ANTERO MIDSTREAM CORPORATION 3Q 2026 EARNINGS CALL - ANTERO RESOURCES CORP

Financial Performance:

• Third-quarter Adjusted EBITDA reached $291 million, representing a 3% year-over-year increase despite approximately 10 BCF of throughput curtailments.
• Capital expenditures totaled $51 million for the quarter, maintaining EBITDA growth with flat capital intensity.
• Free cash flow after dividends was $449 million, inclusive of $377 million in Clearwater litigation proceeds.
• Debt reduction exceeded $400 million during the quarter; share repurchases were accelerated once leverage targets were met.
• Net leverage stood at 2.8 times as of September 30, 2026, below the 3.0x target and down a full turn from its 2022 peak.
• Gathered volumes increased 19% and compression volumes grew 17% year-over-year.
• Both legacy and HG water systems achieved 100% uptime in Q3 2026.

Guidance and Future Outlook:

• Q4 2026 EBITDA is projected to reach an all-time high, driven by higher freshwater delivery volumes and modest throughput growth net of curtailments.
• Q4 2026 EBITDA is expected to grow in the high single digits quarter-over-quarter.
• Full-year 2027 EBITDA is forecasted to achieve double-digit year-over-year growth, fueled by the integration of water synergies, completion of the HG water system, and the ramp-up of two completion crews on dedicated acreage.
• Capital investment is expected to step up in 2027, with over $100 million allocated incrementally to organic programs and regional gas demand projects, including the Eastside Express.
• Antero Resources (AR) has guided for 15-20 BCF production in 2027, which translates to approximately 4.5 BCFE throughput for Antero Midstream.

Business Segments and Product Lines:

• Water Services: Two completion crews are operating on acreage dedicated to Antero Midstream; the HG water system integration is on track for completion by year-end to realize all acquired synergies.
• Regional Pipeline: A new business unit is under development focusing on "demand-pull" infrastructure rather than producer push.
• Eastside Express: Currently under construction with a scope of $200–$300 million, involving roughly seven interconnects with downstream pipelines, with a targeted completion timeframe of late 2028 to 2029.
• North-South Pipeline: An initial capital assessment is underway to connect Antero's field to the growing Clarington market; a Final Investment Decision (FID) is anticipated in 2027.
• Acquisition Integration: Successfully integrated five acquisitions totaling $1.4 billion since 2022, increasing throughput by over 1 BCF per day and reducing the share count by over 6 million shares.

Market and Competitive Landscape:

• Industry dynamics have shifted from producer-led expansions to demand-pull opportunities driven by LNG facilities, utilities, and the electrification of America.
• Management highlights interest from multiple downstream counterparties seeking access to Antero's natural gas, signaling robust demand for midstream infrastructure in Appalachia.
• The company aims to capitalize on expiring third-party agreements to capture more of the value chain, positioning itself as an industrial builder in West Virginia.
• Antero Midstream leverages its scale, balance sheet capacity, and integrated footprint to pursue billion-dollar regional pipeline projects previously farmed out to third parties.

Risks and Challenges:

• Throughput and earnings were temporarily impacted by approximately 10 BCF of curtailments in Q3 2026 due to physical constraints.
• Future growth depends on the successful execution of complex regional pipeline projects and the realization of synergies from the HG acquisition.
• Capital intensity will increase in 2027, though management emphasizes maintaining significant balance sheet capacity to pursue further opportunities.

Management Commentary and Tone:

• Management expressed high confidence in the company's strategic pivot toward demand-driven infrastructure and its ability to finance large-scale projects internally.
• The tone regarding Q4 2026 was positive, explicitly rejecting the notion of "softness" and forecasting record EBITDA.
• Leadership emphasized a "step up" in capital allocation for 2027 while maintaining peer-leading leverage ratios.
• The strategic narrative focuses on Antero Midstream's transition to an integrated player connecting investment-grade producers with growing North American demand centers.

Analyst Questions and Answers:

• Q: Scope and timeline for Eastside Express and North-South projects?
  • A: Eastside Express scope remains $200–$300 million with 7 interconnects, targeting completion in late 2028/2029. The North-South pipeline is currently in the scoping phase, with an anticipated FID in 2027.
• Q: Explanation of Q3/Q4 softness and the bridge to double-digit EBITDA growth in 2027?
  • A: Management clarified that Q4 will not be soft but will be an all-time high for EBITDA. The growth trajectory is driven by Antero Resources' 15-20 BCF guidance, increased water volumes from two completion crews, and throughput growth, culminating in double-digit EBITDA growth for 2027.

Other Key Points:

• The company is actively leveraging its infrastructure to own more of the value chain previously served by third-party providers as their agreements expire.
• Significant balance sheet capacity remains available to pursue large infrastructure opportunities beyond the immediate pipeline projects.
• The call referenced a separate earnings presentation available on the company website and noted the inclusion of non-GAAP financial measures in the press release.
• The "demand-pull" dynamic is identified as a key differentiator from previous expansion waves, offering Antero Midstream a unique opportunity to capture value in the regional gas market.