The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and related notes included elsewhere in this
report. The information provided below supplements, but does not form part of,
our unaudited condensed consolidated financial statements. This discussion
contains forward-looking statements that are based on the views and beliefs of
our management, as well as assumptions and estimates made by our management.
Actual results could differ materially from such forward-looking statements as a
result of various risk factors, including those that may not be in the control
of management. For further information on items that could impact our future
operating performance or financial condition, see "Item 1A. Risk Factors" and
"Cautionary Statement Regarding Forward-Looking Statements." We do not undertake
any obligation to publicly update any forward-looking statements except as
otherwise required by applicable law. In this section, references to "
Overview
We are a growth-oriented midstream energy company formed to own, operate and
develop midstream energy assets to primarily service Antero Resources'
production and completion activity. We believe that our strategically located
assets and our relationship with Antero Resources have allowed us to become a
leading midstream energy company serving the
COVID-19 Pandemic
Since the start of the COVID-19 pandemic, governments have tried to slow the spread of the virus by imposing social distancing guidelines, travel restrictions and stay-at-home orders, among other actions, which caused a significant decrease in activity in the global economy and the demand for oil, and to a lesser extent, natural gas and NGLs. As vaccines have become widely available, social distancing guidelines, travel restrictions and stay-at-home orders have eased, activity in the global economy has increased and demand for oil, natural gas and NGLs, and related commodity pricing, has improved. However, new variants of the virus could cause further commodity market volatility and resulting financial market instability, and these are variables beyond our control that may adversely impact our generation of funds from operating cash flows, distributions from unconsolidated affiliates and our ability to access the capital markets.
We have continued to operate throughout the pandemic, in some cases subject to federal, state and local regulations, and we are taking steps to protect the health and safety of our workers. We have implemented protocols to reduce the risk of an outbreak within our field operations, and these protocols have not reduced Antero Resources' production and our throughput in a significant manner. A substantial portion of our non-field level employees currently operate in a hybrid working arrangement that involves a combination of in-office and remote work-from-home arrangements. We have been able to maintain a consistent level of effectiveness through these arrangements, including maintaining our day-to-day operations, our financial reporting systems and our internal control over financial reporting. We continue to monitor the COVID-19 environment in order to protect the health and safety of our employees and contract workers.
Neither our nor Antero Resources' supply chain has experienced any significant
interruptions due to the COVID-19 pandemic. Prior to the COVID-19 pandemic,
Antero Resources had developed a diverse set of buyers and destinations, as well
as in-field and off-site storage capacity for its condensate volumes, and as a
result of the pandemic, Antero Resources has expanded its customer base and its
condensate storage capacity within the
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The global economy continues to be impacted by the effects of the COVID-19
pandemic and global events, among other factors. Employment activity has
strengthened as demonstrated by the
Growth Incentive Fee Program with Antero Resources
Our gathering and compression agreement with Antero Resources includes a growth incentive fee program whereby we agreed to provide quarterly fee reductions to Antero Resources through 2023, contingent upon Antero Resources achieving volumetric growth targets on low pressure gathering. The compression, high pressure gathering and fresh water delivery fees payable to us were unchanged. If actual low pressure volumes are below the lowest threshold for the respective period, Antero Resources will not earn a reduction in low pressure gathering fees. The following table summarizes the remaining low pressure gathering growth incentive targets through 2023:
Low Pressure Gathering Quarterly Fee Volume Growth Incentive Reduction Targets (MMcf/d) (in millions) Threshold 1 >2,900 and <3,150$12.0 Threshold 2 >3,150 and <3,400$15.5 Threshold 3 >3,400$19.0
During the three months ended
Results of Operations
We have two operating segments: (i) gathering and processing and (ii) water
handling. The gathering and processing segment includes a network of gathering
pipelines and compressor stations that collect and process production from
Antero Resources' wells in the
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