Shale located in West Virginia and Ohio. The Partnership’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants, and water handling and treatment assets, through which the Partnership and its affiliates provide midstream services to Antero Resources under long-term, fixed-fee contracts. The Partnership’s consolidated financial statements as of December 31, 2017, include the accounts of the Partnership, Antero Midstream LLC (“Midstream Operating”), Antero Water LLC (“Antero Water”), Antero Treatment LLC (“Antero Treatment”), and Antero Midstream Finance Corporation (“Finance Corp”), all of which are entities under common control.
On September 23, 2015, Antero Resources contributed (the “Water Acquisition”) (i) all of the outstanding limited liability company interests of Antero Water to the Partnership and (ii) all of the assets, contracts, rights, permits and properties owned or leased by Antero Resources and used primarily in connection with the construction, ownership, operation, use or maintenance of Antero Resources’ advanced wastewater treatment complex in Doddridge County, West Virginia, to Antero Treatment (collectively, (i) and (ii) are referred to herein as the “Contributed Assets”). Our results for periods prior to September 23, 2015 have been recast to include the historical results of Antero Water because the transaction was between entities under common control. Antero Water’s operations prior to the Water Acquisition consisted entirely of fresh water delivery operations.
References in these financial statements to “Predecessor,” “we,” “our,” “us” or like terms, when referring to periods prior to November 10, 2014, refer to Antero Resources’ gathering, compression and water assets, the Partnership’s predecessor for accounting purposes. References to “the Partnership,” “we,” “our,” “us” or like terms, when referring to periods between November 10, 2014 and September 23, 2015 refer to the Partnership’s gathering and compression assets and Antero Resources’ water handling and treatment assets. References to “the Partnership,” “we,” “our,” “us” or like terms, when referring to periods since September 23, 2015 or when used in the present tense or prospectively, refer to the Partnership.
The Partnership’s gathering and compression assets consist of 8-, 12-, 16-, 20-, 24-, and 30-inch high and low pressure gathering pipelines, compressor stations, and processing and fractionation plants that collect and process natural gas, NGLs and oil from Antero Resources’ wells in West Virginia and Ohio. The Partnership’s water handling and treatment assets include two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs as well as several regional waterways and other fluid handling assets which includes high rate transfer, wastewater transportation, disposal, and treatment.
The Partnership also has a 15% equity interest in the gathering system of Stonewall Gas Gathering LLC (“Stonewall”) and a 50% equity interest in the Joint Venture to develop processing and fractionation assets with MarkWest. See Note 11 – Equity Method Investments.
The Partnership’s financial statements are consolidated with the financial statements of Antero Resources (NYSE: AR), our primary beneficiary, for financial reporting purposes.
On April 6, 2017, in connection with its initial public offering, Antero Resources Midstream Management LLC (“ARMM”) formed Antero Midstream Partners GP LLC (“AMP GP” or our “general partner”), a Delaware limited liability company, as a wholly owned subsidiary, and, on April 11, 2017, assigned to AMP GP the general partner interest in us. Concurrent with the assignment, AMP GP was admitted as the Partnership’s sole general partner and ARMM ceased to be our general partner.
On May 9, 2017, ARMM closed its initial public offering. In connection with the offering, ARMM was converted into a Delaware limited partnership, and changed its name to Antero Midstream GP LP (“AMGP”).
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(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, these statements include all adjustments considered necessary for a fair presentation of the Partnership’s financial position as of December 31, 2016 and 2017, and the results of our operations and our cash flows for the years ended December 31, 2015, 2016, and 2017. The combined consolidated statements of operations and comprehensive income, partners’ capital, and cash flows for 2015 have been prepared on a combined basis of accounting. The Partnership has no items of other comprehensive income or loss; therefore, net income is identical to comprehensive income.
Certain costs of doing business incurred by Antero Resources on our behalf have been reflected in the accompanying consolidated financial statements. These costs include general and administrative expenses attributed to us by Antero Resources in exchange for:
business services, such as payroll, accounts payable and facilities management;
corporate services, such as finance and accounting, legal, human resources, investor relations and public and regulatory policy; and
employee compensation, including equity‑based compensation.
Transactions between us and Antero Resources have been identified in the consolidated financial statements (see Note 3 – Transactions with Affiliates).
As of the date these consolidated financial statements were filed with the SEC, we completed our evaluation of potential subsequent events for disclosure and no items requiring disclosure were identified, except the declaration of a cash distribution to unitholders, as described in Note 7 – Partnership Equity and Distributions.
(b)Revenue Recognition
We provide gathering and compression and water handling and treatment services under fee-based contracts primarily based on throughput or at cost plus a margin. Under these arrangements, we receive fees for gathering oil and gas products, compression services, and water handling and treatment services. The revenue we earn from these arrangements is directly related to (1) in the case of natural gas gathering and compression, the volumes of metered natural gas that we gather, compress and deliver to natural gas compression sites or other transmission delivery points, (2) in the case of oil gathering, the volumes of metered oil that we gather and deliver to other transmission delivery points, (3) in the case of fresh water services, the quantities of fresh water delivered to our customers for use in their well completion operations, (4) in the case of wastewater treatment services, the quantities of wastewater treated for our customers, or (5) in the case of flowback and produced water, the third party out-of-pocket costs plus 3%. We recognize revenue when all of the following criteria are met: (1) persuasive evidence of an agreement exists, (2) services have been rendered, (3) prices are fixed or determinable and (4) collectability is reasonably assured.
(c)Use of Estimates
The preparation of the consolidated financial statements and notes in conformity with GAAP requires that management formulate estimates and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities. Items subject to estimates and assumptions include the useful lives of property and equipment and valuation of accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.
(d)Cash and Cash Equivalents
Prior to September 23, 2015 Antero Water was owned and funded by Antero Resources. Net amounts funded by Antero Resources are reflected as “Deemed distribution to Antero Resources, net” on the accompanying Statements of Consolidated Cash Flows.
We consider all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.
(e)Property and Equipment
Property and equipment primarily consists of gathering pipelines, compressor stations and fresh water delivery pipelines and facilities stated at historical cost less accumulated depreciation. We capitalize construction-related direct labor and material costs. We also capitalize interest on capital costs during the construction phase of the water treatment facility, currently undergoing testing and commissioning. We capitalized interest of $4 million and $12 million for the years ended December 31, 2016 and 2017, respectively. Maintenance and repair costs are expensed as incurred.
Depreciation is computed using the straight-line method over the estimated useful lives and salvage values of assets. The depreciation of fixed assets recorded under capital lease agreements is included in depreciation expense. Uncertainties that may impact these estimates of useful lives include, among others, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions, and supply and demand for our services in the areas in which we operate. When assets are placed into service, management makes estimates with respect to useful lives and salvage values that management believes are reasonable. However, subsequent events could cause a change in estimates, thereby impacting future depreciation amounts.
Our investment in property and equipment for the periods presented is as follows (in thousands):
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Estimated |
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December 31, |
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useful lives |
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2016 |
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2017 |
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Land |
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n/a |
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$ |
11,338 |
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15,382 |
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Fresh water surface pipelines and equipment |
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5 years |
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39,562 |
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46,139 |
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Above ground storage tanks |
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10 years |
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4,301 |
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4,301 |
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Fresh water permanent buried pipelines and equipment |
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20 years |
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443,453 |
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472,810 |
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Gathering systems and facilities |
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20 years |
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1,551,771 |
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1,781,386 |
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Construction-in-progress |
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n/a |
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400,096 |
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654,904 |
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Total property and equipment |
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2,450,521 |
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2,974,922 |
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Less accumulated depreciation |
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(254,642) |
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(369,320) |
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Property and equipment, net |
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$ |
2,195,879 |
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2,605,602 |
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(f)Impairment of Long‑Lived Assets
We evaluate our long‑lived assets for impairment when events or changes in circumstances indicate that the related carrying values of the assets may not be recoverable. Generally, the basis for making such assessments are undiscounted future cash flows projections for the asset group being assessed. If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to the estimated fair value, which are based on discounted future cash flows using assumptions as to revenues, costs and discount rates typical of third party market participants, which is a Level 3 fair value measurement.
During the year ended December 31, 2017, we recorded a $23.4 million impairment charge for the carrying value of property and equipment related to condensate gathering lines which Antero Resources no longer uses. These lines were part of our gathering and processing segment.
