Antero Midstream Corporation (AM) Earnings

Management highlights

- Operational Volume Growth: In Q2 2026, Antero Midstream gathered over 4.1 BCF per day of natural gas, a nearly 20% year-over-year increase driven by successful integration of the acquired HG midstream assets. A re-entry to the dry gas Marcellus play produced estimated ultimate recoveries (EURs) over 60% higher than offset wells drilled during the company's last active development in the area over a decade ago, validating large underlying resource potential and productivity gains from improved completion designs. The company now gathers half of all gas produced in West Virginia, with a premier regional footprint and dedicated access to one million acres from Antero Resources (AR). - Strategic Growth Projects: Construction has begun on Eastside Express, the company's first intrastate regional pipeline. This large-diameter east-west pipeline will connect the company's dry gas gathering system to multiple downstream market outlets, with a total capacity of 1.5 to 2 BCF per day and 7 interconnects to long-haul pipelines. The project will be phased in over 2026-2029 to match emerging demand growth, improving infrastructure optionality and supporting low-cost dry gas expansion. The company is currently evaluating an aggregate multi-billion dollar pipeline of additional regional infrastructure opportunities, and will selectively pursue near-term, actionable projects that are accretive to free cash flow and generate attractive returns. Most of the evaluated opportunities are located within West Virginia, focused on connecting natural gas supply to new gas-fired power plants and data centers being developed in the region. - Water Midstream Opportunities: The company's closed-loop beneficial reuse water system delivers economic benefits for both Antero Midstream and Antero Resources, with attractive returns from freshwater distribution and produced water disposal/reuse operations. The system eliminates water logistics constraints for AR's well completion activities. Integration of the HG asset water system is currently ongoing, which will drive high single-digit EBITDA growth in 2027 beyond the company's current base growth. The company has received growing economic incentives for water reuse in the Northeast due to higher local disposal costs compared to major shale basins in Texas. - Financial Position: In July 2026, the company received over $370 million in damages and interest from a legal settlement with Veolium. Pro forma for these proceeds, leverage as of June 30, 2026 was 2.8x, below the company's 3.0x long-term leverage target and achieved well ahead of schedule. The company used excess liquidity to call its 2028 debt maturity at par, converting it to lower-cost prepayable debt under its undrawn credit facility, leaving no near-term debt maturities and maintaining significant available liquidity. This strong financial flexibility positions the company to execute on its large regional growth opportunity set and support increased return of capital to shareholders over the long term. - Regional Demand Growth: The company has observed accelerating announcements of new gas-fired power generation projects and supply deals in Appalachia, including a 2GW combined cycle plant in Doddridge County, West Virginia that is accessed via the company's joint venture pipeline. Management expects accelerating final investment decisions and construction starts for new regional demand projects over the coming years, with significant visible demand growth for Appalachian gas that will require incremental production from large, long-reserve-base producers like Antero Resources.

Guidance

- Full-year 2026 EBITDA guidance is maintained, with the company on track to hit its full-year target. High single-digit sequential EBITDA growth is expected in Q3 2026, driven by rising natural gas volumes. - High single-digit EBITDA growth is expected for 2027 from the ongoing integration of the HG asset water system, in addition to base organic growth.

Segment performance

This Q2 2026 reporting period marks the first full quarter of contribution from the recently acquired HG midstream assets, which have been successfully integrated. Reported adjusted EBITDA reached a company record of $289 million, representing a 2% increase from the prior period. Capital invested during the quarter totaled $47 million, and free cash flow after dividends was $80 million. This quarter marked the 12th consecutive quarter of positive free cash flow after dividends, demonstrating consistent durable cash flow generation over three years. No separate segment-level revenue or performance breakdowns were provided in the transcript.

Risks & headwinds

No explicit material risks, operational failures, or unplanned headwinds were discussed during the call.

Analyst Q&A

• Q: What are the CapEx expectations, underwriting structure, and return profile for the Eastside Express project? /

  A: Total CapEx for the project is $200 to $300 million, spent evenly over the next two to three years. It is fully underwritten by Antero Resources' development plans, with built-in optionality to add future third-party business. The pipeline has 1.5 to 2 BCF per day of capacity and 7 interconnects to long-haul pipelines. (304 characters)

• Q: What categories does the multi-billion dollar opportunity pipeline include, and what is the timeframe for additional projects? /

  A: Most opportunities are regional pipelines and laterals to connect new power plants and data centers being developed in West Virginia. Eastside Express will be built through 2028-2029, and management expects to announce additional projects in the near term. Unlike a decade ago, Antero Midstream now has the capital and expertise to develop these projects internally rather than farming them out. (347 characters)

• Q: How much growth opportunity exists for third-party business beyond Antero Resources, and what is Antero Midstream's stance on the state's 50% clean energy by 2050 power generation buildout goal? /

  A: There are 15 active projects under evaluation in West Virginia, around half of which are associated with Antero Resources, with the rest open to third-party connection. Antero Midstream fully embraces the state's buildout initiative, as the company is the only investment-grade focused midstream operator in West Virginia that produces half of the state's gas, and is well positioned to benefit from this demand growth. (352 characters)

• Q: Would production curtailments by Antero Resources to align with natural gas prices create material volume volatility or seasonality for Antero Midstream? /

  A: The proposed curtailments are only around 50 million cubic feet per day, equal to roughly 1% of Antero Midstream's current total gathered volume for potentially one quarter. This equals a total impact of less than 0.25% of annual volume, which is not material enough to move the needle for Antero Midstream's financial results. (289 characters)