Corporate Presentation Antero Midstream Executive Summary Antero Resources Overview Natural Gas & NGL Fundamentals Appendix & Detailed Asset Overview 3
Antero Midstream Corporation at a Glance Denver, CO Antero Midstream Asset Map HEADQUARTERS S&P 400 CONSTITUENT 5.1 Bn ENTERPRISE VALUE(1) 29% OWNED BY ANTERO RESOURCES(1) Moodys S&P Fitch Ba3/B+/BB+ CORPORATE…
Antero Midstream Core Business Provides a customized, integrated full value chain midstream solution 50/50 JV Exploration & Gathering & Natural Gas C3+ NGL Production Compression Processing Fractionation Terminals & Storage Long…
Recent Announcements Repurchased 100 million of AM shares from AR (Dec 2019) Retired 19MM shares, reducing targeted 2020 dividends by over 23 million First step of ARs 750 MM to 1.0 Bn asset sale target to reduce total debt AM has…
Antero Midstream Strategy Antero Midstream Principles Priorities 1 Continue generating mid-teens return on invested capital (ROIC) Balance Sheet Strength & Flexibility 2 Maintain conservative leverage profile in mid-to-high…
Strategy Aligned with Industry Risks & Reality Energy Industry Realities Commodity Price Risk AR is focused on liquids-rich development and is 90% hedged on natural gas production through 2021 at prices 40% above current strip…
Strategy Delivers Consistent Results Across Cycles 2014 Actuals 6 Years 2020E (MLP IPO) (C-Corp) % Change NYMEX Natural Gas 4.41/MMbtu Price (/MMBtu) 2.08/MMBtu(1) (53)% Adjusted EBITDA 67 MM (MM) 850 - 900 MM 1,206% Capital…
Antero Midstream Investment Thesis Increasing Global Demand for U.S. Natural Gas and NGLs Natural gas and NGLs are the fuels of the future; renewables alone cannot satisfy demand 3% CAGR in natural gas demand and 5% CAGR in NGL demand…
Consistency of Returns and Capital Resiliency AM Capacity Utilization Capital Investment Overview: JV Processing G&P capital returns are much more consistent than E&P single well economics; 100% 96% 96% 98% volumetric risk at this…
2020 Capital Budget AMs just-in-time capital investment philosophy adjusts to ARs plan and results in a 52% decrease in 2020 as compared to 2019 Capital Expenditures (MM) Marcellus Project Map 2019 fresh water 800 Original 2019…
5-year Organic Project Backlog No equity needed to Primary focus on deliver project backlog of liquids-rich Marcellus 1.4B through 2024 infrastructure 1.4 Bn Project Backlog By Area 1.4 Bn Project Backlog By Function Fresh Water…
Capital Allocation vs. Valuation Sector Comparison AM is a unique security with lower capital intensity, higher return of capital to shareholders, and a lower outspend as compared to S&P 500 utility companies 2020E Capital Allocation…
Fixed Fee Business Model Insulates EBITDA Growth Antero Midstream generates all of its revenues through fixed-fee contracts, insulating Adjusted EBITDA growth from commodity price volatility Details Antero Midstream Adjusted EBITDA…
Comparative Free Cash Flow Yield Profiles G&P Cash Flow Yield Overview: In general, midstream companies generate consistent free cash flow and have higher free cash flow yields as compared to E&Ps and Utilities (before return of…
Attractive Midstream Industry Sector Valuation Gathering and Processing sector and AM are trading at a significant discount to C- Corps and natural gas/NGL pipeline sectors on an EV/EBITDA and yield basis Comparable Company EV / 2020…
A Leader In Midstream Governance & Structure Traditional MLP Antero Midstream Outdated Model New Infrastructure Model Limited partnership Eliminated GP & IDRs structure with incentive Converted to a C-Corp with proxy distribution…
Antero Midstreams Sustainability Focus Environmental Stewardship GHG Emissions Water Management Active member of industry 70% decrease in greenhouse gas leading greenhouse gas (GHG) emissions intensity from reduction partnerships…