(g)Asset Retirement Obligations
We are under no legal obligations, neither contractually nor under the doctrine of promissory estoppel, to restore or dismantle our gathering pipelines, compressor stations, water delivery pipelines and water treatment facility upon abandonment. Our gathering pipelines, compressor stations and fresh water delivery pipelines and facilities have an indeterminate life, if properly maintained. Accordingly, we are not able to make a reasonable estimate of when future dismantlement and removal dates of our pipelines, compressor stations and facilities will occur. It has been determined by our operational management team that abandoning all other ancillary equipment, outside of the assets stated above, would require minimal costs. For the reasons stated above, we have not recorded asset retirement obligations at December 31, 2016 or 2017.
(h)Litigation and Other Contingencies
An accrual is recorded for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. We regularly review contingencies to determine the adequacy of our accruals and related disclosures. The ultimate amount of losses, if any, may differ from these estimates.
We accrue losses associated with environmental obligations when such losses are probable and can be reasonably estimated. Accruals for estimated environmental losses are recognized no later than at the time a remediation feasibility study, or an evaluation of response options, is complete. These accruals are adjusted as additional information becomes available or as circumstances change. Future environmental expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded separately as assets at their undiscounted value when receipt of such recoveries is probable.
As of December 31, 2016 and 2017, we have no recorded liabilities for litigation, environmental, or other contingencies.
(i)Equity‑Based Compensation
Our consolidated financial statements reflect various equity-based compensation awards granted by Antero Resources, as well as compensation expense associated with our own plan. These awards include profits interests awards, restricted stock, stock options, restricted units, and phantom units. We recognized expense in each period for an amount allocated from Antero Resources, with the offset included in partners’ capital. See Note 3—Transactions with Affiliates for additional information regarding Antero Resources’ allocation of expenses to us.
In connection with our Initial Public Offering (“IPO”), the Antero Midstream Partners LP Long-Term Incentive Plan (“Midstream LTIP”) was adopted, pursuant to which certain non-employee directors of our general partner and certain officers, employees and consultants of our general partner and its affiliates are eligible to receive awards representing equity interests in the Partnership. An aggregate of 10,000,000 common units may be delivered pursuant to awards under the Midstream LTIP, subject to customary adjustments. For accounting purposes, these units are treated as if they are distributed from us to Antero Resources. Antero Resources recognizes compensation expense for the units awarded to its employees and a portion of that expense is allocated to us. See Note 6—Equity-Based Compensation.
(j)Income Taxes
Our consolidated financial statements do not include a provision for income taxes as we are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its distributive share of our items of income, gain, loss, or deduction.
(k)Fair Value Measures
The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long‑lived assets). The fair value is the price that we estimate would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize inputs to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs. Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
The carrying values on our balance sheet of our cash and cash equivalents, accounts receivable—Antero Resources, accounts receivable—third party, prepaid expenses, other assets, accounts payable, accounts payable—Antero Resources, accrued liabilities, other current liabilities, other liabilities and the revolving credit facility approximate fair values due to their short-term maturities.
(l)Investments in Unconsolidated Entities
The Partnership uses the equity method to account for its investments in companies if the investment provides the Partnership with the ability to exercise significant influence over, but not control, the operating and financial policies of the investee. The Partnership’s consolidated net income includes the Partnership’s proportionate share of the net income or loss of such companies. The Partnership’s judgment regarding the level of influence over each equity method investee includes considering key factors such as the Partnership’s ownership interest, representation on the board of directors and participation in policy-making decisions of the investee and material intercompany transactions. See Note 11–Equity Method Investments.
(m)Recently Adopted Accounting Pronouncement
On August 26, 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which removes diversity in practice for how certain cash receipts and payments are presented and classified in the statement of cash flows, including the presentation of distributions received from equity method investees. We elected to early adopt the standard during 2017.
As permitted by this standard we made an accounting policy election to account for distributions received from equity method investees under the “nature of the distribution” approach. Under the nature of the distribution approach, distributions received from equity method investees are classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities). No changes were necessary to our historical financial statements as a result of adopting ASU No. 2016-15.
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(3) Transactions with Affiliates
(a)Revenues
All revenues earned, except revenues earned from third parties, were earned from Antero Resources, under various agreements for gathering and compression, water handling and treatment services and seconded employees.
(b)Accounts receivable—Antero Resources, and Accounts payable—Antero Resources
Accounts receivable—Antero Resources represents amounts due from Antero Resources, primarily related to gathering and compression services and water handling and treatment services. Accounts payable—Antero Resources represents amounts due to Antero Resources for general and administrative and other costs.
(c)Allocation of Costs
The employees supporting our operations are employees of Antero Resources. Direct operating expense includes allocated costs of $3.0 million, $4.0 million and $6.4 million during the years ended December 31, 2015, 2016, and 2017, respectively, related to labor charges for Antero Resources employees associated with the operation of our assets. General and administrative expense includes allocated costs of $44.2 million, $49.6 million and $54.1 million during the years ended December 31, 2015, 2016, and 2017, respectively. These costs relate to: (i) various business services, including payroll processing, accounts payable processing and facilities management, (ii) various corporate services, including legal, accounting, treasury, information technology and human resources and (iii) compensation, including equity-based compensation (see Note 6—Equity-Based Compensation for more information). These expenses are charged or allocated to us based on the nature of the expenses and are allocated based on a combination of our proportionate share of gross property and equipment, capital expenditures and labor costs, as applicable. We reimburse Antero Resources directly for all general and administrative costs allocated to us, with the exception of noncash equity compensation allocated to the Partnership for awards issued under the Antero Resources long-term incentive plan or the Midstream LTIP.
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(4) Long‑term Debt
Long-term debt was as follows at December 31, 2016 and 2017 (in thousands):
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December 31, |
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2016 |
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2017 |
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Credit Facility (a) |
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$ |
210,000 |
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555,000 |
5.375% senior notes due 2024 (b) |
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650,000 |
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650,000 |
Net unamortized debt issuance costs |
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(10,086) |
|
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(9,000) |
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$ |
849,914 |
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1,196,000 |
(a)Revolving Credit Facility
On October 26, 2017, we entered into a restated and amended senior revolving credit facility. The facility was amended to include a fall away covenants and lower interest rates that is triggered if and when we are assigned an investment grade credit rating by either Standard and Poor’s or Moody’s.
Lender commitments under our new facility remained at $1.5 billion. The maturity date of the facility was extended from November 2019 to October 26, 2022. At December 31, 2017, we had borrowings of $555 million and no letters of credit outstanding under the Credit Facility. Under the Credit Facility, “Investment Grade Period” is a period that, as long as no event of default has occurred and the Partnership is in pro forma compliance with the financial covenants under the Credit Facility, commences when the Partnership elects to give notice to the Administrative Agent that the Partnership has received at least one of either (i) a BBB- or better rating from Standard and Poor’s or (ii) a Baa3 or better from Moody’s (provided that the non-investment grade rating from the other rating agency is at least either Ba1 if Moody’s or BB+ if Standard and Poor’s (an “Investment Grade Rating”)). An Investment Grade Period can end at the Partnership’s election.
During a period that is not an Investment Grade Period, the Credit Facility is ratably secured by mortgages on substantially all of our properties, including the properties of our subsidiaries, and guarantees from our subsidiaries. During an Investment Grade Period, the liens securing the obligations thereunder shall be automatically released (subject to the provisions of the Credit Facility).
The revolving credit facility contains certain covenants including restrictions on indebtedness, and requirements with respect to leverage and interest coverage ratios; provided, however, that during an Investment Grade Period, such covenants become less restrictive on the Partnership. The revolving credit facility permits distributions to the holders of our equity interests in accordance with the cash distribution policy adopted by the board of directors of our general partner in connection with the Partnership’s initial public offering, provided that no event of default exists or would be caused thereby, and only to the extent permitted by our organizational documents. The Partnership was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2016 and 2017.
