Greetings and welcome to the Antero Midstream fourth quarter 2020 earnings conference call. At this time all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the conference over to our host, Michael Kennedy, Senior Vice President of Finance and Chief Financial Officer. Thank you, sir. You may begin. Thank you for joining us for Antero Midstream's fourth quarter 2020 investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I'd also like to direct you to the homepage of our website at www.anteromidstream.com where we have provided a separate earnings call presentation that will be reviewed during today's call. Before we start our comments, I would first like to remind you that during this call, Antero management will make forward-looking statements. Such statements are based on our current judgments regarding factors that will impact the future performance of Antero Resources and Antero Midstream, and are subject to a number of risks and uncertainties, many of which are beyond Antero's control. Actual outcomes and results can materially differ from what is expressed, implied, or forecasted in such statements. Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Joining me on the call today are Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream, and Glen Warren, President and CFO of Antero Resources, and President of Antero Midstream. With that, I'll turn the call over to Paul. Thanks, Mike. I'd like to start by discussing the significant steps AR has taken to improve the balance sheet and senior note term structure on slide number three. Since embarking on the asset sale program just over a year ago, AR has successfully executed on $751 million of asset sales, which allowed us to access the senior unsecured market several times in 2020 and 2021, raising $1.5 billion in proceeds. Antero has also raised $1.1 billion of committed capital through the creative financings, which included a volumetric production payment, an overriding royalty transaction, and now a drilling partnership. This level of counterparty support is a strong endorsement of Antero's assets and operations. These proactive steps allowed AR to eliminate approximately $2.3 billion of near-term maturities. As depicted on the slide, AR has completely eliminated its 2021 and 2022 maturities through a combination of open market purchases and early redemptions. Looking forward, AR expects to generate over $1.5 billion of cumulative free cash flow through 2025 to repay long-term maturities, in addition to the ability to access the senior unsecured markets to refinance. In summary, we've made tremendous strides to improve the financial strength of AR and right-size the balance sheet and maturity schedule. Now, let's turn to slide number four to discuss AR's formation of a drilling partnership. Under the agreement, QL Capital, an affiliate of Quantum Energy Partners, will fund 20% of drilling and completion capital in 2021, and between 15% and 20% of total drilling and completion capital in 2022 through 2024 in exchange for a proportionate working interest percentage in each well spud. QL will participate in every well that Antero drills in the Appalachian Basin over the next four years, starting with wells that spud as of this last January 1st this year. As you can see on the lower right-hand side of the slide, we will drill and complete over 300 wells over the next four years together. The result is an incremental 60 wells being drilled through 2024 as compared to our initial base development plan. On a net basis, AR's net capital spending and production will remain unchanged from our prior maintenance capital program. The incremental drilling partnership completions are expected to drive incremental gross production growth, benefiting both AM's gathering and processing and water businesses. Slide number five illustrates how Antero is in a unique position to benefit from a drilling partnership. First, AR has over 2,000 premium undeveloped core drilling locations in the Marcellus and Ohio Utica, and a contiguous acreage footprint that delivers efficient development. Second, since over 1,400 of AR's 2,000+ premium undeveloped core locations are liquids rich, AR is well-positioned to take advantage of the strong NGL prices. Based on our recent basin-wide study of the remaining undeveloped locations in Appalachia, we estimate that these 1,400 AR locations represent approximately 38% of the remaining liquids-rich core locations in Appalachia. Third, AR has unutilized firm transportation to premium markets that supports the incremental gross gas production from the drilling partnership. This allows AR and its partner to deliver gas to NYMEX base indices, unlike many Northeast producers that experience frequent basis blowouts and often have to shut in supply. Lastly, AR and its partner are able to quickly develop the resource given the integrated nature and flexibility of Antero Midstream. These factors, all of which are unique to AR, drive the substantial increase in AR's free cash flow profile over the next several years, as detailed on slide number six, titled AR Free Cash Flow Enhancement. As depicted by the red box on the left-hand side of the page, the drilling partnership allows AR to fill unutilized premium firm transportation and reduce net marketing expenses by approximately $260 million over the next five years, or approximately $65 million per year beginning in 2022. Driven by the throughput growth on AM dedicated acreage, we now expect AR to achieve additional low-pressure gathering earn-outs totaling approximately $75 million through 2023 when the earn-out program expires. It is important to note that