Antero Midstream Partners LP (NYSE:AM) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 12:00 pm ET


Antero Midstream Partners LP (NYSE:AM) Q4 2019 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Antero Midstream 2020 Fourth Quarter Earnings Conference Call. [Operator Instructions]

At this time, I will turn the conference over to Michael Kennedy, Senior Vice President of Finance. Mr. Kennedy, you may now begin.

Michael N. Kennedy

Thank you for joining us for Antero Midstream's fourth quarter and full year 2019 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 would also like to direct you to the homepage of our website at where we've provided a separate earnings call presentation that will be reviewed during today's call.

Before we start our comments, I'd 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 could materially differ from what is expressed implied or forecast 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.

Paul M. Rady

Thanks Mike. I'd like to start by discussing the 2020 outlook and development plan at AR that supports Antero Midstream's 2020 capital budget and financial guidelines. Yesterday, Antero Resources announced a drilling and completion capital budget of $1.15 billion that is expected to generate 9% net production growth in 2020 as compared to 2019. AR's 2020 capital budget utilizes an average of four drilling rigs and three to four completion crews consistent with 2019 levels. This development program is approximately free cash flow neutral at AR and results in leverage trending toward the mid-two times range, assuming execution of its previously announced asset sale program.

For those that were able to listen into the AR call we just finished, I highlighted that we remain focused on achieving our cost reduction strategies and achieving our asset sale target at AR. The ability to continue growing production in the current commodity price environment is supported by AR's continued capital efficiencies, liquids-rich focus and industry-leading hedge portfolio.

Let me move to slide number 3 in our investor presentation, titled Marcellus Well Cost Reductions, which illustrates the significant momentum in well cost reductions at AR. Last quarter, AR announced a well cost savings initiative that targeted a 15% to 18% reduction in well costs on a per lateral foot basis or approximately $1.7 million to $2 million per well. The left hand side of the page illustrates AR's January 2019, a little over a year ago, well costs of $970 per