Principal amounts borrowed are payable on the maturity date with such borrowings bearing interest that is payable quarterly or, in the case of Eurodollar Rate Loans, at the end of the applicable interest period if shorter than six months. Interest is payable at a variable rate based on LIBOR or the base rate, determined by election at the time of borrowing. Interest at the time of borrowing is determined with reference to (i) during any period that is not an Investment Grade Period, the Partnership’s then-current leverage ratio and (ii) during an Investment Grade Period, with reference to the rating given to the Partnership by Moody’s or Standard and Poor’s. During an Investment Grade Period, the applicable margin rates are reduced by 25 basis points. Commitment fees on the unused portion of the revolving credit facility are due quarterly at rates ranging from 0.25% to 0.375% based on the leverage ratio, during a period that is not an Investment Grade Period, and 0.175% to 0.375% based on the Partnership’s rating during an Investment Grade Period.
At December 31, 2016 and 2017, we had borrowings under the Credit Facility of $210 million and $555 million, respectively, with a weighted average interest rate of 2.23% and 2.81%, respectively. No letters of credit were outstanding at December 31, 2016 or 2017 under the Credit Facility.
(b)5.375% Senior Notes Due 2024
On September 13, 2016, the Partnership and its wholly-owned subsidiary, Finance Corp, as co-issuers, issued $650 million in aggregate principal amount of 5.375% senior notes due September 15, 2024 (the “2024 Notes”) at par. The 2024 Notes are unsecured and effectively subordinated to the revolving credit facility to the extent of the value of the collateral securing the revolving credit facility. The 2024 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the Partnership’s wholly-owned subsidiaries (other than Finance Corp) and certain of its future restricted subsidiaries. Interest on the 2024 Notes is payable on March 15 and September 15 of each year. The Partnership may redeem all or part of the 2024 Notes at any time on or after September 15, 2019 at redemption prices ranging from 104.031% on or after September 15, 2019 or 100.00% on or after September 15, 2022. In addition, prior to September 15, 2019, the Partnership may redeem up to 35% of the aggregate principal amount of the 2024 Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 105.375% of the principal amount of the 2024 Notes, plus accrued and unpaid interest. At any time prior to September 15, 2019, the Partnership may also redeem the 2024 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2024 Notes plus “make-whole” premium and accrued and unpaid interest. If the Partnership undergoes a change of control, the holders of the 2024 Notes will have the right to require the Partnership to repurchase all or a portion of the notes at a price equal to 101% of the principal amount of the 2024 Notes, plus accrued and unpaid interest.
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(5) Accrued Liabilities
Accrued liabilities as of December 31, 2016 and 2017 consisted of the following items (in thousands):
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December 31, |
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2016 |
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2017 |
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Capital expenditures |
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$ |
35,608 |
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|
63,286 |
Operating expenses |
|
|
14,582 |
|
|
29,905 |
Interest expense |
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10,613 |
|
|
10,508 |
Other |
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|
838 |
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2,307 |
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$ |
61,641 |
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106,006 |
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(6) Equity-Based Compensation
Our general and administrative expenses include equity-based compensation costs allocated to us by Antero Resources for grants made pursuant to Antero Resources’ long-term incentive plan and the Midstream LTIP. Equity‑based compensation expense allocated to us was $22.5 million, $26.0 million and $27.3 million for the years ended December 31, 2015, 2016 and 2017, respectively. These expenses were allocated to us based on our proportionate share of Antero Resources’ labor costs. Antero Resources has unamortized expense totaling approximately $112.0 million as of December 31, 2017 related to its various equity-based compensation plans, which includes the Midstream LTIP. A portion of this will be allocated to us as it is amortized over the remaining service period of the related awards. The Partnership does not reimburse Antero Resources for noncash equity compensation allocated to it for awards issued under the Antero Resources long-term incentive plan or the Midstream LTIP.
Midstream LTIP
Our general partner manages our operations and activities and Antero Resources employs the personnel who provide support to our operations. In connection with the IPO, our general partner adopted the Midstream LTIP, pursuant to which non‑employee directors of our general partner and certain officers, employees and consultants of our general partner and its affiliates are eligible to receive awards representing ownership interests in the Partnership. An aggregate of 10,000,000 common units may be delivered pursuant to awards under the Midstream LTIP, subject to customary adjustments. A total of 7,864,621 common units are available for future grant under the Midstream LTIP as of December 31, 2017. Restricted units and phantom units granted under the Midstream LTIP vest subject to the satisfaction of service requirements, upon the completion of which common units in the Partnership are delivered to the holder of the restricted units or phantom units. Compensation related to each restricted unit and phantom unit award is recognized on a straight-line basis over the requisite service period of the entire award. The grant date fair values of these awards are determined based on the closing price of the Partnership’s common units on the date of grant. These units are accounted for as if they are distributed by the Partnership to Antero Resources. Antero Resources recognizes compensation expense for the units awarded and a portion of that expense is allocated to the Partnership. Antero Resources allocates equity-based compensation expense to the Partnership based on our proportionate share of Antero Resources’ labor costs. The Partnership’s portion of the equity-based compensation expense is included in general and administrative expenses, and recorded as a credit to the applicable classes of partners’ capital.
A summary of restricted unit and phantom unit awards activity during the year ended December 31, 2017 is as follows:
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|
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Weighted |
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Aggregate |
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||
|
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Number of |
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grant date |
|
intrinsic value |
|
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Total awarded and unvested—December 31, 2016 |
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1,331,961 |
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$ |
27.31 |
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$ |
41,131 |
|
Granted |
|
377,660 |
|
$ |
32.52 |
|
|
|
|
Vested |
|
(558,525) |
|
$ |
28.00 |
|
|
|
|
Forfeited |
|
(108,133) |
|
$ |
28.63 |
|
|
|
|
Total awarded and unvested—December 31, 2017 |
|
1,042,963 |
|
$ |
28.69 |
|
$ |
30,288 |
|
Intrinsic values are based on the closing price of the Partnership’s common units on the referenced dates. Midstream LTIP unamortized expense of $25.0 million at December 31, 2017 is expected to be recognized over a weighted average period of approximately 2.0 years and our proportionate share will be allocated to us as it is recognized. We paid $5.9 million in minimum statutory tax withholdings for restricted and phantom units that vested during 2017, which is included in the “Issuance of common units upon vesting of equity-based compensation awards, net of units withheld for income taxes” line item in the Consolidated Statements of Partners’ Capital.
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(7) Partnership Equity and Distributions
Our Minimum Quarterly Distribution
Our partnership agreement provides for a minimum quarterly distribution of $0.17 per unit for each quarter, or $0.68 per unit on an annualized basis.
If cash distributions to our unitholders exceed $0.1955 per common unit in any quarter, our unitholders and the holders of our incentive distribution rights (“IDRs”), will receive distributions according to the following percentage allocations:
|
|
Marginal Percentage |
|
||
|
|
Interest in |
|
||
|
|
Distributions |
|
||
Total Quarterly Distribution |
|
|
|
Holders of |
|
Target Amount |
|
Unitholders |
|
IDRs |
|
above $0.1955 up to $0.2125 |
|
85 |
% |
15 |
% |
above $0.2125 up to $0.2550 |
|
75 |
% |
25 |
% |
above $0.2550 |
|
50 |
% |
50 |
% |
General Partner Interest
Our general partner owns a non‑economic general partner interest in us, which does not entitle it to receive cash distributions. However, our general partner is under common control with the holder of the IDRs and may in the future own common units or other equity interests in us and will be entitled to receive distributions on any such interests.
Upon payment of the February 8, 2017 distribution to unitholders, the requirements for the conversion of all subordinated units were satisfied under our partnership agreement. As a result, effective February 9, 2017, the 75,940,957 subordinated units owned by Antero Resources were converted into common units on a one-for-one basis and now participate on terms equal with all other common units in distributions of available cash. The conversion did not impact the amount of the cash distributions paid by the Partnership or the total units outstanding, as shown on the “Conversion of subordinated units to common units” line item on our consolidated Statement of Partners’ Capital.
Cash Distributions
The board of directors of our general partner has declared a cash distribution of $0.365 per unit for the quarter ended December 31, 2017. The distribution was paid on February 13, 2018 to unitholders of record as of February 1, 2018.
