Operator: Greetings. Welcome to Antero Midstream Corporation's Q3 2026 earnings call. At this time, all participants are in listen only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that today's conference is being recorded. At this time, I will turn the conference over to Dan Katzenberg, Vice President of Investor Relations. Thank you. You may now begin.
Dan Katzenberg: Thank you for joining us for Antero Midstream's Q3 investor conference call. We will spend a few moments going through the financial and operating highlights, then we will 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.
Dan Katzenberg: Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such 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: Thanks, Dan. Good morning, everyone. I will begin on slide 3. 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.
Michael Kennedy: Higher freshwater delivery volumes in Q4, 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 Q3, positioning us well for full operational integration.
Michael Kennedy: 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 the East Side 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.
Michael Kennedy: 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 of expansions that were farmed out to third parties, Antero Midstream now has the scale, balance sheet capacity, and expertise to pursue these opportunities.
Michael Kennedy: 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.
Michael Kennedy: This strategy positions AM to play an integrated role in expanding AR's margins and to serve as the industrial builder in West Virginia, delivering customized infrastructure that connects growing demand with investment grade producers. With that, I will turn the call over to Justin.
Justin Agnew: Thanks, Mike. I will start with our Q3 highlights on slide 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 Q3 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 in flat capital.
Justin Agnew: Free cash flow after dividends was $449 million, including $377 million of Clearwater litigation proceeds. 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 will conclude our prepared remarks on slide five, which highlights the balance sheet improvement over the last several years.
Justin Agnew: As of 30 September, our leverage was 2.8 times below our three 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 have integrated five acquisitions totaling $1.4 billion, invested over $1 billion in organic growth capital, increased throughput by over one Bcf a day, and reduced our share count by over six million shares.
Justin Agnew: 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 East Side Express and other regional gas demand projects.
Justin Agnew: Even after these in-basin 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 would like to ask a question at this time, you may press star one from 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. Thank you.
Operator: The first question comes from the line of John Mackay with Goldman Sachs. Please proceed with your questions.
John Mackay: Hey, team. Thank you for the time. Appreciate the updates on East Side Express and some of the early comments on North South. Last call, you guys were still kind of codifying the scope on East Side. So just maybe if you can 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.
Justin Agnew: Yeah. Really no change to the scope of that project. Call it $200 to $300 million. Again, that is going to be roughly seven interconnects with downstream pipelines, really positioning for that demand pull industry dynamic we talked about. So really no change to that scope. Everything remains on track, on schedule for that late 2028, 2029 kind of timeframe.
Michael Kennedy: Yeah. On the North South, I do not know, John, if you caught the AR call, but we are having so much interest in the Clarington market, think it would be natural and very opportunistic for us to build a North South from our field up into that area.
John Mackay: Maybe just any timeline on that?
Michael Kennedy: Yeah. Over the next couple of years. We are actually scoping it right now, having a little initial capital right now assessing it. But I think you will probably see us FID that in 2027.
John Mackay: All right. That is clear. Thank you. Maybe a second one from me. Appreciate the commentary on double digit EBITDA growth into next year. Obviously, the Q3 and kind of implied Q4 are softer. You guys touched on that in terms of the curtailments and some of the more actual physical constraints. Maybe just walk through a little bit of the bridge for us in terms of underlying volumes versus margin versus anything else. Thank you.
Michael Kennedy: Yeah. I do not think Q4 is soft. It will be an all time high EBITDA for the company by quite a margin or quite amount. Not soft there. Then 2027 will have 10% on that. You saw AR's guidance at 15 BCF to 20 BCF, but it is still at 4.3 Bcfe versus the 4.234, I believe it was for AR. So you will have that growth in throughput. Obviously, that is a net number, so you have a little more on that on gross for 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. So that will drive the Q4 up in that high single digit EBITDA growth quarter-over-quarter. Then looking at next year at that 4.5 that AR guided, you will see that obviously come through in the throughput.
Michael Kennedy: Then you will 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 2027 over 2026.
John Mackay: Clear. Understood. Appreciate the time. Thank you.
Michael Kennedy: Sure.
Operator: Thank you. If you would like to ask a question at this time, you may press star one. Thank you. It appears we have no additional questions. We have reached the end of our question and answer session. I will hand the floor to management for any closing or final remarks.
Justin Agnew: I would like to thank you for joining me here in this 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 and have a wonderful day.