the incremental AM freshwater EBITDA from the additional completions more than offsets the additional earn-outs paid by AM, in addition to the benefit AM receives through the increase in gathering, compression, processing, and fractionation throughput. Lastly, we assume that AR will receive a delayed carry on the drilling partnership in the form of one-time payments per tranche that total approximately $50 million by achieving certain IRR thresholds. In total, as depicted by the green bar, the drilling partnership increases AR's free cash flow by approximately $400 million through 2025. Importantly, the drilling partnership also enhances AM's free cash flow profile, as detailed on slide seven. As depicted in the blue box, the incremental completions over the next five years, serviced by AM's freshwater delivery assets, result in approximately $150 million of incremental freshwater EBITDA compared to the AR maintenance capital plan. In the gray bar, you can see we expect a low single-digit annual throughput to drive approximately $225 million of incremental gathering and processing EBITDA, net of the $75 million of additional low-pressure earn-outs under the gross incentive fee program. After netting out the $175 million of additional capital, most of which is an acceleration of capital, we are forecasting $200 million of incremental cumulative free cash flow after dividends through 2025 compared to the AR maintenance capital base plan. With that, I will turn it over to Mike. Thanks, Paul. I'll begin my AM comments with fourth quarter operational results, beginning on slide number eight, titled Year-over-Year Midstream Throughput. Starting in the top left portion of the page, low-pressure gathering volumes were 3.1 Bcf/d in the fourth quarter, which represents a 16% increase from the prior year quarter and flat sequentially. Compression volumes during the quarter averaged 2.9 Bcf/ d, an 18% increase compared to the prior year. Our 50/50 joint venture gross processing volumes averaged 1.5 Bcf/ d, a 26% increase compared to the prior year quarter. Processing capacity was over 100% utilized during the fourth quarter. JV gross fractionation volumes averaged 40,000 bbl per day, a 22% increase from the prior year. JV fractionation capacity was 100% utilized during the quarter. Throughput volumes were ahead of expectations due to the acceleration of well turn-in-lines and outperformance of recent pads turned to sales. Freshwater delivery volumes averaged 43,000 bbl per day, a 71% decrease from the prior year quarter, driven by lower completion activity by Antero Resources as expected. Before moving on to our full year 2020 achievements, I wanted to briefly touch on our balance sheet and liquidity. As of December 31st, 2020, Antero Midstream had $613 million drawn on its $2.13 billion revolving credit facility, resulting in approximately $1.5 billion of liquidity. AM's total debt and leverage were both flat for the third consecutive quarter at $3.1 billion and 3.7x respectively. Let's move on to full year 2020 achievements on slide number nine. Adjusted EBITDA for the full year 2020 was $850 million, a 3% increase year-over-year, and $10 million above the midpoint of our guidance. Capital expenditures were $207 million, a 68% decrease year-over-year and in line with guidance. AM's EBITDA growth and declining capital generated a company record $498 million of free cash flow before dividends in 2020, compared to just $62 million in the prior year. Importantly, we generated a return on invested capital of 17% in 2020, a four-point increase compared to the prior year, highlighting the benefits of our just-in-time capital philosophy and high asset utilization rates. Slide 10 illustrates our capital budget and reallocation of capital to fund the 2021 capital budget. As detailed on the left-hand side of the page, our prior capital target supporting AR's maintenance capital base plan was $185 million. With the announcement of the drilling partnership, AM expects to accelerate approximately $65 million of capital into 2021, bringing the revised capital budget to $240 million-$260 million. Over the next five years, AM expects to invest an incremental $175 million to support the additional activity and throughput growth from the drilling partnership. In order to finance the incremental capital investment, we announced a reduction in AM's dividend to $0.90 per share beginning in the first quarter of 2021. This reduction allows us to allocate capital towards the highest rate of return project in AM's expanded portfolio as a result of the drilling partnership development plan. As depicted on the right-hand side of this page, this allows AM to internally fund both its return of capital to shareholders and capital investments in 2021 based on the midpoint of guidance. We believe this transition to a self-funding C- corp significantly de-risks AM business models so that it no longer requires incremental outside capital to deliver on this organic growth program. In addition, AM expects to de-lever to 3x or less over the next five years. Slide number 11 illustrates the five-year outlook for AM from 2021 through 2025 based on the drilling partnership announcement. Driven by the throughput growth from the drilling partnership, we are forecasting low single-digit annual growth in EBITDA through 2025, which results in cumulative EBITDA of $4.5 billion-$4.6 billion from 2021 through 2025. As you can see, this fully funds our return of capital to shareholders in purple, an organic project backlog of $1.05 billion-$1.15 billion over the next five years. The remaining excess free cash flow after dividends, depicted