Q2 2024 Antero Midstream Corp Earnings Call

Greetings. Welcome to the Ontario Midstream second quarter 2024 earnings call. At this time all participants are in listen-only mode. The question and answer session will follow the formal presentation.

Operator: At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today is sure to acquire operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded.

Operator: At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded.

If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad.

Justin Agnew: At this time, we'll now turn the conference over to Justin Agnew, Vice President and Finance. Justin, you may now begin your presentation. Thanks, operator, and good morning. 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.

Please note, this conference is being recorded.

At this time, we'll now turn the conference over to Justin Agnew, Vice President of Finance. Justin, you may now begin your presentation.

Justin Agnew: Thanks, operator, and good morning. Thank you for joining us on Antero Midstream's second quarter investor conference call. We will 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. Additionally, today's call may also contain certain non-GAAP financial measures.

Justin Agnew: Thanks, Operator, and good morning. Thank you for joining us for Antero Midstream's second quarter investor conference call.

Justin Agnew: 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.

Justin Agnew: 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 reconciliation to the most comparable GAAP financial measures.

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.

Justin Agnew: 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.

Justin Agnew: 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.

Speaker Change: 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.

Paul Rady: With that, I'll turn the call over to Paul. Thanks, Justin. Good morning, everyone.

Paul Rady: Thanks, Justin. Good morning, everyone.

Paul Rady: In my comments, I will discuss our Bolton acquisition and peer-leading break evens at AR. I'm referring to Antero Resources.

Paul Rady: In my comments, I will discuss our bolt-on acquisition and peer-leading breakevens at AR. I'm referring to Antero Resources. Brendan will then walk through our quarterly results and recent credit improvements. Let's start on slide number three, titled Marcellus Bolton acquisition highlight. During the second quarter, we closed on a $70 million acquisition from Summit Midstream. The acquisition included two compressor stations with 100 million cubic feet of daily capacity and approximately 50 miles of high-pressure pipelines in the Marcellus Shale, highlighted in purple on the map.

Paul Rady: Thanks, Justin. Good morning, everyone.

Speaker Change: In my comments, I will discuss our bolt-on acquisition and peer leading break-evens at A.R.

Paul Rady: Brendan will then walk through our quarterly results and recent credit improvements. Let's start on slide number three titled Marcellus Bolton Acquisition Highlights. During the second quarter, we closed down a $70 million acquisition from Summit Midstream. The acquisition included two compressor stations with a 100 million cubic feet a day of capacity and approximately 50 miles of high pressure pipelines in the Marcellus Shale highlighted in purple on the map. These highly strategic assets are already connected to Antero Midstream's infrastructure and support the future development by Antero Resources, which is now an investment-grade counterparty. In line with our previous Bolton acquisitions, all of the throughput volume on these assets is from Antero Resources' production.

I'm referring to Antero Resources.

Brendan will then walk through our quarterly results and recent credit improvements.

Brendan Krueger: Let's start on slide number three titled Marcellus Bolton Acquisition Highlights.

Brendan: During the second quarter, we closed on a $70 million acquisition from Summit Midstream.

Brendan: The acquisition included two compressor stations with 100 million cubic feet a day of capacity and approximately 50 miles of high-pressure pipelines in the Marcellus Shale, highlighted in purple on the map.

Paul Rady: These highly strategic assets are already connected to Antero Midstream's infrastructure and support the future development of Antero Resources, which is now an investment grade counterparty. In line with our previous bolt-on acquisitions, all of the throughput volume on these assets is from Antero Resources Production. Most importantly, this transaction was immediately accretive to free cash flow and keeps us on track to achieve our leverage target of 3.0 times in the back half of this year. Now, let's move on to slide number four, the title.

Brendan: These highly strategic assets are already connected to NTERO midstreams infrastructure and support the future development by NTERO resources, which is now an investment grade counterparty.

Paul Rady: In line with our previous bolt-on acquisitions, all of the throughput volume on these assets is from Antero Resources Production.

Paul Rady: Most importantly, this transaction was immediately accretive to free cash flow that keeps us on track to achieve our leveraged target of 3.0 times in the back half of this year.

Brendan: Most importantly, this transaction was immediately accretive to free cash flow and keeps us on track to achieve our leverage target of 3.0 times in the back half of this year.

Paul Rady: Now let's move on to slide number four titled "AR has the lowest free cash flow break evens." The left hand side of the page illustrates AR's free cash flow break even gas price of $2.20 per MCF. This peer leading break even is due to several factors, including strong wall performance, low maintenance capital requirements, and high exposure to liquid prices. In particular, AR's exposure to international prices and widening ARBs have resulted in strong C3 plus NGL pricing, which provided a $10 per MCF E uplift to the equivalent price realizations in the first half of 2024. These low-break even prices led to a peer-leading unhedged free cash flow profile, which is shown on the right-hand side of the page.