The following table details the amount of quarterly distributions the Partnership paid for each of its partnership interests, with respect to the quarter indicated (in thousands, except per unit data):
|
|
|
|
|
|
Distributions |
|
|
|
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|
|
|
|
|
|
Limited Partners |
|
|
|
|
|
|
|
|
|
||||
Quarter |
|
Record Date |
|
Distribution Date |
|
Common |
|
Subordinated |
|
Holder of IDRs |
|
Total |
|
Distributions |
|||||
Q4 2015 |
|
February 15, 2016 |
|
February 29, 2016 |
|
$ |
22,048 |
|
|
16,708 |
|
|
969 |
|
|
39,725 |
|
$ |
0.2200 |
Q1 2016 |
|
May 11, 2016 |
|
May 25, 2016 |
|
|
23,556 |
|
|
17,846 |
|
|
1,850 |
|
|
43,252 |
|
|
0.2350 |
Q2 2016 |
|
August 10, 2016 |
|
August 24, 2016 |
|
|
25,059 |
|
|
18,985 |
|
|
2,731 |
|
|
46,775 |
|
|
0.2500 |
Q3 2016 |
|
November 10, 2016 |
|
November 24, 2016 |
|
|
26,901 |
|
|
20,124 |
|
|
4,820 |
|
|
51,845 |
|
|
0.2650 |
* |
|
November 12, 2016 |
|
November 18, 2016 |
|
|
849 |
|
|
— |
|
|
— |
|
|
849 |
|
|
* |
|
|
Total 2016 |
|
|
|
$ |
98,413 |
|
|
73,663 |
|
|
10,370 |
|
|
182,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2016 |
|
February 1, 2017 |
|
February 8, 2017 |
|
$ |
50,090 |
|
|
— |
|
|
7,543 |
|
|
57,633 |
|
$ |
0.2800 |
* |
|
April 21, 2017 |
|
April 30, 2017 |
|
|
75 |
|
|
— |
|
|
— |
|
|
75 |
|
|
* |
Q1 2017 |
|
May 3, 2017 |
|
May 10, 2017 |
|
|
55,753 |
|
|
— |
|
|
11,553 |
|
|
67,306 |
|
|
0.3000 |
Q2 2017 |
|
August 3, 2017 |
|
August 16, 2017 |
|
|
59,695 |
|
|
— |
|
|
15,328 |
|
|
75,023 |
|
|
0.3200 |
Q3 2017 |
|
November 1, 2017 |
|
November 16, 2017 |
|
|
63,454 |
|
|
— |
|
|
19,067 |
|
|
82,521 |
|
|
0.3400 |
* |
|
November 12, 2017 |
|
November 17, 2017 |
|
|
1,392 |
|
|
— |
|
|
— |
|
|
1,392 |
|
|
* |
|
|
Total 2017 |
|
|
|
$ |
230,459 |
|
|
- |
|
|
53,491 |
|
|
283,950 |
|
|
|
*Distribution equivalent rights on limited partner common units that vested under the Midstream LTIP.
|
(8) Net Income Per Limited Partner Unit
The Partnership’s net income is attributed to the general partner and limited partners in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to the general partner. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions, by the weighted average number of outstanding limited partner units during the period.
We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.
We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are attributed to the general partner and limited partners in accordance with the contractual terms of the partnership agreement under the two-class method.
Basic earnings per unit is computed by dividing net earnings attributable to unitholders by the weighted average number of units outstanding during each period. Diluted net income per limited partner unit reflects the potential dilution that could occur if agreements to issue common units, such as awards under long-term incentive plans, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method. Earnings per common unit assuming dilution for the year ended December 31, 2017 was calculated based on the diluted weighted average number of units outstanding of 186,082,898, including 453,035 dilutive units attributable to non-vested restricted unit and phantom unit awards. For the year ended December 31, 2017, there were no non-vested phantom unit and restricted unit awards that were anti-dilutive and therefore excluded from the calculation of diluted earnings per unit.
The Partnership’s calculation of net income per unit for the periods indicated is as follows (in thousands, except per unit data):
|
|
Year Ended December 31, |
|||||||
|
|
2015 |
|
2016 |
|
2017 |
|||
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
159,105 |
|
|
236,703 |
|
|
307,315 |
Less: |
|
|
|
|
|
|
|
|
|
Pre-Water Acquisition net income attributed to parent |
|
|
(40,193) |
|
|
— |
|
|
— |
Net income attributable to incentive distribution rights |
|
|
(1,264) |
|
|
(16,944) |
|
|
(69,720) |
Limited partner interest in net income |
|
$ |
117,648 |
|
|
219,759 |
|
|
237,595 |
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.74 |
|
|
1.24 |
|
|
1.28 |
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units outstanding - basic |
|
|
158,479 |
|
|
176,647 |
|
|
185,630 |
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units outstanding - diluted |
|
|
158,527 |
|
|
176,801 |
|
|
186,083 |
|
(9) Sale of Common Units
During the third quarter of 2016, the Partnership entered into an Equity Distribution Agreement (the “Distribution Agreement”), pursuant to which the Partnership may sell, from time to time through brokers acting as its sales agents, common units representing distribution limited partner interest having an aggregate offering price of up to $250 million. The program is registered with the Securities and Exchange Commission (the “SEC”) on an effective registration statement on Form S-3. Sales of the common units may be made by means of ordinary brokers’ transactions on the New York Stock Exchange, at market prices, in block transactions, or as otherwise agreed to between the Partnership and the sales agents. Proceeds are expected to be used for general partnership purposes, which may include repayment of indebtedness and funding working capital or capital expenditures. The Partnership is under no obligation to offer and sell common units under the Distribution Agreement.
During the year ended December 31, 2017, the Partnership issued and sold 777,262 common units under the Distribution Agreement, resulting in net proceeds of $25.5 million, net of $0.6 million of compensation payable to the sales agents made during the period and $0.4 million of other offering costs. As of December 31, 2017, additional common units under the Distribution Agreement up to an aggregate sales price of $157.3 million were available for issuance.
In conjunction with the Joint Venture, on February 10, 2017 we issued 6,900,000 common units, including common units issued pursuant to the underwriters’ option to purchase additional common units, resulting in net proceeds of approximately $223 million (the “Offering”). We used the proceeds from the Offering to repay outstanding borrowings under our Credit Facility incurred to fund the investment in the Joint Venture, and for general partnership purposes.
|
(10) Fair Value Measurement
In connection with the Water Acquisition, we have agreed to pay Antero Resources (a) $125 million in cash if the Partnership delivers 176,295,000 barrels or more of fresh water during the period between January 1, 2017 and December 31, 2019 and (b) an additional $125 million in cash if the Partnership delivers 219,200,000 barrels or more of fresh water during the period between January 1, 2018 and December 31, 2020. This contingent consideration liability is valued based on Level 3 inputs related to expected average volumes and weighted average cost of capital.
The following table provides a reconciliation of changes in Level 3 financial liabilities measured at fair value on a recurring basis for the periods shown below (in thousands):
Contingent acquisition consideration - December 31, 2015 |
$ |
178,049 |
Accretion |
|
16,489 |
Contingent acquisition consideration - December 31, 2016 |
$ |
194,538 |
Accretion and change in fair value |
|
13,476 |
Contingent acquisition consideration - December 31, 2017 |
$ |
208,014 |
We account for contingent consideration in accordance with applicable accounting guidance pertaining to business combinations. We are contractually obligated to pay Antero Resources contingent consideration in connection with the Water Acquisition, and therefore recorded this contingent consideration liability at the time of the Water Acquisition. We update our assumptions each reporting period based on new developments and adjust such amounts to fair value based on revised assumptions, if applicable, until such consideration is satisfied through payment upon achievement of the specified objectives or it is eliminated upon failure to achieve the specified objectives.
As of December 31, 2017, we expect to pay the entire amount of the contingent consideration amounts in 2019 and 2020. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future milestone payments was based on the risk adjusted present value of the contingent consideration payout.
The carrying values of accounts receivable and accounts payable at December 31, 2016 and 2017 approximated fair value because of their short-term nature. The carrying value of the amounts under the revolving credit facility at December 31, 2016 and 2017 approximated fair value because the variable interest rates are reflective of current market conditions.
Based on Level 2 market data inputs, the fair value of the Partnership’s 2024 Notes was approximately $669.5 million at December 31, 2017.
|
(11)Equity Method Investments
In the second quarter of 2016, the Partnership exercised its option to purchase a 15% equity interest in Stonewall, which operates the 67-mile Stonewall pipeline on which Antero is an anchor shipper.
