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Antero Midstream (AM) Q4 Earnings Meet, 2021 Capex to Rise

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Antero Midstream Corporation (AM - Free Report) reported fourth-quarter 2020 adjusted earnings per share of 21 cents, in line with the Zacks Consensus Estimate. The bottom line, however, declined from the year-ago quarter’s 35 cents per share.

Quarterly revenues of $203.9 million beat the Zacks Consensus Estimate of $196 million but declined from $239 million in the year-ago quarter.

The results were supported by higher daily compression and gathering volumes of natural gas. The positives were partially offset by lower fresh water delivery volumes and decreased compression fees.

Operational Performance

For fourth-quarter 2020, average daily compression volumes were recorded at 2,851 million cubic feet (MMcf/d), up 18% from the year-ago level of 2,414 MMcf/d. On a per-Mcf basis, compression fee was 19 cents, down 5% from the prior-year quarter’s 20 cents.

For the quarter, high pressure gathering volumes totaled 3,017 MMcf/d, up from the year-ago period’s 2,613 MMcf/d. On a per-Mcf basis, average gathering high pressure fee was 19 cents, up 6% from the prior-year level.

Low pressure gathering volumes averaged 3,053 MMcf/d, up from the fourth-quarter 2019 figure of 2,639 MMcf/d. On a per-Mcf basis, average gathering low pressure fee was 33 cents, flat with the prior-year level.

Fresh water delivery volumes came in at 43 MBbls/d, down from the prior-year level of 148 MBbls/d. On a per-barrel basis, average fresh water distribution fee was $3.96 per barrel for the fourth quarter, improving from the prior-year level of $3.90.

Operating Expenses

Direct operating expenses for the quarter were recorded at $36.5 million. Total expenses for the quarter were $88.9 million.

Balance Sheet

As of Dec 31, Antero Midstream had cash and cash equivalents of $640,000, reflecting a significant decline from $2.4 million in the third quarter. As of the same date, the company had $3,091.6 million of long-term debt, sequentially down from $3,121.8 million. It had a long-term debt to capitalization of 56.1%.

DCF

Distributable cash flow was $158.7 million, with coverage of 1.1x.

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The company has a project backlog of $1.05-$1.15 billion. It is expected to come up with net income in the range of $325-$365 million in 2021 against 2020 net loss of $122.5 million. Antero Midstream is planning to invest capital in the range of $240-$260 million in 2021. Importantly, it recorded 2020 capital expenditure of $208 million.

Notably, 50% of its share repurchase program of $300 million is left, which has been extended till Jun 30, 2023. The company expects free cash flow (before dividends) for 2021 in the range of $415-$455 million, indicating a decline from the 2020 level of $497.9 million.

Zacks Rank & Key Picks

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Cactus, Inc. (WHD - Free Report) , ConocoPhillips (COP - Free Report) and Altus Midstream Company (ALTM - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cactus’ bottom-line estimates for 2021 have witnessed two upward revisions and no downward movement in the past 60 days.

ConocoPhillips’ sales for 2021 are expected to increase 54% year over year.

Altus Midstream’s bottom line for 2021 is expected to increase 380.5% year over year.

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