Paul Rady: AR has the lowest free cash flow rate either. The left-hand side of the page illustrates AR's free cash flow break-even gas price of $2.20 per mcf. This peer-leading breakeven is due to several factors, including strong well performance, low maintenance capital requirements, and high exposure to liquids prices. In particular, AR's exposure to international prices and widening ARBs has resulted in strong C3 plus NGL prices, which provided a $1.10 per MCFE uplift to the equivalent price realizations in the first half of 2024.

Paul Rady: Now let's move on to slide number four titled AR has the lowest free cash flow break evens.

The left-hand side of the page illustrates AR's free cash flow break-even gas price of $2.20 per MCF.

Paul Rady: This peer-leading break-even is due to several factors including strong well-performance, low maintenance capital requirements, and high exposure to liquids prices.

In particular, A.R.'s exposure to international prices and widening ARBs have resulted in strong C3-plus NGL pricing.

Paul Rady: which provided a $1.10 per mcf e uplift to the equivalent price realizations in the first half of 2024

Paul Rady: These low break-even prices led to a peer-leading, unhedged free cash flow profile, which is shown on the right-hand side of the page. However, despite NYMEX gas prices of only $2.07 in the first half of 2024, AR's unhedged outspend has only been $59 million, well below the rest of the natural gas peer group. These results, combined with AR's balance sheet strength, were the primary drivers of the upgrade to investment grade for AR. In summary, we continue to expand our asset base at AM to support the strongest producer with the lowest natural gas break-even prices.

Paul Rady: These low break-even prices led to a peer-leading, unhedged free cash flow profile, which is shown on the right-hand side of the page.

Paul Rady: Despite 9x gas prices only of only $2.7 in the first half of 2024, AR's unhedged outspin has only been $59 million, well below the rest of the natural gas peer group. These results combined with AR's balance sheet strength were the primary drivers of the upgrade to investment grade for AR.

Paul Rady: Despite NYMEX gas prices of only $2.07 in the first half of 2024, AR's unhedged outspend has only been $59 million, well below the rest of the natural gas peer group.

Paul Rady: These results, combined with AR's balance sheet strength, were the primary drivers of the upgrade to investment grade for AR.

Paul Rady: In summary, we continue to expand our asset base at AM to support the strongest producer with the lowest gas, natural gas, break-even prices in the US.

Brendan: In summary, we continue to expand our asset base at AM to support the strongest producer with the lowest natural gas break-even prices in the U.S. And with that, I will turn the call over to Brendan.

Brendan Krueger: And with that, I will turn the call over to Brendan. Thanks, Paul. I will begin my comments on slide number 5 titled Second Quarter 2024 Highlights. A drop to the EBITDAB of the second quarter was $255 million, which was a 5% increase year over year. Free cash flow after dividends during the quarter was $43 million, a 41% increase compared to the second quarter last year. Both of these metrics are quite notable, given AR is only running two rigs in one completion crew today. Importantly, our leverage remained flat quarter over quarter at 3.1 times, despite the $70 million cash-funded acquisition during the quarter.

Brendan Krueger: Thanks, Paul. I will begin my comments on slide number five, titled Second Quarter 2024 Highlights. Adjusted EBITDA for the second quarter was $255 million, which was a 5% increase year-over-year. Free cash flow after dividends during the quarter was $43 million, a 41% increase compared to the second quarter of last year. Both of these metrics are quite notable given AR is only running two rigs in one completion crew

Brendan: Thanks Paul. I will begin my comments on slide number five titled second quarter 2024 highlights.

Brendan: Adopted EBITDA for the second quarter was $255 million, which was a 5% increase year-over-year.

Brendan: Free cash flow after dividends during the quarter was $43 million, a 41% increase compared to the second quarter of last year.

Paul Rady: Both of these metrics are quite notable given A.R. is only running two rigs and one completion crew today. Importantly, our leverage remained flat quarter over quarter at 3.1 times despite the $70 million cash funded acquisition during the quarter.

Brendan Krueger: Importantly, our leverage remained flat quarter over quarter at 3.1 times, despite the $70 million cash-funded acquisition during the quarter. This highlights the attractive purchase price and immediate accretion to AM's free cash flow from the bolt-on acquisition. Next, let's move on to slide 6, titled Improved Balance Sheet Flexibility. This slide highlights the successful refinancings in 2024 that provide us with the financial flexibility to execute on our attractive organic capital program and acquisition opportunities. In January, we issued 600 million of senior notes due in 2032, which was upsized due to oversubscribed demand. Proceeds from the offering were used to call our highest coupon notes in May.

Brendan Krueger: This highlights the attractive purchase price and immediate accretion to AM's free cash flow from the bolt-on acquisition.

