Antero Midstream Corporation

Greetings and welcome to Antero Midstream Third Quarter 2024 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. Vice President of Finance and Investor Relations. Thank you, Mr. Agnew. You may begin.

Good morning, and thank you for joining us for Antero Midstream's third 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 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 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 Krueger, 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, and good morning, everyone. In my comments, I will discuss AM's 2024 capital budget as well as AR's peer-leading free cash flow break-evens supported by strong international LPG pricing. Brendan will then walk through our third quarter results and fourth quarter outlook. Let me start on slide number three titled, Efficiently Executing on 2024 Capital Program. The left-hand side of the page illustrates our 2024 capital expenditures compared to our budget of $150 to $170 million. As we laid out in our initial guidance earlier this year, we had expected a majority of the capital to be invested in the second and third quarters as summer weather conditions are supportive of construction in Appalachia. During the third quarter, as a result of more favorable weather conditions, we accelerated some capital initially scheduled for later in the year. This resulted in $56 million invested during the third quarter or 35% of the full year budget. Because of this acceleration, we expect a significant decline in capital in the fourth quarter and also expect to end the year within our annual capital budget guidance range. Looking at page number three, the pictures on the right-hand side of the page depict our Torreys Peak Compressor Station. We continue to make good progress on the construction of this station, which is expected to have 160 million cubic feet a day of capacity. This station is expected to be placed online in the second quarter of 2025. and is located in the heart of our liquids-rich midstream corridor. Now let's move on to slide number four, titled International Premiums Support AR Free Cash Flow. The left-hand side of the page depicts the premium that AR receives on its propane exports transported on the Mariner East pipeline and exported out of Marcus Hood, Pennsylvania. This premium has expanded into the high 20 cents per gallon range as a result of strong international demand combined with export constraints along the Gulf Coast. This is a distinct competitive advantage for AR to have unconstrained access to the international markets and to be able to capture these premiums by selling propane at the dock at Marcus Hook. Importantly, we expect these premiums to persist into 2025 until additional export capacity along the Gulf Coast is placed online. These premiums pay our significant liquids exposure and capital efficiencies that have resulted in peer leading unhedged free cash flow break evens in 2024. As you can see on the right-hand side of the page, AR's unhedged free cash flow break-evens are approximately $2.20 per mcf of gas, well below other natural gas peers. This allows AR to continue operating at a maintenance capital level even in today's depressed natural gas environment, providing development and earning stability for AM. With that, I will turn the call over to Brendan Krueger. Thanks, Paul.