UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 28, 2017
 
ANTERO MIDSTREAM PARTNERS LP
(Exact name of registrant as specified in its charter)

Delaware	 	001-36719	 	46-4109058	
(State or Other Jurisdiction of
Incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification Number)	

1615 Wynkoop Street	 	
Denver, Colorado 80202	 	
(Address of principal executive offices) (Zip Code)	 	
 
Registrant’s Telephone Number, including area code (303) 357-7310
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Item 2.02       Results of Operations and Financial Condition
 
On February 28, 2017, Antero Midstream Partners LP issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its financial and operational results for the quarter and year ended December 31, 2016. The press release contains certain non-GAAP financial information.  The reconciliation of such information to GAAP financial measures is included in the release.
 
The information in this Current Report, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act unless specifically identified therein as being incorporated therein by reference.
 
Item 9.01                    Financial Statements and Exhibits.
 
(d)   Exhibits.

Exhibit
Number	 	Description	
 	 	 	
99.1	 	Antero Midstream Partners LP press release dated February 28, 2017.	
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	ANTERO MIDSTREAM PARTNERS LP	
 	 	 	
 	By:	Antero Resources Midstream Management, LLC,	
 	 	its general partner	

 	By:	/s/ Glen C. Warren, Jr.	
 	 	Glen C. Warren, Jr.	
 	 	President	
 
Dated: February 28, 2017
 
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EXHIBIT INDEX

Exhibit 
Number	 	Description	
 	 	 	
99.1	 	Antero Midstream Partners LP press release dated February 28, 2017.	
 
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EXHIBIT 99.1

 
Antero Midstream Reports Fourth Quarter and Full Year 2016 Financial and Operational Results
 
Denver, Colorado, February 28, 2017—Antero Midstream Partners LP (NYSE: AM) (“Antero Midstream” or the “Partnership”) today released its fourth quarter and full year 2016 financial and operational results.  The relevant combined consolidated financial statements are included in Antero Midstream’s Annual Report on Form 10-K for the year ended December 31, 2016, which has been filed with the Securities and Exchange Commission (“SEC”).
 
Fourth Quarter Highlights Include:
 
·                   Net income of $73 million, or $0.37 per limited partner unit, representing a per unit increase of 37% compared to the prior year quarter
·                   Adjusted EBITDA of $126 million, a 52% increase compared to the prior year quarter
·                   Distributable cash flow of $103 million, resulting in DCF coverage of 1.8x
·                   $0.28 per unit cash distribution declared for the fourth quarter of 2016, a 27% increase over the prior year quarter and a 6% increase sequentially
 
Full Year 2016 Highlights Include:
 
·                   Net income of $237 million, or $1.24 per limited partner unit, representing a per unit increase of 63% compared to the prior year
·                   Adjusted EBITDA of $404 million, a 45% increase compared to the prior year
·                   Distributable cash flow of $353 million, resulting in DCF coverage of 1.8x
·                   Leverage of 1.9x, pro forma for 6.9 million common unit offering and Joint Venture capital contribution
 
Recent Developments
 
Strategic Processing and Fractionation Joint Venture
 
During the first quarter of 2017, Antero Midstream announced the formation of a joint venture (the “Joint Venture”) to develop processing and fractionation assets in Appalachia with MarkWest Energy Partners, L.P., a wholly owned subsidiary of MPLX, L.P. Antero Midstream and MarkWest will jointly develop processing assets at the Sherwood Processing Facility in Doddridge County, WV, and a facility at an additional site still to be designated, also located in West Virginia in the southwestern core of the Marcellus Shale.  Since the Joint Venture announcement, Antero Resources committed to plant 10 at the Sherwood facility, which is expected to be placed in service in the third quarter of 2018.  The Joint Venture is underpinned by long-term fee-based agreements with Antero Resources.  Additionally, the Joint Venture will own C3+ fractionation capacity at the Hopedale complex in Harrison County, Ohio supported by Antero Resources and other third party producers and will have the option to participate in incremental fractionation capacity anticipated to be built in the future as needed.
 
Capital Budget and Guidance Increase
 
Concurrent with the Joint Venture announcement, Antero Midstream increased its 2017 capital budget from $525 million to $800 million.  Additionally, Antero Midstream increased its 2017 Adjusted EBITDA guidance to $520 million to $560 million and reaffirmed its compound annual distribution growth target of 28% to 30% and increased its DCF coverage target to greater than 1.25x through 2020. Antero Midstream is targeting leverage in the low 2-times range over the corresponding period.
 
Primary Unit Offering
 
In conjunction with the Joint Venture announcement, Antero Midstream issued 6,900,000 common units, including the underwriter’s purchase option, resulting in net proceeds of approximately $223 million.  Proceeds from the offering were used to fund the initial $155 million capital contribution for the Joint Venture and general partnership purposes.
 
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Distribution for the Fourth Quarter of 2016 and Conversion of Subordinated Units
 
The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared and paid a cash distribution of $0.28 per unit ($1.12 per unit annualized) for the fourth quarter of 2016.  The distribution represented a 27% increase compared to the prior year quarter and a 6% increase sequentially.  The distribution was the Partnership’s eighth consecutive quarterly distribution increase since its initial public offering in November 2014 and was paid on February 8, 2017 to unitholders of record as of February 1, 2017.  Upon payment of this distribution, the 75,940,957 subordinated units owned by Antero Resources were converted into common units on a one-for-one basis under the terms of the Partnership agreement.
 
Commenting on the Joint Venture, Paul Rady, Chairman and CEO, said, “Antero Midstream took another step in becoming a full value chain Appalachian midstream provider and diversifying its cash flow contribution with the addition of processing and fractionation services. The Joint Venture supports Antero Midstream’s long term annual distribution growth target of 28% to 30% through 2020 while targeting a DCF coverage ratio greater than 1.25x and leverage in the low 2-times.  In addition, the Joint Venture increases Antero Midstream’s organic investment opportunity set to $2.7 billion from 2017 through 2020 and is another example of leveraging Antero Resources’ status as the leader in C3+ NGL production and drilling inventory in Appalachia.”
 