Paul Rady: This highlights the attractive purchase price and immediate accretion to AM's free cash flow from the bolt-on acquisition.

Brendan Krueger: Next, let's move on to slide 6 titled Improved Balance Sheet Flexibility. This slide highlights the successful re-financing in 2024 that provides us with the financial flexibility to execute on our attractive organic capital program and acquisition opportunities. In January, we issued 600 million of senior notes due in 2032, which was upside due to oversubscribed demand. Proceeds from the offering were used to call our highest coupon notes in May. This was an NPV positive re-financing, which lowers our go-forward interest expense and expands our free cash flow. In July, we extended the maturity of a revolving credit facility to 2029 and maintained our 1.25 billion of commitments, providing additional near-term balance sheet flexibility.

Paul Rady: Next, let's move on to slide 6, titled Improved Balance Sheet Flexibility.

This slide highlights the successful refinancings in 2024 that provides us with the financial flexibility to execute on our attractive organic capital program and acquisition opportunities.

Paul Rady: In January we issued 600 million of senior notes

Paul Rady: due in 2032, which was upsized due to oversubscribed demand.

Brendan Krueger: This was an NPV positive refinancing, which lowers our go-forward interest expense and expands our pre-cash flow. In July, we extended the maturity of our evolving credit facility to 2029 and maintained our $1.25 billion of commitments, providing additional near-term balance sheet flexibility. As of June 30th, we had $556 million borrowed under our credit facility, resulting in almost $700 million of liquidity.

Paul Rady: Proceeds from the offering were used to call our highest coupon notes in May. This was an NPV positive refinancing which lowers our go-forward interest expense and expands our pre-cash bill.

Paul Rady: In July, we extended the maturity of our evolving credit facility to 2029 and maintained our $1.25 billion of commitments, providing additional near-term balance sheet flexibility.

Brendan Krueger: As of June 30th, we had 556 million borrowed under our credit facility, resulting in almost 700 million of liquidity.

Paul Rady: As of June 30th, we had $556 million borrowed under our credit facility, resulting in almost $700 million of liquidity.

Brendan Krueger: I'll finish my comments on slide 7, because I am a consistent free cash flow and credit momentum. This slide illustrates Antehromit Stream's leverage in credit ratings since we transitioned to a business model that generates consistent free cash flow after dividends in 2020. In May of this year, we received an upgrade from S&P to double B plus on our corporate credit rating. This is the fourth ratings increase from S&P since the end of 2020 and validates the significant progress we have made towards our debt and lending. Over the same time frame, annual EBITDA has increased by over 25%.

Brendan Krueger: I'll finish my comments on slide 7, titled Consistent Free Cash Flow and Credit. This slide illustrates Antero Midstream's leverage in credit ratings since we transitioned to a business model that generates consistent free cash flow after dividends in 2020. In May of this year, we received an upgrade from S&P to BB Plus on our corporate credit rating. This is the fourth rating increase from S&P since the end of 2020 and validates the significant progress we have made towards our debt and leverage targets.

Paul Rady: I'll finish my comments on slide 7, titled Consistent Free Cash Flow and Credit Momentum.

Paul Rady: This slide illustrates Antero Midstream's leverage in credit ratings since we transitioned to a business model that generates consistent free cash flow after dividends in 2020.

Paul Rady: In May of this year, we received an upgrade from S&P to BB Plus on our corporate credit rating. This is the fourth ratings increase from S&P since the end of 2020 and validates the significant progress we have made towards our debt and leverage targets.

Brendan Krueger: Over the same time frame, annual EBITDA has increased by over 25%. We have generated over $280 million of cumulative, free cash flow after dividends, and we have reduced our leverage to 3.1 times. All of this was accomplished while acquiring almost $300 million of bolt-on assets without any equity issuance.

Brendan Krueger: We have generated over 280 million of cumulative free cash flow after dividends, and we have reduced our leverage to 3.1 times. All of this was accomplished while acquiring almost 300 million of bolt-on assets without any equity issuance. This is a testament to our patience and strict return thresholds on our acquisition operations. opportunities, our ability to quickly integrate assets and drive synergies, and our execution on our base organic growth business model.

Over the same time frame, annual EBITDA has increased by over 25%, we have generated over $280 million of cumulative free cash flow after dividends, and we have reduced our leverage to 3.1 times.

Brendan Krueger: This is a testament to our patience and strict return thresholds on our acquisition opportunities, our ability to quickly integrate assets and drive synergies, and our execution on our base organic growth business model. In summary, we continue to execute on our business plan of delivering organic growth supplemented by attractive bolt-on asset acquisitions. We have taken a proactive approach toward debt reduction and extending debt maturities, which provides us with tremendous balance sheet strength and flexibility. As we approach our three times leverage target, we are well positioned to return additional capital to shareholders in the near term. With that, operator, we are ready to take questions. Come on now, be kinder.