On February 6, 2017, we formed the Joint Venture to develop processing and fractionation assets in Appalachia with MarkWest, a wholly owned subsidiary of MPLX. We and MarkWest each own a 50% equity interest in the Joint Venture and MarkWest operates the Joint Venture assets. The Joint Venture assets consist of processing plants in West Virginia, and a one-third interest in a MarkWest fractionator in Ohio.
Our consolidated net income includes the Partnership’s proportionate share of the net income of the Joint Venture and Stonewall. When the Partnership records its proportionate share of net income, it increases equity income in the consolidated statements of operations and comprehensive income and the carrying value of that investment on its balance sheet. When distributions on its proportionate share of net income are received, they are recorded as reductions to the carrying value of the investment on the balance sheet. The Partnership uses the equity method of accounting to account for its investments in Stonewall and the Joint Venture because the Partnership exercises significant influence, but not control, over the entities. Our judgment regarding the level of influence over our equity investments includes considering key factors such as the Partnership’s ownership interest, representation on the board of directors and participation in policy-making decisions of Stonewall and the Joint Venture.
The following table is a reconciliation of our investments in these unconsolidated affiliates (in thousands):
|
|
|
|
MarkWest |
|
Total Investment in |
|
|
Stonewall |
|
Joint Venture |
|
Unconsolidated Affiliates |
Balance at December 31, 2015 |
$ |
— |
|
— |
|
— |
Initial investment |
|
45,044 |
|
— |
|
45,044 |
Additional investments |
|
30,472 |
|
— |
|
30,472 |
Equity in net income of unconsolidated affiliates |
|
485 |
|
— |
|
485 |
Distributions from unconsolidated affiliates |
|
(7,702) |
|
— |
|
(7,702) |
Balance at December 31, 2016 |
|
68,299 |
|
— |
|
68,299 |
Initial investment |
|
— |
|
153,770 |
|
153,770 |
Additional investments |
|
— |
|
81,234 |
|
81,234 |
Equity in net income of unconsolidated affiliates |
|
10,304 |
|
9,890 |
|
20,194 |
Distributions from unconsolidated affiliates |
|
(11,475) |
|
(8,720) |
|
(20,195) |
Balance at December 31, 2017 |
$ |
67,128 |
|
236,174 |
|
303,302 |
|
(12) Reporting Segments
The Partnership’s operations are located in the United States and are organized into two reporting segments: (1) gathering and processing and (2) water handling and treatment.
Gathering and Processing
The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in West Virginia and Ohio. The gathering and processing segment also includes income from processing and fractionation plants through our equity in the Joint Venture with MarkWest.
Water Handling and Treatment
The Partnership’s water handling and treatment segment includes two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs as well as several regional waterways. The segment also includes a wastewater treatment facility that is currently undergoing testing and commissioning. The water handling and treatment segment also includes other fluid handling services which includes, high rate transfer, wastewater transportation, disposal and treatment. See Note 2 – Summary of Significant Accounting Policies, Property and Equipment.
These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. We evaluate the performance of the Partnership’s business segments based on operating income. Interest expense is primarily managed and evaluated on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water |
|
|
|
|
|
|
|
Gathering and |
|
Handling and |
|
Consolidated |
|
|||
|
|
Processing |
|
Treatment |
|
Total |
|
|||
Year ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
230,210 |
|
|
155,954 |
|
|
386,164 |
|
Revenue - third-party |
|
|
382 |
|
|
778 |
|
|
1,160 |
|
Total revenues |
|
$ |
230,592 |
|
|
156,732 |
|
|
387,324 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
25,783 |
|
|
53,069 |
|
|
78,852 |
|
General and administrative (before equity-based compensation) |
|
|
22,608 |
|
|
6,128 |
|
|
28,736 |
|
Equity-based compensation |
|
|
17,840 |
|
|
4,630 |
|
|
22,470 |
|
Depreciation |
|
|
60,838 |
|
|
25,832 |
|
|
86,670 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
3,333 |
|
|
3,333 |
|
Total expenses |
|
|
127,069 |
|
|
92,992 |
|
|
220,061 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
103,523 |
|
|
63,740 |
|
|
167,263 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,428,796 |
|
|
551,236 |
|
|
1,980,032 |
|
Additions to property and equipment |
|
$ |
320,002 |
|
|
132,633 |
|
|
452,635 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
303,250 |
|
|
282,267 |
|
|
585,517 |
|
Revenue - third-party |
|
|
835 |
|
|
— |
|
|
835 |
|
Gain on sale of assets |
|
|
3,859 |
|
|
— |
|
|
3,859 |
|
Total revenues |
|
|
307,944 |
|
|
282,267 |
|
|
590,211 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
27,289 |
|
|
134,298 |
|
|
161,587 |
|
General and administrative (before equity-based compensation) |
|
|
20,118 |
|
|
7,996 |
|
|
28,114 |
|
Equity-based compensation |
|
|
19,714 |
|
|
6,335 |
|
|
26,049 |
|
Depreciation |
|
|
69,962 |
|
|
29,899 |
|
|
99,861 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
16,489 |
|
|
16,489 |
|
Total expenses |
|
|
137,083 |
|
|
195,017 |
|
|
332,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
170,861 |
|
|
87,250 |
|
|
258,111 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
$ |
485 |
|
|
— |
|
|
485 |
|
Total assets |
|
$ |
1,734,208 |
|
|
615,687 |
|
|
2,349,895 |
|
Additions to property and equipment |
|
$ |
228,100 |
|
|
188,220 |
|
|
416,320 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
396,202 |
|
|
376,031 |
|
|
772,233 |
|
Revenue - third-party |
|
|
264 |
|
|
— |
|
|
264 |
|
Total revenues |
|
|
396,466 |
|
|
376,031 |
|
|
772,497 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
39,251 |
|
|
193,287 |
|
|
232,538 |
|
General and administrative (before equity-based compensation) |
|
|
20,607 |
|
|
10,922 |
|
|
31,529 |
|
Equity-based compensation |
|
|
19,730 |
|
|
7,553 |
|
|
27,283 |
|
Impairment of property and equipment |
|
|
23,431 |
|
|
— |
|
|
23,431 |
|
Depreciation |
|
|
86,372 |
|
|
33,190 |
|
|
119,562 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
13,476 |
|
|
13,476 |
|
Total expenses |
|
|
189,391 |
|
|
258,428 |
|
|
447,819 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
207,075 |
|
|
117,603 |
|
|
324,678 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
$ |
20,194 |
|
|
— |
|
|
20,194 |
|
Total assets |
|
$ |
2,237,913 |
|
|
804,296 |
|
|
3,042,209 |
|
Additions to property and equipment |
|
$ |
346,217 |
|
|
195,162 |
|
|
541,379 |
|
|
(13) Quarterly Financial Information (Unaudited)
Our quarterly financial information for the years ended December 31, 2016 and 2017 is as follows (in thousands, except per unit data):
|
|
First |
|
Second |
|
Third |
|
Forth |
|
||||
|
|
quarter |
|
quarter |
|
quarter |
|
quarter |
|
||||
Year ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
136,072 |
|
|
136,810 |
|
|
150,475 |
|
|
166,854 |
|
Total operating expenses |
|
|
89,452 |
|
|
83,503 |
|
|
76,192 |
|
|
82,953 |
|
Operating income |
|
|
46,620 |
|
|
53,307 |
|
|
74,283 |
|
|
83,901 |
|
Net income |
|
|
42,916 |
|
|
49,912 |
|
|
70,524 |
|
|
73,351 |
|
Less: general partner's interest in net income |
|
|
(1,850) |
|
|
(2,731) |
|
|
(4,806) |
|
|
(7,557) |
|
Net income attributable to limited partner units |
|
$ |
41,066 |
|
|
47,181 |
|
|
65,718 |
|
|
65,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.23 |
|
|
0.27 |
|
|
0.37 |
|
|
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
174,770 |
|
|
193,766 |
|
|
193,629 |
|
|
210,332 |
|
Total operating expenses(1) |
|
|
93,073 |
|
|
101,199 |
|
|
110,458 |
|
|
143,089 |
|
Operating income |
|
|
81,697 |
|
|
92,567 |
|
|
83,171 |
|
|
67,243 |
|
Net income |
|
|
75,092 |
|
|
87,175 |
|
|
80,893 |
|
|
64,155 |
|
Less: general partner's interest in net income |
|
|
(11,553) |
|
|
(15,328) |
|
|
(19,067) |
|
|
(23,772) |
|
Net income attributable to limited partner units |
|
$ |
63,539 |
|
|
71,847 |
|
|
61,826 |
|
|
40,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.35 |
|
|
0.39 |
|
|
0.33 |
|
|
0.22 |
|
(1)Operating expenses in the fourth quarter of 2017 include $23 million of impairment on certain condensate gathering lines that Antero Resources no longer uses.
|
(a) Basis of Presentation
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, these statements include all adjustments considered necessary for a fair presentation of the Partnership’s financial position as of December 31, 2016 and 2017, and the results of our operations and our cash flows for the years ended December 31, 2015, 2016, and 2017. The combined consolidated statements of operations and comprehensive income, partners’ capital, and cash flows for 2015 have been prepared on a combined basis of accounting. The Partnership has no items of other comprehensive income or loss; therefore, net income is identical to comprehensive income.
