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
Marcellus Bolt-On Acquisition
On
Market Conditions and Business Trends
Commodity Markets
Prices for natural gas, NGLs and oil have increased significantly during the
nine months ended
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. Antero Resources' throughput on the assets acquired from Crestwood will be gathered under an existing agreement that will not be considered in the low pressure gathering rebate volumes with Antero Resources. 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.
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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
Economic Indicators
The economy is experiencing elevated inflation levels as a result of global
supply and demand imbalances, where global demand continues to outpace current
supplies. For example, the BLS Consumer Price Index ("CPI") for all urban
consumers increased 8% from
The global economy also continues to be impacted by the effects of the COVID-19
pandemic and global events, among other factors. These events have often caused
global supply chain disruptions with additional pressure due to trade sanctions
on
Inflationary pressures and supply chain disruptions could result in increases to our operating and capital costs that are not fixed or renegotiation of contracts and/or supply agreements, among others. These economic variables are beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.
COVID-19 Pandemic
We have continued to operate throughout the COVID-19 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 offices, and these protocols have not impacted Antero Resources' production, our throughput or our business activities. During the third quarter of 2022, we transitioned from a hybrid working arrangement for non-field level employees, which involved a combination of in-office and remote work-from-home arrangements, to an in-office working arrangement for all non-field level employees. 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.
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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