Brendan Krueger: In summary, we continue to execute on our business plan of delivering organic growth supplemented by attractive bolt-on asset acquisitions. We have taken a proactive approach towards debt reduction and extending debt maturities, which provides us with tremendous balance sheets, strengths, and flexibility. As we approach our three times leverage target, we are well positioned to return additional capital to shareholders in the near term.

Operator: With that operator, we are ready to take questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One will please be pulled for questions. Thank you.

Operator: will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Operator: One moment, please, while we poll for questions. Thank you. Thank you. Our first question is from the line of Ned Baramov with Wells Fargo. Please proceed with your question.

Ned Baramov: Our first question is from the line of Ned Baramoth with Wells Fargo.

Ned Baramov: Please just use your questions. Hi, and thanks for taking the questions. Starting with the deferred pad at AR, was this potential delay in when AM begins to gather and compress volumes from these five wells reflected in your most recent guidance update from May? Yes, that's currently in the guidance update overall. To the extent that gets deferred further, that would also fall within our guidance range that we provided, so no change to what we've provided out there as a result of that deferred to the end of the year.

Ned Baramov: Hi, and thanks for taking the questions. Starting with the deferred pad at AR, was this potential delay in when AM begins to gather and compress volumes from these five wells reflected in your most recent guidance update from

Speaker Change: Was this potential delay in when AM begins to gather and compress volumes from these five wells reflected in your most recent guidance update from May?

Brendan Krueger: Yes, that's currently in the guidance update overall. To the extent that it gets deferred further, that would also fall within the guidance range that we've provided, so there would be no change to what we've provided out there as a result of that deferral to the end of the year.

Speaker Change: Yes, that's currently in the guidance update overall. To the extent that gets deferred further, that would also fall within our guidance range that we've provided, so no change to what we've provided out there as a result of that deferral to the end of the year.

Ned Baramov: Understood. And then my second question, can you maybe shed some light on your water results in the second quarter? It seems overall volumes declined to about 81,000 barrels a day from 113,000 barrels a day in the first quarter, but at the same time, the number of service wells increased from 17 wells in the first quarter to 19. So I guess, taken together, this implies much less water per well in the second quarter. So I guess I presume this is related to the timing of well-servicing, but any color you can provide would be helpful. Yeah, no, it's a good question, Ned.

Ned Baramov: And then my second question, could you maybe shed some light on your water results for the second quarter? It seems overall volumes declined to about 81,000 barrels a day from 113,000 barrels a day in the first quarter. But at the same time, the number of serviced wells increased from 17 wells in the first quarter to 19. So I guess taken together, this implies much less water per well in the second quarter. So, and I presume this is related to the timing of well servicing, but any color you can provide would be helpful.

Speaker Change: Your water results in the second quarter, it seems overall volumes declined to about 81,000 barrels a day from 113,000 barrels a day in the first quarter.

Speaker Change: But at the same time, the number of serviced wells increased from 17 wells in the first quarter to 19. So, I guess, taken together, this implies...

Speaker Change: much less water per well in the second quarter. So, and I guess I presume this is related to the timing of well servicing, but any color you can provide would be helpful.

Brendan Krueger: Yeah, no, it's a good question, Ned. It really is related to just how we define well service. So, in particular, there was a seven-well pad that the well began to be serviced at the end of June, but really, most of that volume will come in the third quarter. So, the 19 wells, if you take out the seven-well pad, it's really like 12 wells.

Ned Baramov: It really is related to just how we define well-service. So, in particular, there was a seven-well pad that the wells began to be serviced at the end of June, but really most of that volume will come in the third quarter. So the 19 wells, if you take out the seven well pad, it's really like 12 wells. And the decline in volumes from the first quarter was really just a result of going A.R. going from two completion crews to one completion crew. So it's quite impressive, actually, today. We were looking back historically when you ran one completion crew, it was about 50,000 barrels a day.

Ed: Yeah, that's a good question, Ed. It really is related to just how we define well service. So, in particular, there was a seven well pad.

Speaker Change: that the wells began to be serviced.

Speaker Change: at the end of June, but really most of that volume will come in the third quarter. So the 19 wells, if you take out the seven well pad, it's really like 12 wells.

Brendan Krueger: And the decline in volumes from the first quarter is really just a result of AR going from two completion crews to one completion crew. So, it's quite impressive, actually, today. We were looking back.

Speaker Change: And the decline in volumes from the first quarter was really just a result of AR going from two completion crews to one completion crew. So it's quite impressive actually today. We were looking back.

