Antero Midstream Corporation

Greetings and welcome to the Ontario Midstream second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Justin Agnew, Director of Finance. Thank you. Please go ahead.

Good morning, and thank you for joining us for Antero Midstream's second quarter investor conference call. We'll spend a few minutes 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 www.anteromidstream.com, where we've 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 such measures, including reconciliations to the most comparable GAAP financial measures. Joining me on the call today are Paul Rady, Chairman, CEO, and President of Antero Resources and Antero Midstream, Brendan Kruger, CFO of Antero Midstream, and Michael Kennedy, CFO of Antero Resources and Director of Antero Midstream. With that, I'll turn the call over to Paul.

Thanks, Justin. Intero Midstream delivered another terrific quarter, building upon the momentum generated in the first quarter of 2023. In my comments, I will discuss the operational and capital efficiencies at both AM and AR. Brendan will then walk through the financial results that have put us on track to achieve our 2023 guidance. I'll start my comments on slide number three, titled Drilling and Completion Efficiencies at AR. After a record-breaking first quarter operationally, AR has continued success during the second quarter. As shown on the top left portion of the page, during the second quarter, AR completed over 11 stages per day. This is a 40% improvement compared to 2022, and over a 90% improvement compared to 2019. Drill outs, which are the process of drilling out the plugs in each stage of the horizontal portion of the well, exhibited the same success. Drill outs averaged 4,250 feet per day during the second quarter, a 9% increase compared to 2022, and a 50% improvement compared to 2019. These two factors have resulted in 65% shorter cycle times for AR compared to 2019, as shown at the bottom of the page. These cycle times reflect the number of days it takes to drill, complete, and place a pad to sales. Shorter cycle times equate to better capital efficiency and returns at AR, which drives the ability to consistently develop its acreage positions. dedicated to AM. Now, let's move to slide number four, titled Optimizing Compression and Processing Utilization. The top half of the page illustrates our compression capacity, including organically built compression in green and acquired compression capacity in blue. Historically, we have consistently maintained high utilization rates as a result of our just-in-time capital investment philosophy. The recent acquisitions have increased our compression capacity by over 1 BCF a day, including underutilized capacity that will support capital-efficient future developments. Importantly, we valued our acquisitions in 2022 on a PDP-only basis, so any development on the systems or reuse of underutilized assets is upside for AM. The bottom half of the page illustrates our joint venture processing capacity in the Marcellus shale. During the second quarter, our JV processing capacity of 1.6 BCF a day was 100% utilized, as a result of growth in the liquids-rich Marcellus shale. As a reminder, we can generally run approximately 10% above nameplate processing capacity, providing additional runway for growth. One of the under-recognized aspects of Antero Midstream's business model is the coordinated planning effort with Antero Resources. For example, AR will be drilling two pads in the Ohio Utica Shale later this year. This will help manage overall infrastructure and provide attractive Chicago pricing in the winter months for AR. Lastly, I want to touch on our compression capacity relocation efforts on slide number five. These relocation efforts result in capital savings for AM and peer-leading returns on invested capital. During 2022, we successfully relocated four underutilized compressor units to our Castle Peak Compressor Station to support growth in that area. Given the success of that relocation, we are now in the process of relocating the remaining eight units on the East Mountain Station over to our Gray's Peak Station, colored in blue. This station will be placed online in 2024. As you can see in the picture on the top right-hand portion of the page, we recently poured the foundations for the additional units that will be relocated to this station. Eight of the 12 units at the Grays Peak Station will be relocated units from East Mountain, resulting in 120 million cubic feet a day of initial capacity. Summary, both AR and AM are displaying incredible operational and capital efficiencies in 2023. This supports a stable outlook and gives us confidence in achieving our long-term targets. With that, I'll turn the call over to Brendan.