Fourth Quarter 2016 Financial and Operational Results
 
Low pressure gathering volumes for the fourth quarter of 2016 averaged 1,522 MMcf/d, a 35% increase from the fourth quarter of 2015 and a 6% increase sequentially from the third quarter of 2016.  Compression volumes for the fourth quarter of 2016 averaged 920 MMcf/d, a 92% increase from the fourth quarter of 2015 and an 18% increase sequentially.  High pressure gathering volumes for the fourth quarter of 2016 averaged 1,437 MMcf/d, a 20% increase from the fourth quarter of 2015 and a 6% increase sequentially.    The increase in throughput volumes was driven by Antero Resources’ production growth in Antero Midstream’s area of dedication.
 
Fresh water delivery volumes averaged 149,682 Bbl/d during the quarter, a 25% increase compared to the prior year quarter and a 7% increase sequentially.  The increase in volumes was driven by an increase in wells serviced by the fresh water delivery system and higher water intensity advanced completions.

 	 	Three Months Ended
December 31,	 	 	 	
 	 	2015	 	2016	 	% Change	 	
Average Daily Throughput:	 	 	 	 	 	 	 	
Low Pressure Gathering (MMcf/d)	 	1,124	 	1,522	 	35	%	
Compression (MMcf/d)	 	478	 	920	 	92	%	
High Pressure Gathering (MMcf/d)	 	1,195	 	1,437	 	20	%	
 	 	 	 	 	 	 	 	
Average Daily Volumes:	 	 	 	 	 	 	 	
Fresh Water Delivery (Bbl/d)	 	119,671	 	149,682	 	25	%	
 
For the three months ended December 31, 2016, the Partnership reported revenues of $167 million, comprised of $88 million from the Gathering and Processing segment and $79 million from the Water Handling and Treatment segment.  Revenues increased 27% compared to the prior year quarter, primarily driven by growth in natural gas throughput volumes and fresh water delivery volumes.  Gathering and Processing revenues included a $4 million gain on asset sale related to the divestiture of certain gathering and compression assets in Pennsylvania during the quarter.  Water Handling and Treatment segment revenues include $28 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.
 
Direct operating expenses for the Gathering and Processing and Water Handling and Treatment segments were $8 million and $29 million, respectively, for a total of $37 million compared to $40 million in direct operating expenses in the prior year quarter.  Water Handling and Treatment direct operating expenses include $27 million from fluid handling and high rate water transfer services.  The decrease in direct operating expenses was driven primarily by a reduction in fluid handling and high rate transfer expenses.  General and administrative expenses including equity-based compensation were $14 million, a $1 million increase compared to the fourth quarter of 2015.  General and administrative expenses excluding equity-based compensation were $8 million during the fourth quarter of 2016, in line with the fourth quarter of 2015.  Total operating expenses were $83 million, including $26 million of depreciation, $7 million of equity-based compensation, and $6 million of accretion of contingent acquisition consideration.
 
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Net income for the fourth quarter of 2016 was $73 million, a 50% increase compared to the prior year quarter.  Net income per limited partner unit was $0.37 per unit, a 37% increase compared to the prior year quarter.  Adjusted EBITDA was $126 million, a 52% increase compared to the prior year quarter.  Adjusted EBITDA for the fourth quarter included an $8 million distribution from unconsolidated affiliates related to Antero Midstream’s 15% interest in Stonewall Gathering, LLC.  The distribution represents 2016 cash received from Stonewall operations since acquiring the 15% interest in May of 2016.  The increase in net income and Adjusted EBITDA from the prior year is primarily driven by increased gathering and compression volumes and fresh water delivery volumes.  Cash interest paid and cash reserved for bond interest were $2 million and $10 million during the quarter, respectively.  Income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $3 million.  Maintenance capital expenditures during the quarter totaled $5 million and distributable cash flow was $103 million, resulting in a DCF coverage ratio of 1.8x.
 
Commenting on Antero Midstream’s quarterly results, Michael Kennedy, CFO of Antero Midstream said, “Antero Midstream closed out another strong year operationally and financially, driven by the growth in throughput volumes from Antero Resources.  Additionally, during the fourth quarter, Antero Midstream benefitted from Antero Resources’ accelerated completions, resulting in increased throughput and fresh water delivery volumes that are projected to continue into 2017.”
 
Gathering and Processing — Antero Midstream increased compression capacity by placing into service a 145 MMcf/d compressor station in Tyler County, West Virginia late during the fourth quarter of 2016.  Antero’s current compression capacity is approximately 1.1 Bcf/d in the Marcellus and Utica combined and compression capacity was approximately 90% utilized in the fourth quarter.  Additionally, Antero Midstream connected 41 wells to its Marcellus and Utica gathering systems during the quarter, bringing total wells connected to 440.  Antero Resources is currently operating six drilling rigs in the Marcellus and Utica.
 
Water Handling and Treatment — Antero Midstream’s Marcellus and Utica fresh water delivery systems serviced 35 well completions in the fourth quarter of 2016, in line with the prior year quarter.  As a result of pilot tests utilizing advanced completions, Antero Midstream’s fresh water delivery volumes increased 25% as compared to the prior year quarter despite servicing the same number of wells.  Antero’s completions during the fourth quarter averaged 46 barrels per foot in the Marcellus and 39 barrels per foot in the Utica, for a quarterly weighted average of 44 barrels per foot.  Antero Resources is currently operating six completion crews in the Marcellus and Utica.
 
Antero Midstream continued construction on the Antero Clearwater Facility, which is expected to be placed into service during the fourth quarter of 2017. Through year-end 2016, Antero Midstream has invested $217 million, or approximately 70% of the total estimated project cost, in the Antero Clearwater Facility.  The Antero Clearwater Facility will be the largest advanced wastewater treatment facility in the world designed for oil and gas operations.
 
