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Antero Midstream Partners (AM) Down 4.4% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Antero Midstream Partners (AM - Free Report) . Shares have lost about 4.4% 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 drivers.

Antero Midstream Beats on Q3 Earnings and Revenues Estimates

Antero Midstream’s third-quarter 2018 adjusted earnings per limited partner unit of 44 cents beat the Zacks Consensus Estimate of 41 cents. Also, the bottom line improved from earnings of 33 cents in the year-ago quarter.

Revenues in the quarter jumped to $266 million from $194 million in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $248 million.

The growth in gathering, compression and fresh water delivery volumes have boosted the partnership's quarterly earnings and revenues.

Distribution

Adjusted distributable cash flow was $157 million, up almost 52% from the prior-year quarter's tally and provided coverage of 1.3x.

On Oct 17, Antero Midstream Partners declared a quarterly cash distribution of 44 cents per unit, or $1.76 per unit on an annualized basis, for the quarter ended Sep 30, 2018. This represents an increase of 29% and 6% on an annual basis and sequentially, respectively. The distribution is payable on Nov 16 to unitholders of record at the close of business on Nov 2.

Operational Performance

During the third quarter of 2018, compression volumes averaged a record 1,756 MMcf/d, up 45% from the year-ago quarter's level. However, the figure lagged the Zacks Consensus Estimate of 1,793 MMcf/d. On a per-Mcf basis, compression fee was 19 cents in line with the prior-year quarter's level and the Zacks Consensus Estimate.

In the third quarter, high pressure gathering volumes averaged 2,173 MMcf/d, up 13% from the year-ago quarter's tally. However, the figure lagged the Zacks Consensus Estimate of 2,188 MMcf/d. On a per-Mcf basis, average gathering high pressure fee was 19 cents in line with the prior-year quarter level and the Zacks Consensus Estimate.

Low pressure gathering volumes averaged 2,166 MMcf/d, up 37% from the figure in the third quarter of 2017. The figure lagged the Zacks Consensus Estimate of 2,225 MMcf/d. On a per-Mcf basis, average gathering low pressure fee was 32 cents, in line with the year-ago quarter's level and the Zacks Consensus Estimate.

Fresh water delivery volumes averaged 195 MBbl/d, up 37% from the prior-year quarter's level. The figure beat the Zacks Consensus Estimate of 143 MBbl/d. The upside can be attributed to increased completion activity by Antero Resources. During the quarter, 38 well completions with its fresh water delivery system were serviced by Antero Midstream, up 19% from the year-ago quarter's tally. On a per-barrel basis, average fresh water distribution fee was $3.78 in the third quarter in line with the Zacks Consensus Estimate but up from the prior-year quarter's level of $3.71.

Operating Expenses

Total operating expenses during the quarter was $110.5 million, down from $140.2 million in the prior-year quarter.

Financials

During the quarter, the partnership’s capital investments were $150 million. An amount of $875 million has been drawn by Antero Midstream from its bank credit facility of $1.5 billion. This results in a liquidity of $625 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Antero Midstream Partners has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. 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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