Antero Midstream Snapshot Proven Returns and Conservative Aligned with Capital Discipline Financial Policy Shareholders 54% Adjusted EBITDA Maintain conservative Eliminated IDRs and GP CAGR and 12% average leverage in the mid-to-…
Corporate Presentation Antero Midstream Executive Summary Antero Resources Overview Natural Gas & NGL Fundamentals Appendix & Detailed Asset Overview 21
Antero Resources Corporation at a Glance Denver, CO Antero Resources Asset Map HEADQUARTERS AR Acreage Position S&P 400 CONSTITUENT 2nd Largest U.S. NGL PRODUCER(1) 5th Largest U.S. GAS PRODUCER(1) Own 40% OF CORE…
Antero Resources Strategy Antero Resources Principles Priorities 1 Develop liquids-rich locations with superior returns vs. dry gas locations Scale with Liquids Diversification 2 Hedge commodity price risk and sell-forward…
Large Well-Delineated Core Drilling Inventory AR Resource Overview AR Marcellus Asset Map Deep Drilling Inventory AR holds 40% of the core undrilled liquids-rich locations in Appalachia 10+ years of premium inventory Contiguous…
Differentiated Strategy De-risks E&P Business Model Hedges + Firm Transportation + Liquids-Rich focus provides price stability and supports sustainable long-term development Strategy: Pair Hedges & FT Strategy: Commodity Diversity…
Well Protected From Near-Term Gas Pricing Weakness AR has hedged 94% and 93% of expected natural gas production in 2020 and 2021 at 2.87/MMBtu and 2.80/MMBtu, respectively Hedging provides sustainability to Anteros development program…
Significant Oil and Oil-Equivalent Hedge Position AR has hedged 100% of expected oil and oil-equivalent pentane production in 2020 at 55.63/Bbl and 10% of oil and oil equivalent production in 2021 at 55.16/Bbl Antero Oil and Pentane…
Premium FT Portfolio Supports Sustainable Development Firm transportation portfolio provides price stability relative to NYMEX Antero Resources Firm Transportation Portfolio vs. Gross Gas Production (BBtu/d) (BBtu/d) 5,000 4.6…
NGL Transportation Delivering Premium Pricing Diversified exposure to both international and domestic markets results in Antero realizing a premium to Mont Belvieu on its C3+ NGL pricing Domestic Markets International Markets 31…
Total Debt and Free Cash Flow Enhancements Antero is targeting 750 MM to 1.0 B of asset sales in 2020 and 1.35 -1.55 B in cash flow improvements over next four years Debt Reduction (2020) Cash Flow Improvements (2020 through 2023)…
Marcellus Well Cost Reductions Significant Reduction in Well Costs already in-hand Targeting reduced well costs by 17% (1.9 million per well) Targeted Marcellus Well Cost Reductions (January 2019 AFE to 2020 Target) (MM) 12.00…
Premium Realized Pricing vs. Dry Natural Gas AR expects to generate a 3.00+ realized price per Mcfe even in a 2.50/MMBtu price environment with processing providing oil and NGL pricing exposure AR Pre-Hedge Realized Pricing (/Mcfe)…
Significant Reduction in Operating Cost Structure A 0.22/Mcfe reduction in cash costs expected in 2020 and a 0.42+/Mcfe reduction is expected by 2022 AR All-in Cash Operating Cost Structure (/Mcfe) Net Marketing Expense Cash…
Unhedged E&P Recycle Ratio Assuming a 3.08 realized price (pre-hedge) and unlevered cost structure of 2.10 per Mcfe all-in, AR expects to be able to generate a 2.7x unhedged recycle ratio on its capital Antero has historically…
Corporate Presentation Antero Midstream Executive Summary Antero Resources Overview Natural Gas & NGL Fundamentals Appendix 35
Natural Gas Market Overview & Near-Term Outlook 1 2019 Recap U.S. supply growth remained resilient despite moderated capital budgets o 2H19 supply growth exceeded most expectations, leading to over 5.9 Bcf/d on a January 2019 to…
Natural Gas Rig Count is Responding to Price Gas rig count is responding to lower natural gas prices with a 42% reduction in horizontal gas rigs since March 2019 Horizontal Gas Rig Counts vs NYMEX Henry Hub 1Q 2019 NYMEX Henry Hub:…
