Antero Midstream Q3 2026 Earnings Call Transcript

Antero Midstream (NYSE:AM) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Antero Midstream Corporation is expanding its Marcellus Shale footprint, focusing on the HG acquisition and integration, water growth projects, and a new regional pipeline business unit.

Higher freshwater delivery volumes and modest throughput growth are expected to result in high single-digit EBITDA growth in the fourth quarter, with double-digit year-over-year EBITDA growth anticipated for 2027.

The company continues construction on Eastside Express with multiple downstream counterparties interested, driven by demand from LNG facilities and utilities, with potential projects worth several billion dollars.

Third quarter highlights include a 19% increase in gathering volumes and a 17% increase in compression volumes, with adjusted EBITDA at $291 million, a 3% year-over-year increase.

Capital investment for the quarter was $51 million, and free cash flow after dividends was $449 million, used to reduce debt by over $400 million.

The company’s leverage ratio improved to 2.8 times, with expectations of increased capital investment for 2027 while maintaining strong balance sheet capacity.

Full Transcript

OPERATOR

Greetings, and welcome to Antero Midstream Corporation’s third quarter 2026 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Please note that today’s conference is being recorded. At this time, I’ll turn the conference over to Dan Katzenberg, Vice President, Investor Relations.

Thank you. You may now begin.

Dan Katzenberg (Vice President, Investor Relations)

Thank you for joining us for Antero Midstream’s third quarter investor conference call. We will spend a few moments going through the financial and operating highlights, and then we’ll open it up for Q&A. I would also like to direct you to the homepage of our website at anteromidstream.com, where we have provided a separate earnings call presentation that will be reviewed during today’s call. Today’s call may also contain certain non-GAAP financial measures.

Please refer to our earnings press release for important disclosures regarding those measures. Joining me on the call today are Michael Kennedy, CEO and President of Antero Midstream, Justin Agnew, CFO of Antero Midstream, and Brendan Krueger, CFO of Antero Resources. With that, I will turn the call over to Mike.

Michael Kennedy (Chief Executive Officer and President)

Thanks, Dan. Good morning, everyone. I’ll begin on slide number three. Antero Midstream continues to expand its integrated Marcellus Shale footprint to support growing natural gas demand across North America. This expansion includes our HG acquisition and integration, organic gathering and water growth projects, and our new regional pipeline business unit. Turning first to water, two completion crews are operating on acreage dedicated to Antero Midstream, supporting two drilled but uncompleted growth pads. Higher freshwater delivery volumes in the fourth quarter, combined with modest throughput growth net of expected curtailments, are expected to drive high single-digit EBITDA growth quarter over quarter. We also remain on track to complete the HG Water system integration by year end and realize all of the water synergies assumed in the acquisition.

Both our legacy and HG water systems achieved 100% uptime in the third quarter, positioning us well for full operational integration. Looking ahead to 2027, these growth pads and water system integration are expected to drive double-digit year-over-year EBITDA growth. Turning to our newly established regional pipeline business unit, we continued construction on Eastside Express. Since announcing the project last quarter, we have seen interest from multiple downstream counterparties seeking access to AR’s natural gas through the pipeline. This interest underscores a shift in industry dynamics in Appalachia. Unlike the producer-push expansions of the past, today’s opportunities are driven by demand pull from LNG facilities, utilities, and growing electrification of America.

Importantly, unlike the previous wave expansions that were farmed out to third parties, Antero Midstream now has the scale, balance sheet, capacity, and expertise to pursue these opportunities. We are actively pursuing several billion dollars in potential projects, including our first north-south directed regional pipeline laterals to natural gas demand centers and integrated power opportunities. As existing third-party agreements expire, we plan to leverage our infrastructure to own more of the value chain previously served by those providers.

This strategy positions AM to play an integrated role in expanding AR’s margins and serve the industrial build-out in West Virginia, delivering customized infrastructure that connects growing demand with investment-grade producers. With that, I’ll turn the call over to Justin.

Justin Agnew (Chief Financial Officer)

Thanks, Mike. I’ll start with our third quarter highlights on slide number four. Gathering and compression volumes increased by 19% and 17%, respectively. As noted in the press release, throughput was impacted by approximately 10 Bcf of curtailments during the quarter. Adjusted EBITDA for the third quarter was $291 million, which was a 3% increase year over year. Capital invested during the quarter was $51 million, which marked another quarter of EBITDA growth on flat capital.

