In-Basin Demand and Capital Strategies: Contradictions in AM's Latest Earnings Call

Capital Investment and Progress:
- Antero Midstream invested $45 million in gathering, compression, water, and the Stonewall joint venture projects during the second quarter, bringing the year-to-date capital investment to $82 million, or 45% of the updated 2025 capital budget at the midpoint of guidance.
- This progress is focused on low-pressure gathering and water connects that set up the 2026 development plan and takes advantage of better weather conditions for construction in the third quarter.

Compression Reuse Savings:
- The company has realized over $50 million in savings through its compression reuse program, with $30 million from the Torrey's Peak compressor station alone.
- The increased future reuse savings estimates, now over $85 million from 2026 through 2030, bring the cumulative savings to over $135 million, approximating the cost of building two brand-new 160 million cubic feet per day compressor stations.

Financial Performance and Free Cash Flow:
- Antero Midstream generated $284 million in EBITDA for the second quarter, marking an 11% increase year-over-year.
- This growth, combined with a decline in capital expenditures, resulted in free cash flow after dividends of $82 million, nearly a 90% increase compared to the previous year, leading to a leverage reduction to 2.8x.

Increased 2025 Guidance:
- The company increased its free cash flow guidance by $25 million at the midpoint, driven by a $10 million increase in adjusted EBITDA guidance due to outperformance in gathering and compression throughput.
- This was also supported by a $5 million reduction in the capital budget range and a $5 million decrease in interest expense, along with a reduction in cash income taxes to $0 due to the recent budget reconciliation bill.

LNG and Northeast Demand Growth:
- Antero Midstream is positioned to connect low-cost production to LNG facilities along the Gulf Coast, playing a critical role in first-mile infrastructure.
- The company maintains significant optionality to connect into local Appalachian markets if the demand grows and is supported by regulatory incentives, such as those in West Virginia for data center development. Antero Resources has over 10 years of dry gas locations that can supply growing opportunities in the region.