Brendan Krueger: Historically, when you ran one completion crew, it was about 50,000 barrels a day. So, today, with one completion crew, essentially delivering 80,000 barrels a day is quite impressive and just goes to the efficiency gains overall. But at AM, going back to your question on the 19 wells, it's really just driven by the timing, and that's going to be the third quarter that that seven well pad gets pushed in.

Speaker Change: Historically, when you ran one completion crew, it was about 50,000 barrels a day. So today, with one completion crew, essentially delivering 80,000 barrels a day is quite impressive, and just goes to the efficiency gains overall.

Ned Baramov: So today, with one completion crew essentially delivering 80,000 barrels a day, is quite impressive. It just goes to the efficiency gains overall, but at AM, that going back to your question on the 19 wells, it's really just driven by the timing and that's going to be third quarter that seven well pad gets pushed in.

Ned Baramov: Thank you.

Ned Baramov: Got it. Thanks for the time.

Brendan Krueger: Got it. Thanks for the time.

Operator: Thank you. Thank you.

Operator: The next question is from the line of Naomi Marsa with UBI. Please proceed with your question.

Naomi Marsa: The next question is from the line of Naomi Marsa with UBI. Please receive your questions.

Speaker Change: Thank you.

Naomi Marsa: Hey, good morning. Maybe to start on some capital allocation questions. Seems like you'll be achieving a three-times leverage target sooner rather than later. AM has maintained its DPU for quite some time now. What's the thought process on buyback versus DPU rate once that leverage target is reached, and is there some M&A that could potentially compete with buyback?

Naomi Marsa: Okay, good morning. Maybe to start on some calculation question, seems like you'll be achieving a three-time level of childhood sooner out of them later and has maintained its debut for quite some time now. What's the cost process on BiBac was in DCUV? Once that level of childhood achieved, it doesn't, and many of that could potentially compete with BiBac. Yeah, so again, I think we've talked about once we hit our three times target, we'll start that BiBac. BiBac still looks very attractive to us today. So, you know, second half of the year, we'd expect to start the BiBac program.

Speaker Change: Maybe to start on some capital allocation questions. It seems like you'll be achieving a three-times leverage target sooner rather than later. AM has maintained its DPU for quite some time now. What's the thought process on buyback versus DPU rates once that leverage target is reached? And is there some M&A that could potentially compete with buybacks?

Brendan Krueger: Yeah, so I again, we've talked about once we hit our three times target, we'll start that buyback program. Buybacks still look very attractive to us today. So, you know, in the second half of the year, we'd expect to start the buyback program. And, you know, I think we've got the $500 million authorization out there. And so, based on where we want to end up from a leverage standpoint, whether that's, you know, flat at three times or, you know, 2.9, 2.8.

Speaker Change: Yeah, so again, I think you know we've we've talked about once we hit our three times target We'll start that buyback buyback still look very attractive to us today So, you know second half of the year we'd expect to start the buyback program and

Naomi Marsa: And you know, I think we've got the 500 million authorization out there. And so, you know, based on where we want to end up from a leverage standpoint, whether that's, you know, flat at three times or, you know, 2.9, 2.8, I think we have to be cognizant of just, you know, where our equity is versus internal expectations. And again, today, very attractive. So, we would expect to use that 500 million over a fairly short time frame, given where leverage would be trending over time here.

Speaker Change: You know, I think we've got the 500 million authorization out there. And so, you know, based on where we want to end up from a leverage standpoint, whether that's.

Brendan Krueger: I think we have to be cognizant of just where our equity is versus internal expectations and, again, today, very attractive. So we would expect to use that $500 million over a fairly short timeframe, given where leverage would be trending over time here.

Speaker Change: You know flat at three times or you know 2.9 2.8. I think I think we have to be cognizant of just

Speaker Change: You know where our equity is versus internal expectations and again today very attractive. So we would expect to use that that 500 million over a you know fairly short time frame given Given where leverage would be trending over time here

Naomi Marsa: Thanks, that's helpful. Maybe as a follow-up on drivers-based business, AM increased their 24 EBITDA guidance post the acquisition of assets from Sunweb Midstream. Can you help us understand the drivers-based business growth in 24 and how that sets up for 25?

Naomi Marsa: Maybe as a follow-up on dry with the free business. And please bet 24. You bet our guidance for the acquisition of access from some of the stream. Can you help us understand the dry with the base, you know, growth in 24 on how that sets up for 25? Yeah, so for 24 again, we increased by about 15 million. You know, that acquisition we talked about, if you do the math on the 15 million increase, a little over 20 million on an annualized basis. So, about a three-and-a-half times multiple on that acquisition. So, it was a great, great acquisition from an economic standpoint, which again allowed us to keep our leverage flat despite, you know, acquiring that asset with cash.

Speaker Change: Thanks, that's helpful. Maybe as a follow-up on drivers-based business, AIM increased their 24 EBITDA guidance post-daily acquisition of assets from Samrat Mistry. Can you help us understand the drivers-based business growth in 24 and how that sets up for 25?