Free cash flow after dividends was $449 million, including $377 million of Clearwater litigation proceeds. This free cash flow was utilized to reduce debt by over $400 million during the quarter and accelerate share repurchases once our leverage target was achieved. I’ll conclude our prepared remarks on slide number five, which highlights the balance sheet improvement over the last several years. As of September 30th, our leverage was 2.8 times, below our 3 times target and in line with this time last year. As you can see on the right-hand side of the page, our leverage is down a full turn from its peak at year-end 2022 after our first dry gas gathering acquisition. Since then we’ve integrated five acquisitions totaling $1.4 billion, invested over $1 billion in organic growth capital, increased throughput by over a Bcf a day, and reduced our share count by over 6 million shares.

Looking ahead to 2027, we expect a step-up in capital as we invest over $100 million of capital incremental to our organic program related to Eastside Express and other regional gas demand projects. Even after these end-to-end growth projects, we still have significant balance sheet capacity to pursue the large infrastructure opportunity set Mike referenced in his comments while still maintaining peer-leading leverage and debt levels. In summary, our balance sheet, consistent free cash flow generation, and integrated platform position us well to capitalize on the growing need for natural gas infrastructure in Appalachia.

With that, operator, we are ready to begin Q&A.

OPERATOR

Thank you. If you’d like to ask a question at this time, you may press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. And the first question comes from the line of John McKay with Goldman Sachs. Please proceed with your question.

John McKay (Analyst)

Hey team, thank you for the time. Appreciate the updates on Eastside Express and some of the early comments on North South. Last call you guys were still, I guess, kind of codifying the scope on Eastside Express. So just maybe if you can kind of share a little bit more of what the latest thoughts are in terms of size, total capex. And then off of that, any early read on North South would be interesting. Thanks.

Michael Kennedy (Chief Executive Officer and President)

Yeah, really no change to the scope of that project. Call it $200 to $300 million. Again, that’s going to be roughly seven interconnects with downstream pipelines, really positioning for that demand-pull industry dynamic we talked about. So really no change in that scope. Everything remains on track, on schedule for that late 2028, 2029 type timeframe. Yeah, and then on the North South, I don’t know if you, John, if you caught the AR call, but we’re having so much interest in the Clarington market. I think it’d be natural and very opportunistic for us to build a north-south from our field up into that area.

John McKay (Analyst)

And maybe just any timeline on that.

Michael Kennedy (Chief Executive Officer and President)

Yeah, over the next couple of years. We’re actually scoping it right now, having a little initial capital right now, assessing it. But I think you’ll probably see us FID that in 2027.

John McKay (Analyst)

All right, that’s clear. Thank you. Second one for me. Appreciate the commentary on double-digit EBITDA growth into next year. Obviously the third quarter and kind of implied fourth quarter are softer. You guys touched on that in terms of the curtailments and some of the more actual physical constraints, but maybe just walk through a little bit of the bridge for us in terms of underlying volumes versus margin versus anything else. Thank you.

Justin Agnew (Chief Financial Officer)

Yeah, I don’t think the fourth quarter is soft. It will be an all-time high EBITDA for the company by quite an amount. So not soft there. And then 2027 will have 10% on that. You saw AR’s guidance at 15 to 20 Bcf, but it’s still at 4.3 Bcfe versus the 4.2–4.3, I believe it was, for AR. So you’ll have that growth in throughput. Obviously that’s a net number, so you have a little more than that on gross per AM. Then you have those two water projects, the completion of the DUCs on the AR legacy acreage.

So that will result in substantial water volume growth. That will drive Q4 up in that high single-digit EBITDA growth quarter over quarter. And then looking at next year, at that 4.5 that AR guided, you’ll see that obviously come through in the throughput. And then you’ll have more freshwater delivery as we run two completion crews flat for the year. So you put that all together and you get the double-digit EBITDA growth year over year, ’27 over ’26.

John McKay (Analyst)

Clear. Understood. Appreciate the time. Thank you.

OPERATOR

Thank you. If you’d like to ask a question at this time, you may press star one. Thank you. It appears there are no additional questions. We’ve reached the end of our question-and-answer session. I’ll hand the floor to management for any closing and final remarks.

Dan Katzenberg (Vice President, Investor Relations)

I’d like to thank you for joining the earnings conference call this quarter. If you have any further questions, please feel free to reach out. Have a good day.

OPERATOR

This will conclude today’s conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.