in orange, totals approximately $500 million over the next five years. This excess free cash flow will be utilized to reduce debt and opportunistically repurchase shares under our share repurchase program, which we have extended an additional two years to June 30th, 2023. As a reminder, we have previously utilized $150 million of the $300 million share repurchase program capacity, repurchasing 31 million shares at an average price of $4.88 per share, leaving $150 million of remaining capacity. I'll finish my comments with slide number 12, titled Antero Midstream Outlook Summary. This slide illustrates the benefits to AM from the drilling partnership compared to the previous outlook based on an AR maintenance capital base plan. With the drilling partnership, Antero Midstream expects a low single-digit annual EBITDA growth through 2025 compared to a flat EBITDA profile previously. The drilling partnership also increases AM's organic project backlog from $925 million at the midpoint to $1.1 billion from 2021 through 2025 or a $175 million increase. These organic projects are forecast to result in $200 million of incremental free cash flow after dividends over that timeframe compared to the previous maintenance capital plan. Due to the upfront acceleration of projects, we expect 2021 and 2022 to be approximately free cash flow breakeven after dividends, and then for AM to generate $500 million of cumulative free cash flow after dividends after those projects are placed online through 2025. Importantly, we expect AM to continue to generate peer-leading ROIC in the mid to high teens and AM's leverage profile to decline to three times or less by 2025. Under the prior $1.23 per share dividend level, the drilling partnership resulted in outspend in 2029 and leverage in the high 3x range. Given these circumstances, we have decided to reallocate a portion of the dividend payment so that AM does not add any debt or leverage to its balance sheet to fund these attractive opportunities. In summary, we believe this plan allows AM to check all of the boxes to be a best-in-class midstream C- corp with enhanced corporate governance, EBITDA growth, free cash flow positive after dividends, peer-leading ROIC, and a strong balance sheet. With that, operator, we are ready to take questions. Thank you. At this time, we'll be conducting a question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad. That's the star key followed by the one key on your telephone keypad. A confirmation tone will indicate that your line has been placed in queue. You may press star followed by the number two key if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Shneur Gershuni with UBS. Please state your question. Hi, good afternoon, everyone. Just wonder if we can start off with the decision around the dividend reduction. I'm just wondering if you can walk us through the different scenarios that you shared with the Board and how you arrived at the level that you cut it to. I think we fully appreciate the prudent nature of not borrowing to fund CapEx and dividends. The level seems kind of surgical. Was the goal to just sort of sit there and say, "I need to cover the CapEx for this year, but we don't want to cut it too much," because you're comfortable with where leverage is headed? Alternatively, why not just cut it 50% or more to sort of get to your goals faster? Just kind of curious if you can walk us through the decision-making process and what different considerations you thought about in terms of the choice level. Yeah, thanks. The Board, of course, considered every alternative, you stated it. I mean, the plan, at the end of the day, was to set the dividend such that we had ultimately a positive free cash flow after payment of dividends and capital. We have a bit of a surge in capital for the next couple of years because of the drilling partnership, but that ends up spinning out another $100 million or so of EBITDA down the road if you get three, four years down the road once you've built that out. It's a very profitable venture for AM, so it made a lot of sense. Recalibrate. We're already well-positioned at 3.7x leverage. We didn't feel the need to drive it down overnight by slashing the dividend. I mean, we want to take care of our shareholders and distribute an appropriate amount. We felt like this was the right calibration for us for the next couple of years anyway. If you model this out, once you get back into a strong free cash flow position, there is room for more return of capital when you get further out, while at the same time de-levering. We felt like it was the sweet spot, that $0.90 was the right place to be. Okay. You talk about being at a point where you can actually buy back shares at some point in the future, or return capital, I think was the words you chose. Given the fact your stock is obviously trading down significantly today, I mean, do you sort of sit there and sort of oscillate between potentially buying back shares in the interim as well also? Or is it at the stage right now, it's you're sort of following the reallocation plan and not looking at the shares as opportunistic at these levels? No, we'll always be opportunistic, and we have been in the past. We bought back, I think it was 30 million shares at just under $5, $4.80 something over the past couple of years. We'll be opportunistic, and that's paid off very well, right? I wouldn't be surprised to see us buy back shares if the shares aren't performing like we think that they should. That's the reason we extended that plan. It's a $300 million plan, repurchase plan, of which we've already utilized $150 of that, so we