Fourth Quarter Capital Spending
 
Antero Midstream’s capital expenditures for the three months ended December 31, 2016 were $126 million as compared to $128 million during the prior year quarter.  Capital expenditures included $75 million that was invested in gathering and compression and $51 million invested in water handling and treatment infrastructure.  Water handling and treatment infrastructure capital expenditures included $36 million for the continued construction of the Antero Clearwater Facility.  Additionally, Antero Midstream made a $30 million capital contribution to Stonewall Gathering LLC to repay outstanding debt, thereby releasing restrictions on cash distributions to equity interest holders.
 
2016 Financial and Operational Results
 
Low pressure gathering volumes for 2016 averaged 1,403 MMcf/d, a 38% increase from the prior year.  Compression volumes and high pressure gathering volumes for 2016 averaged 741 MMcf/d and 1,316 MMcf/d representing a 72% and 11% increase, respectively, from the prior year.  The increase in gathering and compression volumes was due to production growth from Antero Resources in Antero Midstream’s area of dedication.  Fresh water delivery volumes for 2016 averaged 123,258 Bbl/d, a 29% increase compared to the prior year.  The increase in volumes was driven by an increase in wells serviced by the fresh water delivery system and higher water intensity advanced completions.
 
Total revenues for 2016 were $590 million, a 52% increase over the prior year, and were comprised of $308 million from the Gathering and Processing segment and $282 million from the Water Handling and Treatment segment.  Water Handling and Treatment segment revenues include $116 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.  Direct operating expenses for 2016 for the Gathering and Processing and Water Handling and Treatment segments were $27 million and $135 million, respectively, for a total of $162 million.  Water Handling and Treatment direct operating expenses include $113 million from fluid handling and high rate water transfer services provided to Antero Resources, which is billed at cost plus 3%.  Direct operating expenses increased 105% from the prior year, driven by the commencement of fluid handling and high rate transfer services provided to Antero Resources for a full twelve month period.  General
 
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and administrative expenses including equity-based compensation were $54 million, a 6% increase compared to the prior year.  General and administrative expenses excluding equity-based compensation for 2016 were $28 million, a 2% decrease from the prior year.  Total operating expenses were $332 million, including $100 million of depreciation, $26 million of equity-based compensation, and $16 million of accretion of contingent acquisition consideration, representing a 51% increase over the prior year.
 
Net income for 2016 was $237 million, a 49% increase compared to the prior year.  Net income per limited partner unit was $1.24 per unit, a 63% increase over the prior year.  Adjusted EBITDA was $404 million, a 45% increase compared to the prior year.  The increases in net income and Adjusted EBITDA were primarily driven by increased throughput volumes and fresh water delivery volumes.  Cash interest paid and cash reserved for bond interest for 2016 were $13 million and $10 million, respectively.  Income tax withholding upon vesting of Antero Midstream equity-based compensation awards was $6 million.  Maintenance capital expenditures for 2016 totaled $22 million and distributable cash flow was $353 million, resulting in a DCF coverage ratio of 1.8x.
 
2016 Capital Spending
 
Antero Midstream’s capital expenditures for the year ended December 31, 2016, including the $75 million investment in Stonewall Gathering LLC, totaled $475 million as compared to $452 million during the prior year.  Capital expenditures included $228 million in gathering and compression and $188 million in water handling and treatment infrastructure.  Water handling and treatment infrastructure capital expenditures include $149 million for the continued construction of the Antero Clearwater Facility.
 
The following table reconciles net income to Adjusted EBITDA and distributable cash flow as used in this release (in thousands):

 	 	Three months ended	 	Years ended	 	
 	 	December 31,	 	December 31,	 	
 	 	2015	 	2016	 	2015	 	2016	 	
Net income	 	$	49,008	 	73,351	 	$	159,105	 	$	236,703	 	
Interest expense	 	2,892	 	9,008	 	8,158	 	21,893	 	
Depreciation expense	 	23,155	 	25,761	 	86,670	 	99,861	 	
Accretion of contingent acquisition consideration	 	3,333	 	6,105	 	3,333	 	16,489	 	
Equity-based compensation	 	4,807	 	6,683	 	22,470	 	26,049	 	
Equity in (earnings) loss of unconsolidated affiliate	 	—	 	1,542	 	—	 	(485	)	
Distributions from unconsolidated affiliate	 	—	 	7,702	 	—	 	7,702	 	
Gain on asset sale	 	—	 	(3,859	)	—	 	(3,859	)	
Adjusted EBITDA	 	$	83,195	 	$	126,293	 	$	279,736	 	$	404,353	 	
Pre-Water Acquisition net income attributed to parent	 	—	 	—	 	(40,193	)	—	 	
Pre-Water Acquisition depreciation expense attributed to parent	 	—	 	—	 	(18,767	)	—	 	
Pre-Water Acquisition equity-based compensation expense attributed to parent	 	—	 	—	 	(3,445	)	—	 	
Pre-Water Acquisition interest expense attributed to parent	 	—	 	—	 	(2,326	)	—	 	
Adjusted EBITDA attributable to the Partnership	 	$	83,195	 	$	126,293	 	$	215,005	 	$	404,353	 	
Cash interest paid, net - attributable to the Partnership	 	(2,934	)	(1,743	)	(5,149	)	(13,494	)	
Income tax withholding upon vesting of Antero Midstream LP equity-based compensation awards	 	(4,806	)	(2,636	)	(4,806	)	(5,636	)	
Cash received from unconsolidated affiliate	 	—	 	(2,998	)	—	 	—	 	
Cash reserved for bond interest (1)	 	—	 	(10,481	)	—	 	(10,481	)	
Maintenance capital expenditures(2)	 	(3,096	)	(5,466	)	(13,097	)	(21,622	)	
Distributable cash flow	 	$	72,359	 	$	102,969	 	$	191,953	 	$	353,120	 	
 	 	 	 	 	 	 	 	 	 	
Total distributions declared	 	$	39,725	 	$	57,634	 	$	132,651	 	$	200,355	 	
 	 	 	 	 	 	 	 	 	 	
DCF coverage ratio	 	1.82	x	1.79	x	1.45	x	1.76	x	

(1)          Cash reserved for bond interest represents accrued interest expense on Antero Midstream’s 5.375% senior notes outstanding during the period that is paid on a semi-annual basis on March 15 th  and September 15 th  of each year.
(2)          Maintenance capital expenditures represent that portion of our estimated capital expenditures associated with (i) the connection of new wells to our gathering and compression systems that we believe will be necessary to offset the natural production declines Antero Resources will experience on all of its wells over time, and (ii) water distribution to new wells necessary to maintain the average throughput volume on our systems.
 