Brendan Krueger: Yeah, so for 24, again, we increased it by about $15 million. You know, that acquisition we talked about, if you do the math on the $15 million increase, a little over $20 million on an annualized basis. So, about a three and a half times multiple on that acquisition. So it was a great, great acquisition from an economic standpoint, which again allowed us to keep our leverage flat despite, you know, acquiring that asset with cash. So still, still able to hit that three times the target in the second half, which was our original plan.

Speaker Change: Yeah, so for...

Speaker Change: For 24, again, we increased it by about $15 million. You know, that acquisition we talked about, if you do the math on...

Speaker Change: on the $15 million increase.

Speaker Change: Little over $20 million on an annualized basis, so about a three and a half times multiple on that acquisition. So it was a great, great acquisition.

Speaker Change: from an economic standpoint, which again allowed us to keep our leverage flat despite acquiring that asset with cash. So still able to hit that three times target in the second half, which was our original plan.

Naomi Marsa: So, still able to hit that three times target in the second half, which was our original plan. As we look out, you know, I think it was just dependent on where the development plan goes at AR. AR is still talking about maintenance capital. So, I think at 8 a.m., you'll obviously have the CPI on fees. And then on the volumes should have, you know, flat volumes year over year, which gets you in that kind of low, low single digit from an EBITDA growth standpoint.

Naomi Marsa: As we look out, you know, I think it'll just depend on where the development plan goes at AR. AR is still talking about maintenance capital. So I think at AM, you'll obviously have the CPI on fees. And then on the volumes, you should have flat volumes, year over year, which gets you in that kind of low, low single digit from an EBITDA growth standpoint.

Speaker Change: As we look out, you know, I think it'll just depend on where the where the development plan goes that they are still talking about maintenance capital. So I, you know, I think at am you'll obviously have the CPI on fees.

Speaker Change: and then on the on the volumes should have you know flat volumes year over year which gets you in that kind of low low single digit from a from an EBITDA growth standpoint.

Naomi Marsa: Yeah, I'm so sorry. I'm doing it there.

Brendan Krueger: Thanks, that's helpful. I'll leave it there. Have a great rest of your day.

Naomi Marsa: Have a great rest of your day. Thanks.

Speaker Change: Thanks, that's helpful. I'll leave it there. Have a great rest of your day.

Noah Katz: Our next questions are from the line of Jeremy tonight with JP Morgan. Let's just hear you with your questions.

Operator: Our next questions are from the line of Jeremy Tonet with J.P. Morgan. I'm pleased to see you with your questions.

Speaker Change: Thanks.

Speaker Change: Our next questions are from the line of Jeremy Tonnet with JPMorgan. Let's just hear with your questions.

Noah Katz: Hey, this is Noah Katz on for Jeremy.

Noah Katz: Hey, this is Noah Katz on for Jeremy. First, I wanted to touch on the 19 wells you connected to the fresh water delivery system in the quarter, which brings you to 36 for the year. To expect for similar wells to be brought in service in 3Q and then for a step down in 4Q. Thanks. Yeah, so if you look at guidance overall, you know, we push or not push, but the 19 wells we talked about, really seven of those 19. You're getting most of that volume in the third quarter. But in terms of what, you know, what we'd look to report from the well service, you know, you should have a similar level in third course, like step down in third quarter from the second quarter in terms of well service.

Noah Katz: Hey, this is Noah Katz on for Jeremy. First I wanted to touch on the 19 wells you connected to the freshwater delivery system in the corridor which brings you to 36 for the year. Should we expect for similar wells to be brought in service in 3Q and then for a step down in 4Q? Thanks.

Brendan Krueger: Yeah, so if you look at guidance overall, we've pushed, we're not pushed, but the 19 wells, we talked about really seven of those 19, you're getting most of that volume in the third quarter. But in terms of what we'd look to, to report from a well service, you should have a similar level.

Speaker Change: Yeah, so if you look at guidance overall, you know, we've pushed, or not pushed, but the 19 wells we talked about, really...

Speaker Change: You know, you should have a similar level in third course, like step down and...

Noah Katz: And then fourth quarter should be a similar level to what you see in first quarter, assuming you run with the two completion periods. To the extent that had we talked about gets deferred, then you have less activity with those wells getting pushed out in the fourth quarter.

Speaker Change: in third quarter from the second quarter in terms of well service.

Noah Katz: Got it, that's helpful. And then, as a follow-up, can you size the impact that AR having one less completion crew for the deliveries we'll have on volumes? And I guess what are your expectations for the number of completion crews that they'll have for the remainder of the year? Thanks. Yeah, so I'm looking at third quarter, one completion crew again. We talked about the second quarter, had one completion crew at about 80,000 barrels a day, so it's a fair assumption that'll be a flat number that running one completion crew in the third quarter. And then in the fourth quarter, today's deck, you know, you run two completion crews by an expected similar level of volume, you know, to running those same amount of completion crews in the first quarter.