have $150 to go. That is a live plan that's out there. Okay. Maybe a quick follow-up question. In slide 12, you talk about you're targeting an ROIC of 15%-17%. What are the chances, odds, probabilities, however you want to characterize it, that there's another drilling partnership down the road that AR does, and we get like an incremental $65 million bump in CapEx? Do we have to concern ourselves about the potential that the dividend is almost becoming variable in nature, that you would have to cut it again to achieve if you had that incremental step-up? Or is it the fact that AR is now filling its capacity or the fixed capacity that it has, and you're kind of drilling up to that point, and you don't see AR potentially expanding above that would require AM to spend more capital? Well, number one, it's not a variable dividend, and it was set, like I said, in the sweet spot at the lowest level. From here, we think it's just upside in terms of variability. It'll be increasing the dividend over time. AR, if you followed AR, this was a one-time deal to fill up firm transportation. I don't see another drilling partnership in AR's future. It's a one-off to address a concern or sort of a burden on AR to continue to pay for unutilized firm transportation and not fill that because it needs to stay at maintenance capital. That's what the market wants these days. It was a good way to address the market, stay at maintenance level capital, flat production for AR, and to fill that with a wedge of third-party participation and production. No, I would consider that as a one-off transaction. Yeah, I'll say, I don't know about your word concern. The actual drilling JV is adding an incremental $200 million of free cash flow to five years. We're investing in projects that have very high rates of return, and then ultimately it's about $100 million of additional EBITDA on an annual basis in year three and out. It's a very attractive opportunity for AM, and we're very happy that AR entered into this drilling JV. [audio distortion] in the top matrix, right? You actually have growth. Not many midstreamers have growth out there, and we're looking at, call it, 3% a year EBITDA growth. Leverage, very manageable 3.7x and going down over time. Free cash flow positive. It really checks all the boxes. Yeah, I totally get it. It was just for trying to understand how to be thinking about all the different almost like putting it on a Bayesian tree of how you're thinking about it. There's some conclusion here is it's basically surgical in nature. You were targeting something specific, and there was no reason to consider a larger tide or the fact that there could be a scenario down the road that would result in another tide given the commodity environment that we see today. Is that kind of a fair recap or paraphrase? Yeah, I think that's well said. Absolutely. Okay, perfect. Thank you very much, guys. Appreciate the color, and stay safe. Thanks. Thank you. Our next question comes from Jeremy Tonet with JPMorgan, please state your question. Hey, good morning, guys. This is James on for Jeremy. Just following up with the Shneur's question. He asked, just doing the math on the savings from the dividend reduction this year, taking out the incremental CapEx, you still have about, call it $90 million- $100 million of savings. Do you expect that to all go back to paying down debt? Do you expect that the 3.7x leverage that you guys ended 2020 at to kind of remain flat in 2021? Actually ticks down a little bit, but yes, those amounts that would've been paid in dividend will be used to pay down debt. Also may have some amounts for allocation for repurchase of shares if it's opportunistic. Okay, fair enough. Just a second question, if you can remind us when you expect to become a cash taxpayer and within the guidance for free cash flow through 2025, is there any consideration for cash taxes through that? Yeah. We're not a cash taxpayer over that five-year period. Got it. All right, I'll leave it there. Thank you. Thanks. Our next question comes from John Mackay with Goldman Sachs. Please state your question. Hey, thanks for the time. I just wanted to follow up. Appreciate the longer-term outlook for free cash flow and EBITDA. Just wondering if you can talk a little bit about maybe the risks to those numbers, either to the upside or the downside. Thank you. I think you can look at AM historically, right? It has been steadfast in terms of its capital spending and the generation of returns. These are the same types of projects that we've been doing. It's just accelerating projects, whether it's compression or LP gathering or HP gathering, water, et cetera. It's the same type of projects that we've been doing. We're just pulling them forward. Yeah, we feel very good about that in terms of returns and the lack of variability or variance in the outlook. Yeah, also at AR, it's addressed all their near-term maturities. Their leverage is coming down. They'll be below 2x debt to EBITDA by year-end, and it's already a maintenance capital program for them. I think there's not much downside from that in the drilling partnership. AM continually, as you saw this year and years past, feeds on volumes as AR as well, has performed very well. All right. That's fair. Thank you. Maybe my follow-up will be on that last point. Seems like AR probably mostly done with kind of liquidity management steps right now. Any new thoughts on their remaining AM stake and what they might want to do with that? Yeah. AR continues to enjoy that ownership, that stake, the dividend stream. No real change there. AR is generating so much free cash flow this year