Antero Midstream Corp Annual Report: A Comprehensive Investor Overview

Unlock the essential insights from Antero Midstream Corp's (AM) latest annual SEC 10-K filing. This summary cuts through the jargon, offering a clear and concise breakdown of the company's performance, strategic direction, and financial health, designed to help you understand its operations and outlook.

Understanding Antero Midstream's Business

Antero Midstream provides crucial infrastructure for the natural gas industry, primarily in the Appalachian Basin's Marcellus and Utica Shales. Its business operates through two core segments:

1. Gathering and Compression: This segment collects natural gas from wells through an extensive pipeline network and then compresses it for transport to larger processing plants. Approximately 90% of these services operate under long-term, fee-based contracts with its affiliate, Antero Resources Corporation (ARC), ensuring stable revenue. AM also serves third-party customers.
2. Water Handling: AM manages the entire water lifecycle for natural gas drilling and completion. This includes delivering fresh water to well sites, then gathering, treating, and disposing of produced water (water returning from wells). Like its gathering and compression services, these are predominantly fee-based and often tied to ARC, providing predictable cash flows.

AM owns and operates a substantial asset base: over 400 miles of gathering pipelines, 20 compressor stations, 400 miles of freshwater pipelines, and various water treatment and storage facilities. It continuously invests in expanding and upgrading this infrastructure to meet growing demand.

Management Discussion and Analysis (MD&A) Highlights

Management's Discussion and Analysis (MD&A) offers insights into AM's financial condition and operational results. Key strategic developments from the past year include:

• Utica Shale Asset Divestiture: In December 2025, AM sold certain non-core property and equipment in the Utica Shale region for approximately $100 million. This strategic move streamlines operations, enhances capital efficiency, and allows AM to focus more on its core Marcellus assets. AM primarily used the proceeds for debt reduction.
• HG Energy Transaction: Also in December 2025, AM acquired new gathering and compression assets and associated long-term, fee-based service agreements through a definitive agreement with HG Energy II Production Holdings LLC and HG Energy II Midstream Holdings LLC. This expanded AM's footprint and customer base in key operating areas.
• New Gathering and Compression Agreements: Effective January 1, 2025, AM secured new long-term gathering and compression agreements with third-party producers. These agreements project to add approximately 150 MMcf/d (million cubic feet per day) of incremental volume by 2027, further diversifying its revenue streams.
• Joint Venture Expansion: AM continued its involvement in the New River Joint Venture, a 50/50 partnership with a major energy infrastructure company. This venture focuses on developing and operating additional water infrastructure, allowing for shared capital investment and risk while enhancing AM's water handling capabilities.
• Employee Incentives: AM uses performance-based compensation, including Performance Share Unit (PSU) awards tied to Return on Invested Capital (ROIC) and Restricted Stock Units (RSU). This aligns employee incentives with long-term shareholder value creation.

Further details on AM's financial performance and future outlook appear in the sections below.

Financial Performance

AM delivered solid financial performance, supported by its fee-based business model:

• Revenue: Total operating revenues for the fiscal year ended December 31, 2025, reached $1.15 billion, a 5% increase from $1.09 billion in 2024. Higher throughput volumes and new service agreements drove this growth.
• Net Income: Net income rose to $450 million in 2025, up from $410 million in 2024, reflecting efficient operations and stable revenues.
• Adjusted EBITDA: Adjusted EBITDA, a key metric for midstream companies, reached $950 million in 2025, up from $900 million in 2024, indicating strong operational cash generation.
• Cash Flow: Operating cash flow was robust at $780 million in 2025. Capital expenditures totaled $280 million, primarily for expansion projects and maintenance.
• Dividends: AM maintained its commitment to shareholder returns. It declared and paid a consistent quarterly cash dividend of $0.375 per common share throughout 2025, totaling $1.50 per share for the year. Additionally, AM paid dividends on its Preferred Class A stock at the stated rate of $0.50 per share quarterly. The Q4 2025 common dividend, declared in January 2026, is a subsequent event, reflecting the company's ongoing dividend policy.

Financial Health

AM maintains a strong financial position, supporting its operations and strategic initiatives:

• Debt Structure: As of December 31, 2025, total long-term debt stood at $3.0 billion. This primarily consists of Senior Notes with staggered maturities from 2026 to 2034, carrying weighted-average interest rates between 5.375% and 7.875%.
• Liquidity: AM also maintains a $1.5 billion revolving credit facility, with $1.2 billion available. This provides ample liquidity for operational needs and future investments.
• Leverage: Its Net Debt to Adjusted EBITDA ratio was 3.1x, well within its target range, demonstrating prudent financial management.

Competitive Position

AM holds a strong competitive position within the Appalachian Basin, thanks to several factors:

• Strategic Asset Location: AM's extensive gathering and processing infrastructure is strategically located in the core of the Marcellus and Utica Shales, providing direct access to prolific natural gas production.
• Integrated Service Offering: AM offers a comprehensive suite of midstream services, including natural gas gathering and compression and full-cycle water handling. This allows for integrated solutions to producers.
• Long-Term, Fee-Based Contracts: Long-term, fee-based contracts secure a significant portion of AM's revenue, primarily with Antero Resources. This provides stable and predictable cash flows, reducing exposure to commodity price volatility.
• High Barriers to Entry: The midstream sector, especially in established basins, faces high capital costs, extensive regulatory requirements, and the need for significant scale. These factors create substantial barriers for new entrants.
• Relationship with Anchor Shipper: AM's strong, long-standing relationship with Antero Resources Corporation, a leading Appalachian producer, provides a stable base of throughput volumes and growth opportunities.

Key Risks to Consider

Investors should consider several factors that could impact AM's performance:

• Dependence on Antero Resources: ARC generates a substantial portion of AM's revenue. Any significant operational or financial challenges ARC faces, or a reduction in its drilling activity, could materially affect AM.
• Commodity Price Volatility: While AM's contracts are fee-based, sustained low natural gas prices could indirectly impact ARC's production decisions, potentially reducing AM's throughput volumes.
• Regulatory and Environmental Risks: The energy industry is subject to extensive environmental regulations. Changes or increased scrutiny could lead to higher operating costs or project delays.
• Operational Risks: AM faces inherent risks operating pipelines and infrastructure, including leaks, explosions, and natural disasters. These could result in service interruptions, environmental damage, and financial liabilities.
• Interest Rate Risk: A portion of AM's debt, particularly its revolving credit facility, is subject to variable interest rates. Higher rates could increase interest expenses.
• Litigation: AM remains involved in a lawsuit with Veolia Water Technologies Inc., initiated in early 2023, regarding contractual disputes. The litigation's outcome could result in significant financial obligations or legal costs.

Future Outlook

AM's strategy for the coming year focuses on disciplined capital allocation, operational efficiency, and enhancing shareholder returns.

• Capital Program: For 2026, AM projects capital expenditures between $270 million and $300 million. It will primarily allocate these funds to Marcellus Shale expansion projects supporting ARC's development plans and maintenance capital.
• Debt Reduction: AM prioritizes continued debt reduction, aiming to maintain a strong balance sheet and financial flexibility.
• Operational Optimization: AM will continue efforts to optimize existing infrastructure and efficiently integrate new assets to maximize throughput and minimize operating costs.
• Market Position: AM anticipates stable demand for its services, driven by Antero Resources' long-term development plans and strategic third-party agreements. This reinforces its position as a critical midstream provider in the Appalachian Basin.

Antero Midstream maintains a stable, fee-based business model, actively managing its assets and debt while continuing to invest in its core infrastructure for long-term growth.