Am website presentation september 2015

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  1. 1. Partnership Overview September 2015
  2. 2. FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Antero Midstream Partners LP, and its subsidiaries (collectively, the Partnership) expect, believe or anticipate will or may occur in the future are forward-looking statements. The words believe, expect, anticipate, plan, intend, estimate, project, foresee, should, would, could, or other similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation specifically include expectations of plans, strategies, objectives, and anticipated financial and operating results of the Partnership and Antero Resources Corporation (Antero Resources). These statements are based on certain assumptions made by the Partnership and Antero Resources based on managements experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced under the heading Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2014 and in the Partnerships subsequent filings with the SEC. The Partnership cautions you that these forward-looking statements are subject to risks and uncertainties that may cause these statements to be inaccurate, and readers are cautioned not to place undue reliance on such statements. These risks include, but are not limited to, Antero Resources expected future growth, Antero Resources ability to meet its drilling and development plan, commodity price volatility, inflation, environmental risks, drilling and completion and other operating risks, regulatory changes, the uncertainty inherent in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks discussed or referenced under the heading Item 1A. Risk Factors in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2014 and in the Partnerships subsequent filings with the SEC. Our ability to make future distributions is substantially dependent upon the development and drilling plan of Antero Resources, which itself is substantially dependent upon the review and approval by the board of directors of Antero Resources of its capital budget on an annual basis. In connection with the review and approval of the annual capital budget by the board of directors of Antero Resources, the board of directors will take into consideration many factors, including expected commodity prices and the existing contractual obligations and capital resources and liquidity of Antero Resources at the time. Any forward-looking statement speaks only as of the date on which such statement is made, and the Partnership undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. 1 Antero Midstream Partners LP is denoted as AM and Antero Resources Corporation is denoted as AR in the presentation, which are their respective New York Stock Exchange ticker symbols.
  3. 3. Transaction Specifics ASSETS: Anteros Marcellus and Utica freshwater delivery business, the fully contracted future advanced wastewater treatment complex and 20-year agreement to cover all fluid handling and disposal services for Antero PURCHASE PRICE: $1.05 billion initial payment at closing and earn out payments at year-end 2019 and 2020 of $125 million each if 3-year volume threshold is met MINIMUM VOLUME COMMITMENTS: 90,000 Bbl/d in 2016, 100,000 Bbl/d in 2017 and 120,000 Bbl/d in 2018 and 2019 FINANCING: $243 million of units issued via PIPE, $257 million of units issued to Antero Resources and $552 million from existing cash and revolving credit facility; 23.9 million partnership units issued in total CLOSING: Expected to close concurrently with AM PIPE unit offering on September 23, 2015 Transaction Rationale SCALE/GROWTH: Accretive to AM growth story and adds largest Appalachian integrated water business to high growth gathering and compressions assets to create one of the highest growth midstream MLPs in the U.S. PIPE cash proceeds to be used by AR to repay debt and fund future development plan VALUATION: Accretive purchase price at 8.5x to 9.0x projected 2016 EBITDA MIDSTREAM INTEGRATION: Integrates water delivery, water services and waste water treatment business with existing gas gathering and compression business THIRD PARTY BUSINESS: Enhances AMs ability to attract third party business fresh water supply to completions and treatment of produced and flowback water PRO FORMA LEVERAGE: Net Debt/LTM EBITDAX 1.7x; over $1 billion of AM liquidity post transaction WATER DROP DOWN ANNOUNCED 2