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Balance Sheet and Liquidity
 
As of December 31, 2016, Antero Midstream had $210 million drawn on its $1.5 billion bank credit facility with current borrowing capacity of $1.4 billion, resulting in approximately $1.2 billion in available credit facility capacity.  Antero Midstream had $14 million of cash on its balance sheet and a consolidated net debt to trailing twelve months Adjusted EBITDA ratio of 2.1x as of December 31, 2016.  Pro forma for the initial capital contribution to the Joint Venture and the 6.9 million common unit offering, Antero Midstream’s consolidated net debt to trailing twelve months Adjusted EBITDA ratio was 1.9x.  For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.”
 
Full Year 2016 Capacity Additions
 
During 2016, Antero Midstream added 315 MMcf/d of compression capacity, resulting in significant growth in compression volumes during the year.  Additionally, the Partnership placed into service 12 miles of low pressure pipeline and 22 miles of high pressure pipeline.  The below table summarizes the Partnership’s cumulative miles of pipeline and compression capacity at year-end 2015 and 2016:

 	 	Gathering and Compression System	 	
 	 	Low
Pressure
Pipeline
(miles)	 	High
Pressure
Pipeline
(miles)	 	Compression
Capacity
(MMcf/d)	 	
 	 	As of December 31,	 	
 	 	2015	 	2016	 	2015	 	2016	 	2015	 	2016	 	
Marcellus	 	106	 	115	 	76	 	98	 	700	 	1,015	 	
Utica	 	55	 	58	 	36	 	36	 	120	 	120	 	
Total	 	161	 	173	 	112	 	134	 	820	 	1,135	 	
 
During 2016, Antero Midstream added 27 miles of buried and surface fresh water pipelines in the Marcellus and Ohio Utica Shale plays combined.  Additionally, the Partnership built one fresh water storage impoundment in the Ohio Utica Shale.  The below table summarizes the Partnership’s cumulative miles of fresh water pipeline and fresh water storage impoundments at year-end 2015 and 2016, in addition to wells serviced by fresh water delivery and water per foot used in completions during the period:

 	 	Water Handling System	 	
 	 	Fresh Water Pipeline
(miles)	 	Fresh Water
Impoundments	 	Wells Serviced by
Water Delivery	 	Water Per Foot Used
in Completions
(Bbls/ft)	 	
 	 	As of December 31,	 	
 	 	2015	 	2016	 	2015	 	2016	 	2015	 	2016	 	2015	 	2016	 	
Marcellus	 	184	 	203	 	22	 	22	 	62	 	99	 	33	 	41	 	
Utica	 	75	 	83	 	13	 	14	 	62	 	32	 	34	 	37	 	
Total	 	259	 	286	 	35	 	36	 	124	 	131	 	34	 	40	 	
 
Conference Call
 
A conference call is scheduled on Wednesday, March 1, 2017 at 10:00 am MT to discuss the results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in at 1-888-347-8204 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-4229 (International) and reference “Antero Midstream”.  A telephone replay of the call will be available until Friday, March 10 , 2017 at 10:00 am MT at 1-877-870-5176 (U.S.) or 1-858-384-5517 (International) using the passcode 10098008.
 
To access the live webcast and view the related earnings conference call presentation, visit Antero Midstream’s website at www.anteromidstream.com.  The webcast will be archived for replay on the Partnership’s website until Friday, March 10, 2017 at 10:00 am MT.
 
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Presentation
 
An updated presentation will be posted to the Partnership’s website before the March 1, 2017 conference call.  The presentation can be found at www.anteromidstream.com on the homepage.  Information on the Partnership’s website does not constitute a portion of this press release.
 
Non-GAAP Financial Measures
 
Antero Midstream views Adjusted EBITDA as an important indicator of the Partnership’s performance.  Antero Midstream defines Adjusted EBITDA as Net Income before equity-based compensation expense, interest expense, depreciation expense, accretion of contingent acquisition consideration, gain on asset sale, excluding pre-acquisition income and expenses attributable to the parent and equity in earnings of unconsolidated affiliate, and including cash distributions from unconsolidated affiliate .
 
Antero Midstream uses Adjusted EBITDA to assess:
 
·                   the financial performance of the Partnership’s assets, without regard to financing methods in the case of Adjusted EBITDA, capital structure or historical cost basis;
 
·                   its operating performance and return on capital as compared to other publicly traded partnerships in the midstream energy sector, without regard to financing or capital structure; and
 
·                   the viability of acquisitions and other capital expenditure projects.
 
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest paid, income tax withholding payments and cash reserved for payments upon vesting of equity-based compensation awards, cash reserved for bond interest and ongoing maintenance capital expenditures paid, excluding pre-acquisition amounts attributable to the parent less cash received from unconsolidated affiliate.  Antero Midstream uses Distributable Cash Flow as a performance metric to compare the cash generating performance of the Partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to unitholders.  Distributable Cash Flow does not reflect changes in working capital balances.
 
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures.  The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income.  The non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the GAAP measure of Net Income.  Adjusted EBITDA and Distributable Cash Flow are not presentations made in accordance with GAAP and have important limitations as an analytical tool because they include some, but not all, items that affect Net Income and Adjusted EBITDA.  You should not consider Adjusted EBITDA and Distributable Cash Flow in isolation or as a substitute for analyses of results as reported under GAAP.  Antero Midstream’s definition of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other partnerships.
 
Antero Midstream does not provide guidance on equity earnings, among other items, that are reconciling items between forecasted Adjusted EBITDA and forecasted Net Income due to the uncertainty regarding timing and estimates of reconciling items.  Antero Midstream provides a range for the forecasts or targets of Net Income, Adjusted EBITDA, and Distributable Cash Flow to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Adjusted EBITDA and forecasted Net Income.  Therefore, the Partnership cannot reconcile Adjusted EBITDA to forecasted Net Income without unreasonable effort.
 
