Antero Midstream (AM) Update - August 15

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Antero Midstream (AM) Update - August 15

Post by dan_s »

We will be sending out an updated profile on AM on Friday, August 16. I want to stress that this midstream C-Corp. has STRONG DCF coverage growth locked in and that they have publicly said that they will be increasing dividends year-after-year. 99% of their revenues come from Antero Resources (AR) which has solid growth locked in and AM will be expanding its gathering, compression and water hauling & treatment services to other operators in the Marcellus/Utica play. At the current unit price and the increased dividend below, annual yield on AM is over 17%.

Dividend Update

On July 10, 2019 Antero Midstream Corporation announced its second dividend since it converted to a corporation and closed the acquisition of Antero Midstream Partners LP.

The Board of Directors of Antero Midstream declared a cash dividend of $0.3075 per share ($1.23 per share annualized) for the second quarter of 2019. The dividend also represents a 40% increase compared to Antero Midstream Partners LP's second quarter 2018 distribution and a 2% increase sequentially, each adjusted for the 1.8926 exchange ratio for unitholders who elected to receive stock in the recently closed simplification transaction. This represents the eighteenth consecutive quarterly dividend or distribution increase since Antero Midstream Partners LP's initial public offering in November 2014.

“Total dividends for 2019 are expected to be $1.24/share, increasing to $1.30/share in 2020. This is in line with AM’s stated goal of increasing dividends at an annual rate of “high single digits”.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Antero Midstream (AM) Update - August 15

Post by dan_s »

Antero Midstream Approves $300-Million Share Repurchase Plan
Zacks Equity Research
August 15, 2019

In a bid to boost shareholder value, Antero Midstream Corporation (AM) recently announced a $300-million share buyback program. The company expects the program, which is likely to run through Jun 30, 2021, to not have any impact on its financial leverage profile.

The latest move is expected to further increase the flexibility of its capital return program. Notably, Antero Midstream is aiming to return capital to its shareholders at a high single-digit rate in 2020. To achieve this target, the company will utilize combinations of share repurchase program and dividend hikes.

As far as dividend hikes are considered, the company is on the right track. In the second week of April 2019, the firm announced its first-ever dividend of 30.25 cents per share, after Antero Midstream GP LP completed the buyout of Antero Midstream Partners LP on Mar 12. On the same day, Antero Midstream GP was transformed into Antero Midstream Corporation.

In July, it reported a hike in its quarterly dividend payout for second-quarter 2019 to 30.75 cents per share, reflecting a sequential rise of 2% and 146% surge from Antero Midstream GP LP's year-ago distribution figure. Markedly, Antero Midstream’s dividend yield rate of 17% is much higher than the industry average of 6.7%.

Antero Midstream’s intention of increasing the rate of return of capital is supported by stable operations. It generates sustainable fee-based revenues under long-term contracts for providing customized and integrated midstream services to leading natural gas producer Antero Resources Corporation AR. Moreover, through a joint venture with MPLX LP MPLX, Antero Midstream provides processing and fractionation related services for the produced natural gas by Antero Resources.

However, as the company primarily provides services to Antero Resources, it is losing the opportunity to earn significantly more fee-based revenues by providing midstream services to other drillers in the prolific Marcellus and Utica Shale plays, wherein demand for transportation and storage assets is on the rise. Currently, companies like Anadarko Petroleum Corporation APC, Cabot Oil & Gas Corporation, Carrizo Oil & Gas Corp. and others are boosting hydrocarbon production from the Marcellus Shale & Ohio.
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In the last 30 days three analysts have published new reports on AM
> Christopher Tillett at Barclays on 07/16/19 rates it a HOLD with a valuation of $13.00
> Barrett Blaschke at MUFG Securities Americas Inc on 08/02/19 rates it a HOLD with a valuation of $13.00
> Timothy Howard at Stifel Nicolaus on 08/02/19 rate is a HOLD with a valuation of $11.00
Dan Steffens
Energy Prospectus Group
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