Certain costs of doing business incurred by Antero Resources on our behalf have been reflected in the accompanying consolidated financial statements. These costs include general and administrative expenses attributed to us by Antero Resources in exchange for:
business services, such as payroll, accounts payable and facilities management;
corporate services, such as finance and accounting, legal, human resources, investor relations and public and regulatory policy; and
employee compensation, including equity‑based compensation.
Transactions between us and Antero Resources have been identified in the consolidated financial statements (see Note 3 – Transactions with Affiliates).
As of the date these consolidated financial statements were filed with the SEC, we completed our evaluation of potential subsequent events for disclosure and no items requiring disclosure were identified, except the declaration of a cash distribution to unitholders, as described in Note 7 – Partnership Equity and Distributions.
(b)Revenue Recognition
We provide gathering and compression and water handling and treatment services under fee-based contracts primarily based on throughput or at cost plus a margin. Under these arrangements, we receive fees for gathering oil and gas products, compression services, and water handling and treatment services. The revenue we earn from these arrangements is directly related to (1) in the case of natural gas gathering and compression, the volumes of metered natural gas that we gather, compress and deliver to natural gas compression sites or other transmission delivery points, (2) in the case of oil gathering, the volumes of metered oil that we gather and deliver to other transmission delivery points, (3) in the case of fresh water services, the quantities of fresh water delivered to our customers for use in their well completion operations, (4) in the case of wastewater treatment services, the quantities of wastewater treated for our customers, or (5) in the case of flowback and produced water, the third party out-of-pocket costs plus 3%. We recognize revenue when all of the following criteria are met: (1) persuasive evidence of an agreement exists, (2) services have been rendered, (3) prices are fixed or determinable and (4) collectability is reasonably assured.
(c)Use of Estimates
The preparation of the consolidated financial statements and notes in conformity with GAAP requires that management formulate estimates and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities. Items subject to estimates and assumptions include the useful lives of property and equipment and valuation of accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.
(d)Cash and Cash Equivalents
Prior to September 23, 2015 Antero Water was owned and funded by Antero Resources. Net amounts funded by Antero Resources are reflected as “Deemed distribution to Antero Resources, net” on the accompanying Statements of Consolidated Cash Flows.
We consider all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.
(e)Property and Equipment
Property and equipment primarily consists of gathering pipelines, compressor stations and fresh water delivery pipelines and facilities stated at historical cost less accumulated depreciation. We capitalize construction-related direct labor and material costs. We also capitalize interest on capital costs during the construction phase of the water treatment facility, currently undergoing testing and commissioning. We capitalized interest of $4 million and $12 million for the years ended December 31, 2016 and 2017, respectively. Maintenance and repair costs are expensed as incurred.
Depreciation is computed using the straight-line method over the estimated useful lives and salvage values of assets. The depreciation of fixed assets recorded under capital lease agreements is included in depreciation expense. Uncertainties that may impact these estimates of useful lives include, among others, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions, and supply and demand for our services in the areas in which we operate. When assets are placed into service, management makes estimates with respect to useful lives and salvage values that management believes are reasonable. However, subsequent events could cause a change in estimates, thereby impacting future depreciation amounts.
Our investment in property and equipment for the periods presented is as follows (in thousands):
|
|
Estimated |
|
December 31, |
|
||||
|
|
useful lives |
|
2016 |
|
2017 |
|
||
Land |
|
n/a |
|
$ |
11,338 |
|
|
15,382 |
|
Fresh water surface pipelines and equipment |
|
5 years |
|
|
39,562 |
|
|
46,139 |
|
Above ground storage tanks |
|
10 years |
|
|
4,301 |
|
|
4,301 |
|
Fresh water permanent buried pipelines and equipment |
|
20 years |
|
|
443,453 |
|
|
472,810 |
|
Gathering systems and facilities |
|
20 years |
|
|
1,551,771 |
|
|
1,781,386 |
|
Construction-in-progress |
|
n/a |
|
|
400,096 |
|
|
654,904 |
|
Total property and equipment |
|
|
|
|
2,450,521 |
|
|
2,974,922 |
|
Less accumulated depreciation |
|
|
|
|
(254,642) |
|
|
(369,320) |
|
Property and equipment, net |
|
|
|
$ |
2,195,879 |
|
|
2,605,602 |
|
(f)Impairment of Long‑Lived Assets
We evaluate our long‑lived assets for impairment when events or changes in circumstances indicate that the related carrying values of the assets may not be recoverable. Generally, the basis for making such assessments are undiscounted future cash flows projections for the asset group being assessed. If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to the estimated fair value, which are based on discounted future cash flows using assumptions as to revenues, costs and discount rates typical of third party market participants, which is a Level 3 fair value measurement.
During the year ended December 31, 2017, we recorded a $23.4 million impairment charge for the carrying value of property and equipment related to condensate gathering lines which Antero Resources no longer uses. These lines were part of our gathering and processing segment.
(g)Asset Retirement Obligations
We are under no legal obligations, neither contractually nor under the doctrine of promissory estoppel, to restore or dismantle our gathering pipelines, compressor stations, water delivery pipelines and water treatment facility upon abandonment. Our gathering pipelines, compressor stations and fresh water delivery pipelines and facilities have an indeterminate life, if properly maintained. Accordingly, we are not able to make a reasonable estimate of when future dismantlement and removal dates of our pipelines, compressor stations and facilities will occur. It has been determined by our operational management team that abandoning all other ancillary equipment, outside of the assets stated above, would require minimal costs. For the reasons stated above, we have not recorded asset retirement obligations at December 31, 2016 or 2017.
(h)Litigation and Other Contingencies
An accrual is recorded for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. We regularly review contingencies to determine the adequacy of our accruals and related disclosures. The ultimate amount of losses, if any, may differ from these estimates.
We accrue losses associated with environmental obligations when such losses are probable and can be reasonably estimated. Accruals for estimated environmental losses are recognized no later than at the time a remediation feasibility study, or an evaluation of response options, is complete. These accruals are adjusted as additional information becomes available or as circumstances change. Future environmental expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded separately as assets at their undiscounted value when receipt of such recoveries is probable.
As of December 31, 2016 and 2017, we have no recorded liabilities for litigation, environmental, or other contingencies.
(i)Equity‑Based Compensation
Our consolidated financial statements reflect various equity-based compensation awards granted by Antero Resources, as well as compensation expense associated with our own plan. These awards include profits interests awards, restricted stock, stock options, restricted units, and phantom units. We recognized expense in each period for an amount allocated from Antero Resources, with the offset included in partners’ capital. See Note 3—Transactions with Affiliates for additional information regarding Antero Resources’ allocation of expenses to us.
In connection with our Initial Public Offering (“IPO”), the Antero Midstream Partners LP Long-Term Incentive Plan (“Midstream LTIP”) was adopted, pursuant to which certain non-employee directors of our general partner and certain officers, employees and consultants of our general partner and its affiliates are eligible to receive awards representing equity interests in the Partnership. An aggregate of 10,000,000 common units may be delivered pursuant to awards under the Midstream LTIP, subject to customary adjustments. For accounting purposes, these units are treated as if they are distributed from us to Antero Resources. Antero Resources recognizes compensation expense for the units awarded to its employees and a portion of that expense is allocated to us. See Note 6—Equity-Based Compensation.
