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Antero Midstream (AM) Stock Dips 3.4% Despite Q4 Earnings Beat

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Antero Midstream Corporation’s AM shares have declined 3.4% since the fourth-quarter 2021 earnings announcement on Feb 16. Despite the earnings beat, investors are worried about the pandemic-induced uncertainties affecting upstream operations, which will continue to hurt the midstream firm.

The company reported fourth-quarter adjusted earnings per share of 20 cents, beating the Zacks Consensus Estimate by a penny. However, the bottom line declined from the year-ago quarter’s 21 cents per share.

Total quarterly revenues of $216.5 million surpassed the Zacks Consensus Estimate of $204 million. The top line also increased from $204 million in the year-ago quarter.

The better-than-expected earnings can be attributed to higher freshwater delivery volumes. The positives were partially offset by lower compression and gathering volumes.

Antero Midstream Corporation Price, Consensus and EPS Surprise

Antero Midstream Corporation Price, Consensus and EPS Surprise
Antero Midstream Corporation Price, Consensus and EPS Surprise

Antero Midstream Corporation price-consensus-eps-surprise-chart | Antero Midstream Corporation Quote

Operational Performance

For fourth-quarter 2021, average daily compression volumes were recorded at 2,843 million cubic feet (MMcf/d), down from the year-ago level of 2,851 MMcf/d. On a per-Mcf basis, the compression fee was 20 cents, improving from the prior-year quarter’s 19 cents.

For the reported quarter, high-pressure gathering volumes totaled 2,915 MMcf/d, down from the year-ago period’s 3,017 MMcf/d. On a per-Mcf basis, the average gathering high-pressure fee was 20 cents, improving from the prior-year level of 19 cents.

Low-pressure gathering volumes averaged 2,961 MMcf/d, down from the fourth-quarter 2020 figure of 3,053 MMcf/d. On a per-Mcf basis, the average gathering low-pressure fee was 33 cents, in line with the prior-year level.

Freshwater delivery volumes were at 80 MBbls/d, up 86% from the prior-year level of 43 MBbls/d. On a per-barrel basis, the average freshwater distribution fee was $3.97 per barrel in the reported quarter, up from $3.96 in the prior-year quarter.

Operating Expenses

For fourth-quarter 2021, direct operating expenses were recorded at $38.8 million, up from $36.5 million a year ago. G&A expenses rose to $16.8 million from $13 million in the year-ago quarter.

Total expenses for the quarter were $88 million, decreasing from the fourth-quarter 2020 levels of $89 million.

Balance Sheet

As of Dec 31, Antero Midstream had no cash and cash equivalents. As of the same date, the company had $3,122.9 million of long-term debt, sequentially up from $3,095.6 million. It had a long-term debt to capitalization of 57.2%.

Other Details

Free cash flow after dividend payments was a $19.4-million deficit in the fourth quarter.

Capital expenditure (accrual basis) was recorded at $80 million, increasing 179% from the prior-year quarter. Net cash from operations was $164 million in the reported quarter.

Outlook

For 2022, Antero Midstream expects a net income of $330-$370 million and an adjusted net income of $385-$425 million. The company projects adjusted EBITDA at $850-$890 million. It expects a capital budget of $275-$300 million for the year.

The midstream operator anticipates free cash flow before dividends of $385-$425 million, while free cash flow after dividends is expected to be a $45-$5 million deficit for the year. Notably, the company is projecting year-over-year throughput growth in the low-single-digits for 2022.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at the following stocks that reported solid fourth-quarter earnings numbers and presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Valero Energy Corporation VLO is the largest independent refiner and marketer of petroleum products in the United States. VLO reported fourth-quarter 2021 adjusted earnings of $2.47 per share, improving from a loss of $1.06 in the year-ago quarter.

Valero is expected to see an earnings growth of 152.7% in 2022. Among all the independent refiners, The company offers the most diversified refinery base, with a capacity of 3.1 million barrels per day, in its 15 refineries throughout the United States, Canada and the Caribbean. VLO’s Refining segment was responsible for 81.7% of the total margin in 2021.

Exxon Mobil Corporation XOM, based in Irving, TX, is one of the leading integrated energy companies in the world. XOM reported fourth-quarter 2021 earnings per share of $2.05, excluding identified items, beating the Zacks Consensus Estimate of $1.96 per share.

ExxonMobil is expected to see an earnings growth of 27.3% in 2022. ExxonMobil has initiated share repurchases at the beginning of the March-end quarter of this year. The buybacks are associated with the repurchase plan announced earlier, representing the program of repurchasing up to $10 billion over the next 12 to 24 months.

Marathon Oil Corporation MRO is a leading oil and natural gas exploration and production company, with operations in the United States and Africa. MRO reported fourth-quarter 2021 adjusted net income per share of 77 cents, comprehensively beating the Zacks Consensus Estimate of 55 cents.

Marathon Oil’s earnings for 2022 are expected to soar 75.8% year over year. In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, MRO has executed $1 billion of share repurchases since October 2021 (with $1.7 billion remaining under the current authorization) and recently announced a dividend hike.


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