Antero Midstream (AM) Q3 Earnings Top on Gathering Volumes
Antero Midstream Corporation AM reported third-quarter 2023 adjusted earnings per share of 23 cents, which beat the Zacks Consensus Estimate of 21 cents. The bottom line also improved from the year-ago quarter’s level of 20 cents.
Total quarterly revenues of $264 million surpassed the Zacks Consensus Estimate of $256 million. The top line also increased from $231 million recorded in the year-ago quarter.
Such strong quarterly results were primarily driven by higher compression, gathering and freshwater delivery volumes, and increased average freshwater distribution fees.
Antero Midstream Corporation Price, Consensus and EPS Surprise
Antero Midstream Corporation price-consensus-eps-surprise-chart | Antero Midstream Corporation Quote
Operational Performance
In the third quarter, average daily compression volumes were 3,271 million cubic feet (MMcf/d) compared with 2,794 MMcf/d in the year-ago period. The reported figure was also higher than our estimate of 2,961 MMcf/d. On a per-Mcf basis, the compression fee was 21 cents, in line with the prior-year quarter’s number.
High-pressure gathering volumes totaled 2,935 MMcf/d, up from the year-ago period’s level of 2,802 MMcf/d. The figure was also higher than our estimate of 2,753 MMcf/d. On a per-Mcf basis, the average gathering high-pressure fee was 21 cents, in line with the year-ago quarter’s level.
Low-pressure gathering volumes averaged 3,323 MMcf/d compared with 2,952 MMcf/d in the third quarter of 2022. The figure was also higher than our estimate of 3,046 MMcf/d. On a per-Mcf basis, the average gathering low-pressure fee was 35 cents, higher than the prior-year quarter’s level of 34 cents. The reported figure was in line with our estimate.
Freshwater delivery volumes were registered at 106 MBbls/d, up 3% from the prior-year quarter’s level of 103 MBbls/d. On a per-barrel basis, the average freshwater distribution fee was $4.20 compared with $4.04 in the year-ago period. The figure was also higher than our estimate of $4.05.
Operating Expenses
Direct operating expenses amounted to $51.9 million, up from $46.6 million recorded a year ago.
Antero Midstream’s total operating expenses were $101.5 million, up from $93.3 million recorded in the corresponding period of 2022.
Balance Sheet
As of Sep 30, the company had no cash and cash equivalents. As of the same date, the company had $3,258.5 million of long-term debt.
Outlook
For 2023, Antero Midstream increased its adjusted EBITDA projection to the range of $970-$990 million, indicating an increase of $10 million at the mid-point of the prior guidance. The company increased free cash flow after dividends to a range of $135-$155 million. The midstream operator looks forward to leverage a target of 3.0x or less in 2024.
Zacks Rank & Other Stocks to Consider
Currently, Antero Midstream carries a Zacks Rank #2 (Buy).
Some other top-ranked players in the energy sector are APA Corporation APA, currently sporting a Zacks Rank #1 (Strong Buy), and Pioneer Natural Resources Company PXD and Diamondback Energy Inc. FANG, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based APA Corporation is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. APA boasts of a large, geographically diversified reserve base with multi-year trends in reserve replacement. It has witnessed an upward earnings estimate revision for 2024 in the past seven days.
APA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.9%.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 in the past seven days.
PXD’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 4.34%.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.
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