(j)Income Taxes
Our consolidated financial statements do not include a provision for income taxes as we are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its distributive share of our items of income, gain, loss, or deduction.
(k)Fair Value Measures
The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis (e.g., the initial recognition of asset retirement obligations and impairments of long‑lived assets). The fair value is the price that we estimate would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize inputs to valuation techniques used to estimate fair value. An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The highest priority (Level 1) is given to unadjusted quoted market prices in active markets for identical assets or liabilities, and the lowest priority (Level 3) is given to unobservable inputs. Level 2 inputs are data, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
The carrying values on our balance sheet of our cash and cash equivalents, accounts receivable—Antero Resources, accounts receivable—third party, prepaid expenses, other assets, accounts payable, accounts payable—Antero Resources, accrued liabilities, other current liabilities, other liabilities and the revolving credit facility approximate fair values due to their short-term maturities.
(l)Investments in Unconsolidated Entities
The Partnership uses the equity method to account for its investments in companies if the investment provides the Partnership with the ability to exercise significant influence over, but not control, the operating and financial policies of the investee. The Partnership’s consolidated net income includes the Partnership’s proportionate share of the net income or loss of such companies. The Partnership’s judgment regarding the level of influence over each equity method investee includes considering key factors such as the Partnership’s ownership interest, representation on the board of directors and participation in policy-making decisions of the investee and material intercompany transactions. See Note 11–Equity Method Investments.
(m)Recently Adopted Accounting Pronouncement
On August 26, 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which removes diversity in practice for how certain cash receipts and payments are presented and classified in the statement of cash flows, including the presentation of distributions received from equity method investees. We elected to early adopt the standard during 2017.
As permitted by this standard we made an accounting policy election to account for distributions received from equity method investees under the “nature of the distribution” approach. Under the nature of the distribution approach, distributions received from equity method investees are classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities). No changes were necessary to our historical financial statements as a result of adopting ASU No. 2016-15.
|
Our investment in property and equipment for the periods presented is as follows (in thousands):
|
|
Estimated |
|
December 31, |
|
||||
|
|
useful lives |
|
2016 |
|
2017 |
|
||
Land |
|
n/a |
|
$ |
11,338 |
|
|
15,382 |
|
Fresh water surface pipelines and equipment |
|
5 years |
|
|
39,562 |
|
|
46,139 |
|
Above ground storage tanks |
|
10 years |
|
|
4,301 |
|
|
4,301 |
|
Fresh water permanent buried pipelines and equipment |
|
20 years |
|
|
443,453 |
|
|
472,810 |
|
Gathering systems and facilities |
|
20 years |
|
|
1,551,771 |
|
|
1,781,386 |
|
Construction-in-progress |
|
n/a |
|
|
400,096 |
|
|
654,904 |
|
Total property and equipment |
|
|
|
|
2,450,521 |
|
|
2,974,922 |
|
Less accumulated depreciation |
|
|
|
|
(254,642) |
|
|
(369,320) |
|
Property and equipment, net |
|
|
|
$ |
2,195,879 |
|
|
2,605,602 |
|
|
Long-term debt was as follows at December 31, 2016 and 2017 (in thousands):
|
|
December 31, |
||||
|
|
2016 |
|
2017 |
||
Credit Facility (a) |
|
$ |
210,000 |
|
|
555,000 |
5.375% senior notes due 2024 (b) |
|
|
650,000 |
|
|
650,000 |
Net unamortized debt issuance costs |
|
|
(10,086) |
|
|
(9,000) |
|
|
$ |
849,914 |
|
|
1,196,000 |
|
|
|
December 31, |
||||
|
|
2016 |
|
2017 |
||
Capital expenditures |
|
$ |
35,608 |
|
|
63,286 |
Operating expenses |
|
|
14,582 |
|
|
29,905 |
Interest expense |
|
|
10,613 |
|
|
10,508 |
Other |
|
|
838 |
|
|
2,307 |
|
|
$ |
61,641 |
|
|
106,006 |
|
|
|
|
|
Weighted |
|
Aggregate |
|
||
|
|
Number of |
|
grant date |
|
intrinsic value |
|
||
Total awarded and unvested—December 31, 2016 |
|
1,331,961 |
|
$ |
27.31 |
|
$ |
41,131 |
|
Granted |
|
377,660 |
|
$ |
32.52 |
|
|
|
|
Vested |
|
(558,525) |
|
$ |
28.00 |
|
|
|
|
Forfeited |
|
(108,133) |
|
$ |
28.63 |
|
|
|
|
Total awarded and unvested—December 31, 2017 |
|
1,042,963 |
|
$ |
28.69 |
|
$ |
30,288 |
|
|
|
|
Marginal Percentage |
|
||
|
|
Interest in |
|
||
|
|
Distributions |
|
||
Total Quarterly Distribution |
|
|
|
Holders of |
|
Target Amount |
|
Unitholders |
|
IDRs |
|
above $0.1955 up to $0.2125 |
|
85 |
% |
15 |
% |
above $0.2125 up to $0.2550 |
|
75 |
% |
25 |
% |
above $0.2550 |
|
50 |
% |
50 |
% |
|
|
|
|
|
|
Distributions |
|
|
|
||||||||||
|
|
|
|
|
|
Limited Partners |
|
|
|
|
|
|
|
|
|
||||
Quarter |
|
Record Date |
|
Distribution Date |
|
Common |
|
Subordinated |
|
Holder of IDRs |
|
Total |
|
Distributions |
|||||
Q4 2015 |
|
February 15, 2016 |
|
February 29, 2016 |
|
$ |
22,048 |
|
|
16,708 |
|
|
969 |
|
|
39,725 |
|
$ |
0.2200 |
Q1 2016 |
|
May 11, 2016 |
|
May 25, 2016 |
|
|
23,556 |
|
|
17,846 |
|
|
1,850 |
|
|
43,252 |
|
|
0.2350 |
Q2 2016 |
|
August 10, 2016 |
|
August 24, 2016 |
|
|
25,059 |
|
|
18,985 |
|
|
2,731 |
|
|
46,775 |
|
|
0.2500 |
Q3 2016 |
|
November 10, 2016 |
|
November 24, 2016 |
|
|
26,901 |
|
|
20,124 |
|
|
4,820 |
|
|
51,845 |
|
|
0.2650 |
* |
|
November 12, 2016 |
|
November 18, 2016 |
|
|
849 |
|
|
— |
|
|
— |
|
|
849 |
|
|
* |
|
|
Total 2016 |
|
|
|
$ |
98,413 |
|
|
73,663 |
|
|
10,370 |
|
|
182,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2016 |
|
February 1, 2017 |
|
February 8, 2017 |
|
$ |
50,090 |
|
|
— |
|
|
7,543 |
|
|
57,633 |
|
$ |
0.2800 |
* |
|
April 21, 2017 |
|
April 30, 2017 |
|
|
75 |
|
|
— |
|
|
— |
|
|
75 |
|
|
* |
Q1 2017 |
|
May 3, 2017 |
|
May 10, 2017 |
|
|
55,753 |
|
|
— |
|
|
11,553 |
|
|
67,306 |
|
|
0.3000 |
Q2 2017 |
|
August 3, 2017 |
|
August 16, 2017 |
|
|
59,695 |
|
|
— |
|
|
15,328 |
|
|
75,023 |
|
|
0.3200 |
Q3 2017 |
|
November 1, 2017 |
|
November 16, 2017 |
|
|
63,454 |
|
|
— |
|
|
19,067 |
|
|
82,521 |
|
|
0.3400 |
* |
|
November 12, 2017 |
|
November 17, 2017 |
|
|
1,392 |
|
|
— |
|
|
— |
|
|
1,392 |
|
|
* |
|
|
Total 2017 |
|
|
|
$ |
230,459 |
|
|
- |
|
|
53,491 |
|
|
283,950 |
|
|
|
*Distribution equivalent rights on limited partner common units that vested under the Midstream LTIP.
