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Antero Midstream Partners (AM) Down 12.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Antero Midstream Partners (AM - Free Report) . Shares have lost about 12.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Antero Midstream Partners due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Second-Quarter 2018 Results

Antero Midstream Partners L.P.’s second-quarter 2018 adjusted earnings per limited partner unit of 41 cents lagged the Zacks Consensus Estimate of 43 cents. The bottom line improved from earnings of 39 cents in the year-ago quarter.

Revenues in the quarter jumped to $251 million from $194 million in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $236 million.

The growth in gathering, compression and fresh water delivery volumes has helped it in posting higher earnings and revenues. This was partially offset by fall in revenues from gathering and compression as well as water handling and treatment segments.

Distribution

Adjusted distributable cash flow was $142.2 million, up almost 30% from the prior-year quarter’s level and provided coverage of 1.3x.

On Jul 18, Antero Midstream Partners declared a quarterly cash distribution of 41.5 cents per unit, or $1.66 per unit on an annualized basis, for the quarter ended Jun 30, 2018. This represents an increase of 30% and 6% on an annual basis and sequentially, respectively. The distribution is payable on Aug 17 to unitholders of record at the close of business on Aug 2.

Operational Performance

During the second quarter of 2018, compression volumes averaged a record 1,558 MMcf/d, up 31% compared with the level in the second quarter of 2017 and also beat the Zacks Consensus Estimate of 1,573 MMcf/d. On a per-Mcf basis, compression fee was19 cents in line with the prior-year quarter level and the Zacks Consensus Estimate.

In the second quarter, high pressure gathering volumes averaged 1,932 MMcf/d, up 11% compared to the year-ago period but lagged the Zacks Consensus Estimate of 1,937 MMcf/d. On a per-Mcf basis, average gathering high pressure fee was19 cents in line with the prior-year quarter level and the Zacks Consensus Estimate.

Low pressure gathering volumes averaged 1,981 MMcf/d, up 18% compared to the second quarter of 2017 but lagged the Zacks Consensus Estimate of 1,992 MMcf/d. On a per-Mcf basis, average gathering low pressure fee was 32 cents in line with the year-ago quarter level and the Zacks Consensus Estimate.

Fresh water delivery volumes averaged 228 MBbl/d, up 32% compared to prior-year quarter and beat the Zacks Consensus Estimate of 176 MBbl/d. The growth was due to increased completion activity by Antero Resources. During the quarter, 48 well completions with its fresh water delivery system were serviced by Antero Midstream, up 29% compared to the year-ago quarter. On a per-barrel basis, average fresh water distribution fee was $3.78 in the second quarter in line with the Zacks Consensus Estimate but increased compared to the prior-year quarter level of $3.72.

Operating Expenses

Total operating expenses during the quarter was $101.2 million, down from $136.1 million in the prior year quarter.

Financials

During the quarter, the partnership’s capital investments were $128 million. As of Jun 30, 2018, Antero Midstream Partners had cash balance of $20 million. An amount of $770 million has been drawn by Antero Midstream from its bank credit facility of $1.5 billion. This results in a liquidity of $750 million.

Outlook

The partnership expects accelerated growth in the second half of 2018, as Antero Resources is anticipated to turn to sales 65-75 wells in the third quarter compared with 51 wells in the corresponding period of prior year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.41% due to these changes.

VGM Scores

Currently, Antero Midstream Partners has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Antero Midstream Partners has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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