  4. 4. MVCS SUPPORT AND EARN OUTS DRIVE RETURNS 31. The 2019 earn out is based on a trailing 36 month fresh water delivery volume average at the end of 2019 of 161,000 Bbl/d while the 2020 earn out is based on a trailing 36 month fresh water delivery volume average at the end of 2020 of 200,000 Bbl/d. Minimum volume commitments (MVCs) on fresh water delivery volumes, at $3.68 and $3.63 per barrel for the Marcellus and Utica respectively (with CPI adjustments), support revenues and rates of return for the water business acquisition Earn out payments at year-end 2019 and 2020 provide incentives for the sponsor to perform long-term 0 40 80 120 160 200 2014 2015E 2016E 2017E 2018E 2019E 2020E MBbl/d Actual Volumes Estimated Volumes MVCs Fresh Water Delivery MVCs and Earn Out Payments(1) 177Completions 130Completions 125-135Completions 2020 Earn Out 200 MBbl/d Avg 2019 Earn Out 161 MBbl/d Avg MVC 90K MVC 100K MVC 120K MVC 120K 125K 80K - 85K 50 Deferred Completions Transaction Metrics 2016E EBITDA: $115MM - $125MM Estimated Volume: 115K - 125K Bbl/d 2016E Completions: 160 - 170 2016E Volume Midpoint 120K
  5. 5. ANTERO MIDSTREAM 2015 GUIDANCE Key Variable 2015 Guidance(1) 2015 Revised Guidance(2) Adjusted EBITDA ($MM) $150 - $160 $170 - $180 Distributable Cash Flow ($MM) $135 - $145 $150 - $160 Year-over-Year Distribution Growth(3) 28% - 30% 28% - 30% Low Pressure Pipelines Added (Miles) 44 27 High Pressure Pipelines Added (Miles) 20 15 Compression Capacity Added (MMcf/d) 545 545 Capital Expenditures ($MM) Low Pressure Gathering $165 - $170 $90 - $95 High Pressure Gathering $85 - $90 $70 - $75 Compression $160 - $165 $165 - $170 Condensate Gathering $5 - $10 $5 Water Infrastructure(4) - $80 - $90 Maintenance Capital $10 - $15 $15 Total Capital Expenditures ($MM) $425 - $450 $425 - $450 1. Financial guidance per Partnership press release dated 1/20/2015. 2. Updated financial guidance for water drop down. 3. Reflects the expected distribution growth associated with the fourth quarter 2015 over the fourth quarter 2014. 4. Includes fresh water delivery system plus waste water treatment capital expenditures. Key Operating & Financial Assumptions 4
  6. 6. Sustainable Business Model High Growth Sponsor Drives AM Throughput and Distribution Growth Largest Dedicated Core Liquids-Rich Acreage Position in Appalachia $1.0+ Billion of AM Liquidity 5 Premier E&P Operator in Appalachia 100% Fixed Fee and Largest Firm Transport and Hedge Portfolio Opportunity to Build Out Northeast Value Chain Growth Liquids- Rich Value Chain Opportunity High Visibility Sponsor Strength LEADING UNCONVENTIONAL MIDSTREAM BUSINESS MODEL Just-in Time Non-Speculative Capital Program Strong Financial Position Mitigated Commodity Risk 1 2 3 4 5 67 8 Premier Appalachian Midstream Partnership Run by Co-Founders Consolidated Acreage Position in Lowest Unit Cost Basin
  7. 7. - 100 200 300 400 500 600 Core Net Acres - Dry Core Net Acres - Liquids-Rich Largest Liquids-Rich Core Position in Appalachia 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Largest Proved Reserve Base in Appalachia Top Producers in Appalachia (Net MMcfe/d) 2Q 2015(1)(2) Top 12 U.S. Natural Gas Producers (Net MMcf/d) 2Q 2015(1) Appalachian Producers by Proved Reserves (Bcfe) YE 2014(1)(2)Appalachian Producers by Core Net Acres (000s) August 2015(3)(4) 1. Based on company filings and presentations. 2. Appalachian only production and reserves where available. Excludes companies that do not break out Appalachian production including CHK, CVX, HES and XOM. 3. Based on Antero geologic interpretation supported by state well data, company presentations and public land data. Peer group includes AEP, CHK, CNX, COG, CVX, EQT, NBL, RICE, RRC, STO, SWN. 4. Southwestern leasehold and reserves include the impact from STO and WPX property acquisitions closed in January 2015. 5. Includes proved reserves categorized in Northern Division consisting of Utica Shale, Marcellus Shale and Powder River Basin. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Appalachian Peers 11th Largest U.S. Gas Producer 6 3rd Largest Appalachian Producer SPONSOR STRENGTH LEADERSHIP IN APPALACHIAN BASIN
  8. 8. Note: 2014 SEC prices were $4.07/MMBtu for natural gas and $81.48/Bbl for oil on a weighted average Appalachian index basis. 1. All net acres allocated to the WV/PA Utica Shale Dry Gas and Upper Devonian Shale are included among the net acres allocated to the Marcellus Shale as they are stacked pay formations attributa