|
The Partnership’s calculation of net income per unit for the periods indicated is as follows (in thousands, except per unit data):
|
|
Year Ended December 31, |
|||||||
|
|
2015 |
|
2016 |
|
2017 |
|||
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
159,105 |
|
|
236,703 |
|
|
307,315 |
Less: |
|
|
|
|
|
|
|
|
|
Pre-Water Acquisition net income attributed to parent |
|
|
(40,193) |
|
|
— |
|
|
— |
Net income attributable to incentive distribution rights |
|
|
(1,264) |
|
|
(16,944) |
|
|
(69,720) |
Limited partner interest in net income |
|
$ |
117,648 |
|
|
219,759 |
|
|
237,595 |
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.74 |
|
|
1.24 |
|
|
1.28 |
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units outstanding - basic |
|
|
158,479 |
|
|
176,647 |
|
|
185,630 |
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units outstanding - diluted |
|
|
158,527 |
|
|
176,801 |
|
|
186,083 |
|
The following table provides a reconciliation of changes in Level 3 financial liabilities measured at fair value on a recurring basis for the periods shown below (in thousands):
Contingent acquisition consideration - December 31, 2015 |
$ |
178,049 |
Accretion |
|
16,489 |
Contingent acquisition consideration - December 31, 2016 |
$ |
194,538 |
Accretion and change in fair value |
|
13,476 |
Contingent acquisition consideration - December 31, 2017 |
$ |
208,014 |
|
The following table is a reconciliation of our investments in these unconsolidated affiliates (in thousands):
|
|
|
|
MarkWest |
|
Total Investment in |
|
|
Stonewall |
|
Joint Venture |
|
Unconsolidated Affiliates |
Balance at December 31, 2015 |
$ |
— |
|
— |
|
— |
Initial investment |
|
45,044 |
|
— |
|
45,044 |
Additional investments |
|
30,472 |
|
— |
|
30,472 |
Equity in net income of unconsolidated affiliates |
|
485 |
|
— |
|
485 |
Distributions from unconsolidated affiliates |
|
(7,702) |
|
— |
|
(7,702) |
Balance at December 31, 2016 |
|
68,299 |
|
— |
|
68,299 |
Initial investment |
|
— |
|
153,770 |
|
153,770 |
Additional investments |
|
— |
|
81,234 |
|
81,234 |
Equity in net income of unconsolidated affiliates |
|
10,304 |
|
9,890 |
|
20,194 |
Distributions from unconsolidated affiliates |
|
(11,475) |
|
(8,720) |
|
(20,195) |
Balance at December 31, 2017 |
$ |
67,128 |
|
236,174 |
|
303,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water |
|
|
|
|
|
|
|
Gathering and |
|
Handling and |
|
Consolidated |
|
|||
|
|
Processing |
|
Treatment |
|
Total |
|
|||
Year ended December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
230,210 |
|
|
155,954 |
|
|
386,164 |
|
Revenue - third-party |
|
|
382 |
|
|
778 |
|
|
1,160 |
|
Total revenues |
|
$ |
230,592 |
|
|
156,732 |
|
|
387,324 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
25,783 |
|
|
53,069 |
|
|
78,852 |
|
General and administrative (before equity-based compensation) |
|
|
22,608 |
|
|
6,128 |
|
|
28,736 |
|
Equity-based compensation |
|
|
17,840 |
|
|
4,630 |
|
|
22,470 |
|
Depreciation |
|
|
60,838 |
|
|
25,832 |
|
|
86,670 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
3,333 |
|
|
3,333 |
|
Total expenses |
|
|
127,069 |
|
|
92,992 |
|
|
220,061 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
103,523 |
|
|
63,740 |
|
|
167,263 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,428,796 |
|
|
551,236 |
|
|
1,980,032 |
|
Additions to property and equipment |
|
$ |
320,002 |
|
|
132,633 |
|
|
452,635 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
303,250 |
|
|
282,267 |
|
|
585,517 |
|
Revenue - third-party |
|
|
835 |
|
|
— |
|
|
835 |
|
Gain on sale of assets |
|
|
3,859 |
|
|
— |
|
|
3,859 |
|
Total revenues |
|
|
307,944 |
|
|
282,267 |
|
|
590,211 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
27,289 |
|
|
134,298 |
|
|
161,587 |
|
General and administrative (before equity-based compensation) |
|
|
20,118 |
|
|
7,996 |
|
|
28,114 |
|
Equity-based compensation |
|
|
19,714 |
|
|
6,335 |
|
|
26,049 |
|
Depreciation |
|
|
69,962 |
|
|
29,899 |
|
|
99,861 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
16,489 |
|
|
16,489 |
|
Total expenses |
|
|
137,083 |
|
|
195,017 |
|
|
332,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
170,861 |
|
|
87,250 |
|
|
258,111 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
$ |
485 |
|
|
— |
|
|
485 |
|
Total assets |
|
$ |
1,734,208 |
|
|
615,687 |
|
|
2,349,895 |
|
Additions to property and equipment |
|
$ |
228,100 |
|
|
188,220 |
|
|
416,320 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenue - Antero Resources |
|
$ |
396,202 |
|
|
376,031 |
|
|
772,233 |
|
Revenue - third-party |
|
|
264 |
|
|
— |
|
|
264 |
|
Total revenues |
|
|
396,466 |
|
|
376,031 |
|
|
772,497 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Direct operating |
|
|
39,251 |
|
|
193,287 |
|
|
232,538 |
|
General and administrative (before equity-based compensation) |
|
|
20,607 |
|
|
10,922 |
|
|
31,529 |
|
Equity-based compensation |
|
|
19,730 |
|
|
7,553 |
|
|
27,283 |
|
Impairment of property and equipment |
|
|
23,431 |
|
|
— |
|
|
23,431 |
|
Depreciation |
|
|
86,372 |
|
|
33,190 |
|
|
119,562 |
|
Accretion of contingent acquisition consideration |
|
|
— |
|
|
13,476 |
|
|
13,476 |
|
Total expenses |
|
|
189,391 |
|
|
258,428 |
|
|
447,819 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
207,075 |
|
|
117,603 |
|
|
324,678 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
$ |
20,194 |
|
|
— |
|
|
20,194 |
|
Total assets |
|
$ |
2,237,913 |
|
|
804,296 |
|
|
3,042,209 |
|
Additions to property and equipment |
|
$ |
346,217 |
|
|
195,162 |
|
|
541,379 |
|
|
Our quarterly financial information for the years ended December 31, 2016 and 2017 is as follows (in thousands, except per unit data):
|
|
First |
|
Second |
|
Third |
|
Forth |
|
||||
|
|
quarter |
|
quarter |
|
quarter |
|
quarter |
|
||||
Year ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
136,072 |
|
|
136,810 |
|
|
150,475 |
|
|
166,854 |
|
Total operating expenses |
|
|
89,452 |
|
|
83,503 |
|
|
76,192 |
|
|
82,953 |
|
Operating income |
|
|
46,620 |
|
|
53,307 |
|
|
74,283 |
|
|
83,901 |
|
Net income |
|
|
42,916 |
|
|
49,912 |
|
|
70,524 |
|
|
73,351 |
|
Less: general partner's interest in net income |
|
|
(1,850) |
|
|
(2,731) |
|
|
(4,806) |
|
|
(7,557) |
|
Net income attributable to limited partner units |
|
$ |
41,066 |
|
|
47,181 |
|
|
65,718 |
|
|
65,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.23 |
|
|
0.27 |
|
|
0.37 |
|
|
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
174,770 |
|
|
193,766 |
|
|
193,629 |
|
|
210,332 |
|
Total operating expenses(1) |
|
|
93,073 |
|
|
101,199 |
|
|
110,458 |
|
|
143,089 |
|
Operating income |
|
|
81,697 |
|
|
92,567 |
|
|
83,171 |
|
|
67,243 |
|
Net income |
|
|
75,092 |
|
|
87,175 |
|
|
80,893 |
|
|
64,155 |
|
Less: general partner's interest in net income |
|
|
(11,553) |
|
|
(15,328) |
|
|
(19,067) |
|
|
(23,772) |
|
Net income attributable to limited partner units |
|
$ |
63,539 |
|
|
71,847 |
|
|
61,826 |
|
|
40,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic and diluted |
|
$ |
0.35 |
|
|
0.39 |
|
|
0.33 |
|
|
0.22 |
|
(1)Operating expenses in the fourth quarter of 2017 include $23 million of impairment on certain condensate gathering lines that Antero Resources no longer uses.
|
|
|
|
|
|
|
|
|
|
|
|
|