and going forward at the current strip, even a backwar dated strip, that there's no need to sell any AM shares. Good. That's it. Thank you. Thank you. Thank you. Just a reminder, to ask a question, press star one. You can press star two to remove your question from the queue. Our next question comes from Chris Tillett with Barclays. Please state your question. Hey, guys. Good afternoon. Appreciate the comments there on the not being any cash tax in the forecast. Are you able to share, even broadly speaking, sort of when you do expect to start paying cash taxes? Yeah, no, we don't have that year. It's not in any of our forecasts, and they go out six, seven years, so it's not in that timeframe. Okay. Maybe as a follow-up to what I believe Shneur was asking, looking through the AR slides, it looks like they kind of hit max FT capacity in that 2025 timeframe. If I marry that with kind of what you guys said about not really anticipating further drilling partnerships or ramps in CapEx, should we be viewing that era as sort of peak production from a midstream standpoint? Kind of what would you envision would be next for midstream beyond that? No, I don't think so. At some point here, especially with higher prices, you'll see companies like Antero go back to some growth, at least in the single-digit range. I wouldn't read that as driven strictly by the FT. Then also the drilling partnership, it drills and completes. The last completions will be early year 2025, and after that, the drilling partnership will be done. Those volumes will start to decline on that side. There'll be some FT available for AR growth there, if you follow what I'm saying. We don't have to match our production exactly to FT. There are local markets. That's certainly been our thesis, is to avoid being dependent on the local markets, but there's room to grow. By then, I think you are going to see some real inventory fatigue, and that was the purpose of one of the slides that we put out today. As I mentioned on the AR call, if you're completing 1,000 wells a day in the Southwest Marcellus and Ohio Utica combined, and we're not quite at that rate today, but I think with commodity prices where they are, you're going to see some uptick in rigs. We'll be adding one because the drilling partnership. You really only look at five or six years of the best premium inventory in that area. At some point you'll need higher prices and all that, but you likely will also see some capacity going back to the market for operators like us who still have plenty of premium inventory. Okay. I guess not necessarily a ton of concern about pipeline constraints at that point in time. That's right. That's right. Yeah. I wouldn't read too much into that FT chart in terms of growth. It doesn't cap our growth at AR. Okay. Final question from me, just on the water side, can you share sort of what your latest usage assumptions are for well completions, and then how long do you expect to run those 13,000 ft laterals? Yeah. We do have a bounty, just a long inventory of 13,000 ft laterals. That's a benefit. You've seen it on the maps of our acreage being so contiguous, and where we control it in terms of being the operator with nearly or almost always 100% working interest. 35 bbl of water per foot. Right. Is our current formula. We're doing pilots to dry it up a little bit, but 35 bbl a foot is the standard mix right now. Okay. Is there any risk to either of those numbers starting to creep down in the next 12 -24 months? Not materially. No. In terms of lateral length, the entire five-year plan average is 13,100 ft. We've got long laterals as far as you can see. With our land efforts, we continue to add on to laterals that are in the plan, year six, seven, whatever, that are shorter. We continue to add to that and grow those, if you will. That's where we'll be for quite some time. Yeah. 35 bbl of water per foot is our standard completion. Right. Okay. That was it for me, guys. Thank you very much. Great. Thank you. Thank you. Our next question comes from Ned Baramov with Wells Fargo. Please state your question. Hey. Thanks for taking the questions. Based on the current production plan, do you expect to offer any low-pressure gathering fee rebates to AR in 2021? Also, does the incentive fee agreement that you have in place, are there any thoughts on potentially extending the term of that? I know that it goes through 2023 currently. Yes. To your question on the fees, we've got a slide in the AR presentation that outlines the current forecast. There are no fee rebates in 2021. They do achieve them in 2022 and 2023. There's a schematic out there, and it does expire in 2023. Okay, got it. Maybe, can you talk about the cadence of the remaining $110 million of growth CapEx associated with AR's drilling partnership that's expected in the period 2022 through 2025? The majority of it is in 2022, and then a little bit in 2023. The midpoint of this year's guidance is $250 million. You can kind of think of 2022 will be a little bit higher than that, maybe $275 million-$300 million, and then 2023 and beyond steps back to $200 million and below. It returns below $200 million in that 2024 timeframe and beyond. Very helpful. That's all I had today. Thank you. Thank you, Ned. Thanks, Ned. Thank you. That's all the time we have for questions today. I'll now turn it back to management for closing remarks. Thank you. We'd like to thank everyone for participating on our conference call today. If you have any further questions, please feel free to reach out to us. Thanks again. Thank you. This concludes today's conference. All parties may disconnect. Have a great day.