HOUSTON, May 1, 2019 – Altus Midstream Company (NASDAQ: ALTM) today announced its results for the three-month period ending March 31, 2019.
First-quarter 2019 net income attributable to Class A common shareholders was $1.1 million. Gathering and processing volumes for the period averaged 564 million cubic feet per day, approximately 53 percent of which was rich gas. Adjusted EBITDA for the first quarter of 2019 was $12.1 million.
Capital investments in midstream infrastructure during the quarter were $258 million, which includes $118 million for the exercise of the EPIC crude oil pipeline option in February and continued capital calls for Altus’ ownership in Gulf Coast Express, $105 million primarily for gathering and processing infrastructure and $35 million attributable to a finance lease obligation related to power generators at the Diamond cryo complex.
CEO Comment
“Altus delivered a strong quarter to start the year with increasing gathering and processing volumes, revenues and Adjusted EBITDA. We continued to expand our infrastructure at Alpine High and diversify our portfolio by exercising the EPIC crude oil pipeline option in February. We also plan to exercise our equity options to participate in Kinder Morgan’s Permian Highway natural gas pipeline and Enterprise Product Partners’ Shin Oak NGL pipeline later this year,” said Clay Bretches, Altus Midstream CEO and president.
“At Alpine High, cryo units one and two are expected to be in service in May and July, respectively. Our high-quality G&P assets, underpinned by the deep drilling inventory at Alpine High, combined with our JV pipeline ownership and options provide us with a diverse, long-term revenue stream. We believe with just our current asset base, Altus is capable of growing for many years, and we look forward to generating substantial free cash flow in 2021 and establishing an attractive dividend payout,” Bretches added.
Infrastructure Update
The first of Altus’ three new cryogenic processing plants reached mechanical completion last month, and the company anticipates that the plant will be in service in the next few weeks. Cryo unit two is expected to be commissioned in June and fully operational in July, and unit three is on schedule for startup in the fourth quarter of this year. By year-end 2019, Altus will have 600 million cubic feet per day in nameplate processing capacity from all three plants.
Bretches continued, “These new cryo facilities will improve our operating costs with greater efficiency and reliability. They will also enable higher and more flexible ethane and propane recoveries than the more common processing technology used today in West Texas, providing competitive advantages as we market services to third parties.
“Our joint venture pipelines and options are progressing well. Kinder Morgan recently reiterated October 2019 and October 2020 as the respective in-service dates for the Gulf Coast Express (GCX) and Permian Highway natural gas pipelines. Enterprise’s Shin Oak NGL main line is now in service, and, according to recent disclosures from Enterprise, the pipeline was effectively full on day one. The lateral connecting the Shin Oak NGL line to Waha is expected to be completed by the end of this quarter, at which time Altus will have a 60-day window to exercise its equity option. Permanent service on the EPIC crude oil pipeline is expected in January 2020, with interim service delivering crude on the converted EPIC NGL line expected to commence during the third quarter of 2019.”
CFO Comment
“Our high-quality G&P assets at Alpine High and JV pipelines are very financeable and are attracting substantial investor interest,” said Ben Rodgers, Altus Midstream chief financial officer. “We have been very focused on our financing efforts and are confident in a positive near-term outcome.
“Apache announced last month that it has chosen to defer gas volumes at Alpine High in response to recent pricing weakness at the Waha Hub.
“We expect a large portion of Apache’s rich gas deferrals to return to production with the startup of our first cryo facility in May. Apache is demonstrating strong support, which includes assistance to reduce Altus’ overhead and shared costs.
“As a result of the temporary deferral of Alpine High gas production, we are revising our gathered volume guidance this year to 500 – 550 MMcf/d, of which approximately 65 percent is expected to be rich gas. Our 2019 Adjusted EBITDA and capital guidance is unchanged, and we look forward to executing on our financing efforts in the near future.”
Conference Call
Altus will host its first-quarter 2019 results conference call Thursday, May 2, 2019, at 1 p.m. Central time. The conference call will be webcast from Altus’ website at www.altusmidstream.com/investors, and the webcast replay will be archived there as well. The conference call will also be available for playback by telephone for one week beginning May 2 at approximately 6 p.m. Central time. To access the telephone playback, dial (855) 859-2056 or (404) 537-3406 for international calls. The conference access code is 1989173.
About Altus Midstream Company
Altus Midstream Company is a pure-play, Permian to Gulf Coast midstream C-corporation. Through its consolidated subsidiaries, Altus owns substantially all of the gas gathering, processing and transportation assets servicing Apache Corporation’s production in the Alpine High play in the Delaware Basin and owns, or has the option to own, joint venture equity interests in five Permian Basin pipelines, four of which go to various points along the Texas Gulf Coast. Altus posts announcements, operational updates, investor information and press releases on its website, www.altusmidstream.com.
Additional information
Free cash flow as referenced in this news release is defined as Adjusted EBITDA less capital expenditures. Additional information follows, including a reconciliation of Adjusted EBITDA and Capital Investments (non-GAAP financial measures) to the GAAP measures.
Non-GAAP financial measures
Altus’ financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted EBITDA and Capital Investments are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
Forward-looking statements
This news release includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “seeks,” “possible,” “potential,” “predict,” “project,” “guidance,” “outlook,” “should,” “would,” “will,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for Altus Midstream’s and Apache’s operations, including statements about our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, and objectives of management. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See "Risk Factors" in our Annual Report Form 10-K for the fiscal year ended December 31, 2018 filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.
Contacts
Media: (713) 296-7276 Phil West
Investors: (281) 302-2286 Gary Clark
Website: www.altusmidstream.com
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