The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):

 	 	December 31,	 	
 	 	2015	 	2016	 	
 	 	 	 	 	 	
Bank credit facility	 	$	620,000	 	$	210,000	 	
5.375% AM senior notes due 2024	 	—	 	650,000	 	
Net unamortized debt issuance costs	 	—	 	(10,086	)	
Consolidated total debt	 	$	620,000	 	$	849,914	 	
Cash and cash equivalents	 	6,883	 	14,042	 	
Consolidated net debt	 	$	613,117	 	$	835,872	 	
 
Antero Midstream is a limited partnership that owns, operates and develops midstream gathering, compression, processing and fractionation assets located in West Virginia and Ohio, as well as integrated water assets that primarily service Antero Resources’ properties located in West Virginia and Ohio.
 
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This release includes “forward-looking statements” within the meaning of federal securities laws.  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Partnership’s control.  All statements, other than historical facts included in this release, are forward-looking statements.  All forward-looking statements speak only as of the date of this release and are based upon a number of assumptions.  Although the Partnership believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that the assumptions underlying these forward-looking statements will be accurate or the plans, intentions or expectations expressed herein will be achieved.  For example, future acquisitions, dispositions or other strategic transactions may materially impact the forecasted or targeted results described in this release.  Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.  Nothing in this release is intended to constitute guidance with respect to Antero Resources.
 
Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnership’s control, incident to the gathering and processing and fresh water and waste water treatment businesses.  These risks include, but are not limited to, Antero Resources’ expected future growth, Antero Resources’ ability to meet its drilling and development plan, commodity price volatility, ability to execute the Partnership’s business strategy, competition and government regulations, actions taken by third-party producers, operators, processors and transporters, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under “Risk Factors” in Antero Midstream’s Annual Report on Form 10-K for the year ended December 31, 2016.
 
For more information, contact Michael Kennedy — CFO of Antero Midstream at (303) 357-6782 or mkennedy@anteroresources.com .
 
7 

 
ANTERO MIDSTREAM PARTNERS LP
Condensed Combined Consolidated Balance Sheets
December 31, 2015 and 2016
(In thousands)

 	 	2015	 	2016	 	
Assets	
Current assets:	 	 	 	 	 	
Cash and cash equivalents	 	$	6,883	 	$	14,042	 	
Accounts receivable—Antero Resources	 	65,712	 	64,139	 	
Accounts receivable—third party	 	2,707	 	1,240	 	
Prepaid expenses	 	—	 	529	 	
Total current assets	 	75,302	 	79,950	 	
Property and equipment:	 	 	 	 	 	
Gathering and compression systems	 	1,485,835	 	1,705,839	 	
Water handling and treatment systems	 	565,616	 	744,682	 	
 	 	2,051,451	 	2,450,521	 	
Less accumulated depreciation	 	(157,625	)	(254,642	)	
Property and equipment, net	 	1,893,826	 	2,195,879	 	
Investment in unconsolidated affiliate	 	—	 	68,299	 	
Other assets, net	 	10,904	 	5,767	 	
Total assets	 	$	1,980,032	 	$	2,349,895	 	
Liabilities and Partners’ Capital	
Current liabilities:	 	 	 	 	 	
Accounts payable	 	$	10,941	 	$	16,979	 	
Accounts payable—Antero Resources	 	2,138	 	3,193	 	
Accrued liabilities	 	85,385	 	61,641	 	
Other current liabilities	 	150	 	200	 	
Total current liabilities	 	98,614	 	82,013	 	
Long-term liabilities:	 	 	 	 	 	
Long-term debt	 	620,000	 	849,914	 	
Contingent acquisition consideration	 	178,049	 	194,538	 	
Other	 	624	 	620	 	
Total liabilities	 	897,287	 	1,127,085	 	
 	 	 	 	 	 	
Partners’ capital:	 	 	 	 	 	
Common unitholders - public (59,286 units and 70,020 units issued and outstanding at December 31, 2015 and 2016, respectively)	 	1,351,317	 	1,458,410	 	
Common unitholder - Antero Resources (40,929 units and 32,929 units issued and outstanding at December 31, 2015 and 2016, respectively)	 	30,186	 	26,820	 	
Subordinated unitholder - Antero Resources (75,941 units issued and outstanding at December 31, 2015 and 2016)	 	(299,727	)	(269,963	)	
General partner	 	969	 	7,543	 	
Total partners’ capital	 	1,082,745	 	1,222,810	 	
Total liabilities and partners’ capital	 	$	1,980,032	 	$	2,349,895	 	
 
8 

 
ANTERO MIDSTREAM PARTNERS LP
Condensed Combined Consolidated Statements of Operations and Comprehensive Income
Three Months Ended December 31 , 2015, and 2016
(In thousands, except per unit amounts )

 	 	2015	 	2016	 	
 	 	 	 	 	 	
Revenue:	 	 	 	 	 	
Gathering and compression—Antero Resources	 	$	62,154	 	$	84,312	 	
Water handling and treatment—Antero Resources	 	69,195	 	78,517	 	
Gathering and compression—third party	 	344	 	166	 	
Water handling and treatment—third party	 	—	 	—	 	
Gain on sale of assets	 	—	 	3,859	 	
Total revenue	 	131,693	 	166,854	 	
Operating expenses:	 	 	 	 	 	
Direct operating	 	40,022	 	36,636	 	
General and administrative (including $4,807 and $6,683 of equity-based compensation in 2015 and 2016, respectively)	 	13,283	 	14,451	 	
Depreciation	 	23,155	 	25,761	 	
Accretion of contingent acquisition consideration	 	3,333	 	6,105	 	
Total operating expenses	 	79,793	 	82,953	 	
Operating income	 	51,900	 	83,901	 	
Interest expense, net	 	(2,892	)	(9,008	)	
Equity in earnings (loss) of unconsolidated affiliate	 	—	 	(1,542	)	
Net income and comprehensive income	 	49,008	 	73,351	 	
General partner interest in net income attributable to incentive distribution rights	 	(969	)	(7,557	)	
Limited partners’ interest in net income	 	$	48,039	 	$	65,794	 	
Net income per limited partner unit:	 	 	 	 	 	
Basic:	 	 	 	 	 	
Common units	 	$	0.27	 	$	0.37	 	
Subordinated units	 	$	0.27	 	$	0.37	 	
Diluted:	 	 	 	 	 	
Common units	 	$	0.27	 	$	0.37	 	
Subordinated units	 	$	0.27	 	$	0.37	 	
Weighted average number of limited partner units outstanding:	 	 	 	 	 	
Basic:	 	 	 	 	 	
Common units	 	100,036	 	101,910	 	
Subordinated units	 	75,941	 	75,941	 	
Diluted:	 	 	 	 	 	
Common units	 	100,075	 	102,254	 	
Subordinated units	 	75,941	 	75,941	 	
 