Noah Katz: Got it. That's helpful. And then, as a follow-up, can you size the impact that AR having one less completion crew for the deliveries will have on volumes? And I guess what are your expectations for the number of completion crews that they'll have for the remainder of the year? Thanks.

Speaker Change: Got it. That's helpful. And then as a follow-up, can you size the impact that AR having one less completion crew for the deliveries will have on volumes? And I guess, what are your expectations for the number of completion crews that they'll have for the remainder of the year? Thanks.

Brendan Krueger: Yeah, so going, you know, looking at the third quarter, one completion crew again. We talked about the second quarter and one completion crew at about 80,000 barrels a day. So it's a fair assumption that it'll be a flat number running one completion crew in the third quarter. And then in the fourth quarter, to the extent you know you run two completion crews, I'd expect a similar level of volume, you know, to running the same number of completion crews in the first quarter. Pretty simple, I think, math on that, just based on the completion crew count.

Speaker Change: Yeah, so looking at third quarter, one completion crew again, we talked about the second quarter had one completion crew at about 80,000 barrels a day, so it's a fair assumption that will be a flat number, running one completion crew in the third quarter.

Speaker Change: And then in the fourth quarter, to the extent, you know, you run two completion crews, I'd expect a similar level of volume, you know, to running those same amount of completion crews in the first quarter, so.

Noah Katz: So you know, pretty simple, I think, math on that just based on the completion crew count.

Speaker Change: Pretty simple, I think, math on that, just based on the completion crew count.

Noah Katz: Thank you.

John McKnight: Our next questions are from the line of John McKnight with Goldman Sachs.

Operator: Our next questions are from the line of John Mackay with Goldman Sachs. Please proceed with your questions.

Speaker Change: Thank you

John McKnight: Please just use your questions. Hey, all thanks for the time. Maybe as just a quick follow-up there, we're looking at the guidance range for the back half of the year. I guess, you know, how sensitive do you think you are to be able to start the buyback sometime in the second half to the timing of that, you know, that deferral at AR. I know we're talking relatively small dollars here, but just trying to figure out timing. And if that would be a driver for, let's say, more of a fourth quarter start, then let's say later this quarter.

John Mackay: Hey all, thanks for the time. Maybe as just a quick follow-up there, if we're looking at the guidance range for the back half of the year, I guess, you know, how sensitive do you think you are to being able to start the buyback sometime in the second half at the timing of that deferral at AR. I know we're talking relatively small amounts here, but just trying to figure out timing and if that would be a driver for, let's say, more of a fourth quarter start than, let's say, later this quarter.

Speaker Change: Hey y'all, thanks for the time. Maybe as just a quick follow-up there for...

Speaker Change: Looking at the guidance range for the back half of the year, I guess, you know, how sensitive do you think you are to being able to start the buyback sometime in the second half to the timing of that?

Speaker Change: you know, that deferral at AR. I know we're talking relatively small dollars here, but just trying to figure out timing and if that would be a driver for let's say more of a fourth quarter start than let's say later this quarter.

Brendan Krueger: No, I mean you're talking about $3 billion in debt, so you're not moving the needle much by a change in EBITDA on the overall three times leverage impact, so that's not really factoring into the timing there.

John McKnight: No, I mean, you're talking a three billion, three billion of debt. So you're not moving the needle much by a change in any bidon; the overall three times leverage impact. So that's not really factoring into the timing there.

Speaker Change: No, I mean you're talking a three billion of debt, so you're not moving the needle much by a change in EBITDA on the overall three times leverage impact, so that's not really factoring into the timing there.

John McKnight: For enough more broadly, you guys have been talking up maybe some more third-party opportunities. Maybe just an update on how those conversations are going, what we could be looking for, time frame, anything like that. Thanks. Yeah, John, I think those conversations continue. We're always looking at third party opportunities on the gathering side. I think we talked primarily about Ohio and the sense that we have excess capacity there. There is more activity going on in Ohio, so that, you know, we've had conversations there, but whether that comes to fruition, it's always tough to get third-party deals done.

John Mackay: Fair enough. More broadly, you guys have been talking up maybe some more third-party opportunities. Maybe just an update on how those conversations are going, what we could be looking for, time frame, anything like that. Thanks.

Speaker Change: Fair enough. More broadly, you guys have been talking up maybe some more third-party opportunities, maybe just an update on how those conversations are going, what we could be looking for, time frame, anything like that. Thanks.

