John McKay

John McKay with Goldman Sachs inquired about Antero Midstream's longer-term growth trajectory beyond 2027, specifically asking how a 3-rig, 2-crew program would impact throughput volume and EBITDA growth after the M&A tailwinds subside. He also asked about the implications of Antero Resources' (AR) growth upside plans for Antero Midstream's (AM) EBITDA and capital.

Answer

Michael Kennedy, CEO and President of Antero Midstream, explained that the 3-rig, 2-crew program is expected to provide continued growth past 2027, projecting approximately 200 million a day of throughput volume growth and mid-to-high single-digit EBITDA growth, consistent with the company's historical performance and 2025/2026 expectations. Regarding AR's growth plans, Mr. Kennedy stated there would be no additional capital requirements for AM beyond the outlined budget, as the assets are strategically located within existing infrastructure, including trunk lines, pipelines, and water systems, with much of it being dry gas not requiring further processing. He highlighted AR's strong position due to AM's infrastructure, firm transport, dry gas optionality, and ability to transport gas to the Gulf Coast for LNG.

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.

John McKay from The Goldman Sachs Group, Inc. asked for a year-over-year bridge for the long-haul Permian volume guidance, focusing on the volume versus margin mix, and inquired about the near-term storm impacts on volumes over the past two weeks and the current recovery status.

Answer

Jeremy Goebel, EVP and Chief Commercial Officer, attributed the Permian volume strength to the full-year run rate of Cactus 3, increased contracted capacity on the basin pipeline system (leading to lower margins due to Midland-Cushing rates), and BridgeTex's full-year run rate. He also stated that storm impacts, which caused a 7-10 day production loss of 10-12 million barrels of crude and half that for NGLs, have already recovered and were factored into guidance.

John McKay asked for a year-over-year bridge for Plains All American's long-haul Permian volume guidance, focusing on the volume versus margin mix and how it contributes to the 2026 numbers. He also inquired about the near-term storm impacts on volumes across the board in the last week or two and the current status of recovery.

Answer

Jeremy Goebel, Executive Vice President and Chief Commercial Officer, attributed the long-haul Permian volume strength to the full-year run rate of Cactus 3, a significant uptick in contracted capacity on the basin pipeline system (leading to lower margins due to Midland-Cushing rates), and the full-year run rate of BridgeTex. He confirmed that storm impacts, which caused a 7-10 day production loss of 10-12 million barrels of crude and half that for NGLs, have already recovered and were factored into the guidance.

John McKay asked for a year-over-year bridge for the long-haul Permian volume guidance, focusing on the volume versus margin mix. He also inquired about the near-term storm impacts on volumes across gas and crude, and the current recovery status.

Answer

Jeremy Goebel, Executive Vice President and Chief Commercial Officer, attributed the long-haul Permian volume guidance to the full-year run rate of Cactus 3, a significant uptick in contracted capacity on the Basin pipeline, and the full-year run rate of BridgeTex. Regarding storm impacts, he stated that recovery had already occurred after a 7-10 day period of back-to-back freezes, which impacted gas infrastructure and subsequently crude, estimating a loss of 10-12 million barrels of crude production and half that for NGLs, with these impacts already considered in the guidance.

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.