Completion Crew Count is Responding to Price Completion crew count has responded to lower natural gas and oil prices with an 35% reduction in active completion crews since April Monthly Average U.S. Completion Crews Completion Crews…
5-Year U.S. Gas Base Decline Significant U.S. base decline requires substantial new supply just to maintain flat production 110 YE 2019(1): 92.8 Bcf/d 100 Maintenance Production Level 25 Bcf/d of new Base Decline (27% in 2020)…
U.S. Gas Supply and Required New Supply Wedge Modest demand growth through 2024 plus base decline requires 77 Tcf of new supply 110 YE 2019: Current (1): 92.8 Bcf/d 93.0 Bcf/d YE 2024E: 101.2 Bcf/d 100 Marketed Dry Gas Production…
New Gas Supply Breakdown 45% of new gas supply needed in the 2020-2024 period is forecast to come from dry gas plays with breakeven gas prices that are higher than the long-term 2020-2024 strip 2.42/MMBtu If new dry gas supply is not…
U.S. Natural Gas Demand Forecast Total U.S. natural gas demand is expected to grow by approximately 8 Bcf/d, or 9% from 2020 2024 driven by LNG and exports to Mexico 2020-2024 Growth % 100 U.S. Dry Marketed Gas Supply (1) LNG…
NGL Macro Outlook Growing supply into limited export capacity has driven down Mont Belvieu prices on an absolute price and relative to WTI basis. This is expected to improve as new export expansion capacity comes online through 2020.…
Antero Resources: Advantaged NGL Producer Producer Disadvantaged & Constrained: Producer Advantaged & Unconstrained: E&Ps in Permian, Rockies, Mid-Con & Bakken Antero Resources in Appalachia AR is the largest C3+ producer with the…
APPENDIX
Expanding Liquids-Rich Core Infrastructure Highly visible near-term projects expanding liquids-rich Marcellus infrastructure Gathering and Compression In Marcellus Project Map System Expansions Size Service New Fresh Water Tyler/Wetzel…
Growth Incentive Program Summary Growth incentive targets structured in a manner that aligns ARs plan to grow net production by 8% to 10% through 2022 in order to fill its premium FT portfolio Actual reduction in low pressure…
AM Gathering and Compression Margins After including the implied low pressure gathering fee reduction of (0.05)/Mcf, AMs projected gathering and compression unit margins are still 13% higher than 2014 margins AM has achieved a 50%…
Gathering and Compression Assets & Strategy Significant long-term volumetric visibility from AR supports efficient gathering and compression infrastructure buildout and attractive project returns Asset Strategy Historical Compression…
Processing and Fractionation Assets & Strategy Joint Venture with MPLX (subsidiary of Marathon) aligns the largest core liquids-rich resource base with largest processing and fractionation footprint in Appalachia Asset Strategy…
Water Handling and Treatment Assets & Strategy Due to the reliability of AMs buried fresh water pipeline system, AM has a 100% track record of timely fresh water deliveries to ARs completions Asset Strategy Water Services Provided…
Antero Midstream Non-GAAP Measures Non-GAAP Financial Measures and Definitions Antero Midstream uses certain non-GAAP financial measures. Antero Midstream defines Adjusted Net Income as net income plus amortization of customer contracts…
Antero Midstream Non-GAAP Measures The following table reconciles consolidated total debt to consolidated net debt (Net Debt) as used in this presentation (in thousands): December 31, 2019 Bank credit facility 959,500 5.375% senior…
Antero Midstream Non-GAAP Reconciliation The following reconciles net income to Adjusted EBITDA: 2014 in Thousands G&C Only 2014 2015 2016 2017 Net income 16,832 127,875 159,105 236,703 307,315 Interest expense, net 4,620 6,183 8,158…
Antero Midstream Non-GAAP Measures Antero Midstream has not included a reconciliation of Adjusted EBITDA, Adjusted Net Income, Free Cash Flow or Distributable Cash Flow to the nearest GAAP financial measure for 2020 because it cannot do…
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