Brendan Krueger: Yeah, John, I think those, you know, conversations continue. We're always looking at third-party opportunities on the gathering side. I think we talked primarily about, you know, Ohio in the sense that we have excess capacity there. There is more activity going on in Ohio, so we've had conversations there. But whether that comes to fruition, it's always tough to get third-party deals done. So whether that comes to fruition, I think it is still in the works. So nothing to add at this point.

Speaker Change: Yeah, John, I think those, you know, conversations continue. We're always looking at third-party opportunities on the gathering side. I think we talked...

Speaker Change: primarily about, you know, Ohio in the sense that we have excess capacity there. There is more activity going on in Ohio, so that, you know, we've had conversations there, but whether that comes to fruition, it's always tough to get third-party deals done.

John McKnight: So whether that comes to fruition, I think still still in the works.

John McKnight: So nothing to add at this point. Got it. Thanks for time. Thanks, John.

Speaker Change: So whether that comes to fruition, I think it's still in the works. So nothing to add at this point.

Speaker Change: Got it. Thanks for your time.

Zachery Everen: Our next question is from the line of Zach, and everyone with TPH. Please see with your question. Perfect. Thanks for taking my question, guys. I just got one for you today. Looks like rates across both gas and water ticked up quarter of a quarter. I know the CPI escalators in Q1. So maybe just any color on what might be driving those rates a little bit higher. Yeah, I think on the gathering, it was really the high pressure gathering rate. And that was just a function of how we're accounting for the summit bolt-on acquisitions there. So small change there, but again, just due to the accounting treatment.

Operator: Our next question is from the line of Zack and Everen with TPH. Please answer your question.

John: Thanks, John.

Speaker Change: Our next question is from the line of Zach Van Everen with TPH. Please proceed with your question.

Zackery Everen: Perfect, thanks for taking my question guys. I just got one for you today. Looks like rates across both gas and water ticked up quarter over quarter. I know the CPI escalators in Q1, so maybe just any color on what might be driving those rates a little bit higher.

Speaker Change: Perfect. Thanks for taking my question, guys. I just got one for you today. Looks like rates across both gas and water ticked up quarter over quarter. I know the CPI escalator is in Q1, so maybe just any color on what might be driving those rates a little bit higher.

Brendan Krueger: Yeah I think on the gathering it was it was really the high-pressure gathering rate and that was just a function of how we're accounting for the summit bolt-on acquisitions there so small change there but again just due to the accounting treatment still when you think about EBITDA impact for that again it's in that you know 20 million dollar mark for annual EBITDA it's just a matter of how it was accounted for in terms of fee versus volume

Speaker Change: Yeah, I think on the gathering, it was really the high-pressure gathering rate, and that was just a function of how we're accounting for the...

Speaker Change: the summit bolt-on acquisitions there. So a small change there, but again just due to the accounting treatment.

Zachery Everen: Still, when you think about EBITDA, in fact, from that, again, it's in that $20 million mark for annually EBITDA. It's just a matter of how it was accounted for in terms of fee versus volume. Gotcha, and then maybe on the water, it looks like that one went up quarter of a quarter as well. Yeah, I want to get back to you on that. There shouldn't be no real impact there on water. So we'll come back to you on that one. All right, perfect. Appreciate it. Thanks, guys. Thanks, sir.

Speaker Change: Still, when you think about EBITDA, in fact, for that, again, it's in that, you know, $20 million mark for annual EBITDA, it's just a matter of how it was accounted for in terms of fee versus volume.

Zackery Everen: Gotcha, and then maybe on water. It looks like that one went up quarter over quarter as well.

Brendan Krueger: Yeah, we'll have to get back to you on that. There should be no real impact on water, so we'll come back to you on that one. All right, perfect.

Speaker Change: Gotcha and then maybe on water it looks like that one went up quarter over quarter as well.

Speaker Change: I want to get back to you on that. There should be no real impact there on water. So we'll come back to you on that one.

Zackery Everen: All right. Perfect. I appreciate it. Thanks, guys.

Operator: Thank you. That will include a question and answer session.

Speaker Change: Perfect. Appreciate it. Thanks guys

Justin Agnew: That will conclude our question and answer session. I'll now turn the call back to Justin Agnew for his closing remarks.

Justin Agnew: I'll now turn the call back to Justin Agnew for closing remarks.

Speaker Change: Thank you. That will conclude our question and answer session. I'll now turn the call back to Justin Agnew for closing remarks.

Justin Agnew: Thank you, everybody, for joining today. Please feel free to reach out with any questions.

Justin Agnew: Thank you everybody for joining us today. Please feel free to reach out with any questions.

Justin Agnew: Thank you everybody for joining today. Please feel free to reach out with any questions.

Operator: This will conclude today's conference. Let me disconnect your lines at this time.

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Operator: Thank you for your participation, and have a wonderful day.

Speaker Change: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.