John McKay

John McKay at Goldman Sachs inquired about Venture Global's strategy for funding a worst-case scenario in ongoing arbitrations and sought clarification on the accounting methodology for the $14-$15 million quarterly reserve. He also asked about the continuation of contracting activity, pricing trends for new SPAs, and whether the BP ruling has influenced recent contract discussions.

Answer

CEO Michael Sabel highlighted the company's strong cash position, spread-out nature of potential damages over years, and substantial unencumbered assets, including 100% ownership of Venture Global and CP2, and 77% of CP1. CFO Jack Thayer explained the $14-$15 million per quarter reserve as the "best estimate of award outcomes" based on accounting guidance, noting it's a non-cash estimate and below the maximum liability. Michael Sabel affirmed that the BP ruling has not impacted contracting discussions, citing the company's leading pace in signing 20-year SPAs globally and attractive long-term pricing that drives strong returns.

John McKay from Goldman Sachs inquired about Antero Midstream's potential role in emerging in-basin demand opportunities and questioned the capital allocation strategy between share buybacks and balance sheet improvements.

Answer

Brendan Krueger, CFO of Antero Midstream, explained that AM could build new infrastructure, such as spurs with take-or-pay contracts, to service new demand. Regarding capital allocation, Krueger clarified that the 50% excess free cash flow target for buybacks is a long-term goal, not a quarterly one, and the company opportunistically balances repurchases with debt reduction, which it also sees as accretive to equity value.