9 

 
ANTERO MIDSTREAM PARTNERS LP
Combined Consolidated Statements of Operations and Comprehensive Income
Years Ended December 31, 2014, 2015, and 2016
(In thousands, except unit counts and per unit amounts)

 	 	2014	 	2015	 	2016	 	
 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	
Gathering and compression—Antero Resources	 	$	95,746	 	$	230,210	 	$	303,250	 	
Water handling and treatment—Antero Resources	 	162,283	 	155,954	 	282,267	 	
Gathering and compression—third party	 	—	 	382	 	835	 	
Water handling and treatment—third party	 	8,245	 	778	 	—	 	
Gain on sale of assets	 	—	 	—	 	3,859	 	
Total revenue	 	266,274	 	387,324	 	590,211	 	
Operating expenses:	 	 	 	 	 	 	 	
Direct operating	 	48,821	 	78,852	 	161,587	 	
General and administrative (including $11,618, $22,470 and $26,049 of equity-based compensation in 2014, 2015, and 2016, respectively)	 	30,366	 	51,206	 	54,163	 	
Depreciation	 	53,029	 	86,670	 	99,861	 	
Accretion of contingent acquisition consideration	 	—	 	3,333	 	16,489	 	
Total operating expenses	 	132,216	 	220,061	 	332,100	 	
Operating income	 	134,058	 	167,263	 	258,111	 	
Interest expense, net	 	(6,183	)	(8,158	)	(21,893	)	
Equity in earnings of unconsolidated affiliate	 	—	 	—	 	485	 	
Net income and comprehensive income	 	127,875	 	159,105	 	236,703	 	
Pre-IPO net income attributed to parent	 	(98,219	)	—	 	—	 	
Pre-Water Acquisition net income attributed to parent	 	(22,234	)	(40,193	)	—	 	
General partner interest in net income attributable to incentive distribution rights	 	—	 	(1,264	)	(16,944	)	
Limited partners’ interest in net income	 	$	7,422	 	$	117,648	 	$	219,759	 	
Net income per limited partner unit:	 	 	 	 	 	 	 	
Basic:	 	 	 	 	 	 	 	
Common units	 	$	0.05	 	$	0.76	 	$	1.24	 	
Subordinated units	 	$	0.05	 	$	0.73	 	$	1.24	 	
Diluted:	 	 	 	 	 	 	 	
Common units	 	$	0.05	 	$	0.76	 	$	1.24	 	
Subordinated units	 	$	0.05	 	$	0.73	 	$	1.24	 	
Weighted average number of limited partner units outstanding:	 	 	 	 	 	 	 	
Basic:	 	 	 	 	 	 	 	
Common units	 	75,941	 	82,538	 	100,706	 	
Subordinated units	 	75,941	 	75,941	 	75,941	 	
Diluted:	 	 	 	 	 	 	 	
Common units	 	75,941	 	82,586	 	100,860	 	
Subordinated units	 	75,941	 	75,941	 	75,941	 	
 
10 

 
ANTERO MIDSTREAM PARTNERS LP
Combined Consolidated Results of Segment Operations
Three Months Ended December 31 , 2015, and 2016
(In thousands)

 	 	 	 	Water	 	 	 	
 	 	Gathering and	 	Handling and	 	Consolidated	 	
 	 	Processing	 	Treatment	 	Total	 	
Three Months Ended December 31, 2015	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	
Revenue - Antero Resources	 	$	62,154	 	$	69,195	 	$	131,349	 	
Revenue - third-party	 	344	 	—	 	344	 	
Total revenues	 	62,498	 	69,195	 	131,693	 	
 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	
Direct operating	 	5,966	 	34,056	 	40,022	 	
General and administrative (before equity-based compensation)	 	6,141	 	2,335	 	8,476	 	
Equity-based compensation	 	3,622	 	1,185	 	4,807	 	
Depreciation	 	16,090	 	7,065	 	23,155	 	
Accretion of contingent acquisition consideration	 	—	 	3,333	 	3,333	 	
Total expenses	 	31,819	 	47,974	 	79,793	 	
 	 	 	 	 	 	 	 	
Operating income	 	$	30,679	 	$	21,221	 	$	51,900	 	
 	 	 	 	 	 	 	 	
Segment and consolidated Adjusted EBITDA	 	$	50,391	 	$	32,804	 	$	83,195	 	
 	 	 	 	 	 	 	 	
Three Months Ended December 31, 2016	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	
Revenue - Antero Resources	 	$	84,312	 	$	78,517	 	$	162,829	 	
Revenue - third-party	 	166	 	—	 	166	 	
Gain on sale of assets	 	3,859	 	—	 	3,859	 	
Total revenues	 	88,337	 	78,517	 	166,854	 	
 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	
Direct operating	 	7,531	 	29,105	 	36,636	 	
General and administrative (before equity-based compensation)	 	5,265	 	2,503	 	7,768	 	
Equity-based compensation	 	4,812	 	1,871	 	6,683	 	
Depreciation	 	17,837	 	7,924	 	25,761	 	
Accretion of contingent acquisition consideration	 	—	 	6,105	 	6,105	 	
Total expenses	 	35,445	 	47,508	 	82,953	 	
 	 	 	 	 	 	 	 	
Operating income	 	$	52,892	 	$	31,009	 	$	83,901	 	
 	 	 	 	 	 	 	 	
Segment and consolidated Adjusted EBITDA	 	$	79,384	 	$	46,909	 	$	126,293	 	
 
11 

 
ANTERO MIDSTREAM PARTNERS LP
Combined Consolidated Results of Segment Operations
Year Ended December 31 , 2015, and 2016
(In thousands)

 	 	 	 	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	 	
 	 	 	 	 	 	 	 	
Segment and consolidated Adjusted EBITDA	 	$	182,201	 	$	97,535	 	$	279,736	 	
 	 	 	 	 	 	 	 	
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	 	
 	 	 	 	 	 	 	 	
Segment and consolidated Adjusted EBITDA	 	$	264,380	 	$	139,973	 	$	404,353	 	
 
12 

 
ANTERO MIDSTREAM PARTNERS LP
Selected Operating Data
Three Months Ended December 31 , 2015, and 2016
(In thousands, except average realized fees)

 	 	Three months ended
December 31,	 	Amount of
Increase	 	Percentage	 	
 	 	2015	 	2016	 	(Decrease)	 	Change	 	
Revenue:	 	 	 	 	 	 	 	 	 	
Revenue - Antero Resources	 	$	131,349	 	$	162,829	 	$	31,480	 	24	%	
Revenue - third-party	 	344	 	166	 	(178	)	(52	)%	
Gain on sale of assets	 	—	 	3,859	 	3,859	 	*	 	
Total revenue	 	131,693	 	166,854	 	35,161	 	27	%	
Operating expenses:	 	 	 	 	 	 	 	 	 	
Direct operating	 	40,022	 	36,636	 	(3,386	)	(8	)%	
General and administrative (before equity-based compensation)	 	8,476	 	7,768	 	(708	)	(8	)%	
Equity-based compensation	 	4,807	 	6,683	 	1,876	 	39	%	
Depreciation	 	23,155	 	25,761	 	2,606	 	11	%	
Accretion of contingent acquisition consideration	 	3,333	 	6,105	 	2,772	 	83	%	
Total operating expenses	 	79,793	 	82,953	 	3,160	 	4	%	
Operating income	 	51,900	 	83,901	 	32,003	 	62	%	
Interest expense	 	(2,892	)	(9,008	)	(6,116	)	211	%	
Equity in earnings of unconsolidated affiliate	 	—	 	(1,542	)	(1,542	)	*	 	
Net income	 	$	49,008	 	$	73,351	 	$	24,343	 	50	%	
Adjusted EBITDA	 	$	83,195	 	$	126,293	 	$	43,098	 	52	%	
Operating Data:	 	 	 	 	 	 	 	 	 	
Gathering—low pressure (MMcf)	 	103,388	 	140,052	 	36,664	 	35	%	
Gathering—high pressure (MMcf)	 	109,931	 	132,206	 	22,275	 	20	%	
Compression (MMcf)	 	43,932	 	84,654	 	40,722	 	93	%	
Condensate gathering (MBbl)	 	366	 	5	 	(361	)	(99	)%	
Fresh water distribution (MBbl)	 	11,011	 	13,771	 	2,760	 	25	%	
Wells serviced by fresh water delivery	 	35	 	35	 	—	 	0	%	
Gathering—low pressure (MMcf/d)	 	1,124	 	1,522	 	398	 	35	%	
Gathering—high pressure (MMcf/d)	 	1,195	 	1,437	 	242	 	20	%	
Compression (MMcf/d)	 	478	 	920	 	442	 	93	%	
Condensate gathering (MBbl/d)	 	3,978	 	—	 	(3,978	)	(99	)%	
Fresh water delivery (MBbl/d)	 	120	 	150	 	30	 	32	%	
Average realized fees:	 	 	 	 	 	 	 	 	 	
Average gathering—low pressure fee ($/Mcf)	 	$	0.31	 	$	0.31	 	$	—	 	*	 	
Average gathering—high pressure fee ($/Mcf)	 	$	0.19	 	$	0.19	 	$	—	 	*	 	
Average compression fee ($/Mcf)	 	$	0.19	 	$	0.19	 	$	—	 	*	 	
Average gathering—condensate fee ($/Bbl)	 	$	4.16	 	$	4.17	 	$	0.01	 	*	 	
Average fresh water delivery fee - Antero Resources ($/Bbl)	 	$	3.66	 	$	3.68	 	$	0.02	 	1	%	

*                  Not meaningful or applicable.
 
13 

 
ANTERO MIDSTREAM PARTNERS LP
Selected Operating Data
Year Ended December 31 , 2015, and 2016
(In thousands, except average realized fees)

 	 	 	 	 	 	Amount of	 	 	 	
 	 	Year ended December 31,	 	Increase	 	Percentage	 	
 	 	2015	 	2016	 	(Decrease)	 	Change	 	
Revenue:	 	 	 	 	 	 	 	 	 	
Revenue - Antero Resources	 	$	386,164	 	$	585,517	 	$	199,353	 	52	%	
Revenue - third-party	 	1,160	 	835	 	(325	)	(28	)%	
Gain on sale of assets	 	—	 	3,859	 	3,859	 	*	 	
Total revenue	 	387,324	 	590,211	 	202,887	 	52	%	
Operating expenses:	 	 	 	 	 	 	 	 	 	
Direct operating	 	78,852	 	161,587	 	82,735	 	105	%	
General and administrative (before equity-based compensation)	 	28,736	 	28,114	 	(622	)	(2	)%	
Equity-based compensation	 	22,470	 	26,049	 	3,579	 	16	%	
Depreciation	 	86,670	 	99,861	 	13,191	 	15	%	
Accretion of contingent acquisition consideration	 	3,333	 	16,489	 	13,156	 	395	%	
Total operating expenses	 	220,061	 	332,100	 	112,039	 	51	%	
Operating income	 	167,263	 	258,111	 	90,848	 	54	%	
Interest expense	 	(8,158	)	(21,893	)	(13,735	)	168	%	
Equity in earnings of unconsolidated affiliate	 	—	 	485	 	485	 	*	 	
Net income	 	$	159,105	 	$	236,703	 	$	77,598	 	49	%	
Adjusted EBITDA(1)	 	$	279,736	 	$	404,353	 	$	124,617	 	45	%	
Operating Data:	 	 	 	 	 	 	 	 	 	
Gathering—low pressure (MMcf)	 	370,830	 	513,390	 	142,560	 	38	%	
Gathering—high pressure (MMcf)	 	432,861	 	481,646	 	48,785	 	11	%	
Compression (MMcf)	 	157,515	 	271,060	 	113,545	 	72	%	
Condensate gathering (MBbl)	 	1,117	 	503	 	(614	)	(55	)%	
Fresh water delivery (MBbl)	 	35,044	 	45,112	 	10,068	 	29	%	
Wells serviced by fresh water delivery	 	124	 	131	 	7	 	6	%	
Gathering—low pressure (MMcf/d)	 	1,016	 	1,403	 	387	 	38	%	
Gathering—high pressure (MMcf/d)	 	1,186	 	1,316	 	130	 	11	%	
Compression (MMcf/d)	 	432	 	741	 	309	 	72	%	
Condensate gathering (MBbl/d)	 	3	 	1	 	(2	)	(55	)%	
Fresh water delivery (MBbl/d)	 	96	 	123	 	27	 	29	%	
Average realized fees:	 	 	 	 	 	 	 	 	 	
Average gathering—low pressure fee ($/Mcf)	 	$	0.31	 	$	0.31	 	$	—	 	*	 	
Average gathering—high pressure fee ($/Mcf)	 	$	0.19	 	$	0.19	 	$	—	 	*	 	
Average compression fee ($/Mcf)	 	$	0.19	 	$	0.19	 	$	—	 	*	 	
Average gathering—condensate fee ($/Bbl)	 	$	4.16	 	$	4.17	 	$	0.01	 	*	 	
Average fresh water delivery fee - Antero Resources ($/Bbl)	 	$	3.64	 	$	3.68	 	$	0.04	 	1	%	

*                  Not meaningful or applicable.
 
14 

 
ANTERO MIDSTREAM PARTNERS LP
Condensed Combined Consolidated Statements of Cash Flows
Year Ended December 31 , 2014, 2015, and 2016
(In thousands)

 	 	2014	 	2015	 	2016	 	
Cash flows provided by (used in) operating activities:	 	 	 	 	 	 	 	
Net income	 	$	127,875	 	$	159,105	 	$	236,703	 	
Adjustment to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	
Depreciation	 	53,029	 	86,670	 	99,861	 	
Accretion of contingent acquisition consideration	 	—	 	3,333	 	16,489	 	
Equity-based compensation	 	11,618	 	22,470	 	26,049	 	
Equity in earnings of unconsolidated affiliate	 	—	 	—	 	(485	)	
Distribution of earnings from unconsolidated affiliate	 	—	 	—	 	7,702	 	
Amortization of deferred financing costs	 	135	 	1,144	 	1,814	 	
Gain on sale of assets	 	—	 	—	 	(3,859	)	
Changes in assets and liabilities:	 	 	 	 	 	 	 	
Accounts receivable—Antero Resources	 	(29,988	)	(35,148	)	1,573	 	
Accounts receivable—third party	 	(5,574	)	2,867	 	1,467	 	
Prepaid expenses	 	(518	)	518	 	(529	)	
Accounts payable	 	863	 	2,803	 	95	 	
Accounts payable—Antero Resources	 	1,059	 	475	 	1,055	 	
Accrued liabilities	 	10,934	 	15,441	 	(9,328	)	
Net cash provided by operating activities	 	169,433	 	259,678	 	378,607	 	
Cash flows provided by (used in) investing activities:	 	 	 	 	 	 	 	
Additions to gathering and compression systems	 	(553,582	)	(320,002	)	(228,100	)	
Additions to water handling and treatment systems	 	(200,116	)	(132,633	)	(188,220	)	
Amounts paid to Antero Resources for gathering and compression systems	 	(40,277	)	—	 	—	 	
Investment in unconsolidated affiliate	 	—	 	—	 	(75,516	)	
Proceeds from sale of assets	 	—	 	—	 	10,000	 	
Change in other assets	 	(3,530	)	7,180	 	3,673	 	
Net cash used in investing activities	 	(797,505	)	(445,455	)	(478,163	)	
Cash flows provided by (used in) financing activities:	 	 	 	 	 	 	 	
Deemed distribution to Antero Resources, net	 	(5,375	)	(52,669	)	—	 	
Distributions to Antero Resources	 	(332,500	)	(620,997	)	—	 	
Distributions to unitholders	 	—	 	(107,248	)	(182,446	)	
Issuance of senior notes	 	—	 	—	 	650,000	 	
Borrowings (repayments) on bank credit facilities, net	 	115,000	 	505,000	 	(410,000	)	
Issuance of common units, net of offering costs	 	1,087,224	 	240,703	 	65,395	 	
Payments of deferred financing costs	 	(4,871	)	(2,059	)	(10,435	)	
Employee tax witholding for settlement of equity compensation awards	 	—	 	—	 	(5,636	)	
Other	 	(1,214	)	(262	)	(163	)	
Net cash provided by (used in) financing activities	 	858,264	 	(37,532	)	106,715	 	
Net increase (decrease) in cash and cash equivalents	 	230,192	 	(223,309	)	7,159	 	
Cash and cash equivalents, beginning of period	 	—	 	230,192	 	6,883	 	
Cash and cash equivalents, end of period	 	$	230,192	 	$	6,883	 	$	14,042	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	
Cash paid during the period for interest	 	$	5,864	 	$	7,765	 	$	13,494	 	
Supplemental disclosure of noncash investing activities:	 	 	 	 	 	 	 	
Increase (decrease) in accrued capital expenditures and accounts payable for property and equipment	 	$	37,596	 	$	4,552	 	$	(8,471	)	
 
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