Altus Midstream Announces First-Quarter 2020 Results

May 6, 2020
  • Strong liquidity position through 2023 to execute capital investment program; 
  • Three of four long-haul joint venture pipeline projects in service, with the Permian Highway Pipeline on schedule for early 2021; and
  • Continued strong operational performance with 15% reduction in operating costs.

HOUSTON, May 6, 2020 – Altus Midstream Company (Nasdaq: ALTM) today announced its results for the three-month period ending March 31, 2020. 

The company reported a first-quarter 2020 net loss including noncontrolling interests of $26.8 million, which includes a $62 million non-cash unrealized loss related to an embedded derivative in the company’s preferred units. Excluding this and other items, adjusted EBITDA for the first quarter 2020 was approximately $46.5 million. Gathering and processing (G&P) throughput volumes for the period averaged 577 million cubic feet (MMcf) per day, approximately 75% of which was rich gas.

Capital investments during the quarter were approximately $90 million, which includes $7 million for G&P infrastructure and $83 million for the joint venture (JV) pipelines, comprising primarily capital calls for construction of EPIC’s crude oil line and the Permian Highway Pipeline (PHP). 

CEO Comment

“Altus Midstream is in a good position to navigate the current market situation. We have a diverse cash flow stream from a portfolio of G&P and long-haul pipeline assets, no upcoming debt maturities, and ample liquidity to meet foreseeable investment needs with a revolver that extends through 2023,” said Clay Bretches, Altus Midstream CEO and president. “We continue to focus on operational excellence while lowering costs, as demonstrated by a 99% G&P uptime during the quarter and a 15% reduction in operating expenses from the fourth-quarter 2019 to the first-quarter 2020. We expect to be cash flow positive upon the start-up of Kinder Morgan’s PHP in early 2021.”

Infrastructure Update

Altus received cash distributions from Kinder Morgan’s Gulf Coast Express (GCX) natural gas pipeline and Enterprise Products’ Shin Oak Natural Gas Liquids pipeline through the first quarter. “Kinder Morgan highlighted GCX as a major contributor to its higher volumes in the first quarter, and the Shin Oak pipeline is providing customers the advantage of Y-grade delivery directly to fractionation and storage facilities at Mont Belvieu on the Gulf Coast,” continued Bretches.

PHP, in which Altus holds an approximate 27% equity interest, remains on track to commence service in early 2021. This natural gas pipeline, operated by Kinder Morgan, will have a capacity of 2.1 billion cubic feet (Bcf) per day and is supported by minimum volume commitments. 

The EPIC Crude Oil Pipeline (EPIC) went into full service on April 1 with a smooth start-up. Altus holds a 15% equity interest in EPIC. 

“Oil volumes in the area remain challenged due to reduced drilling activity in the Permian basin; however, EPIC is aggressively sourcing business and has added incremental revenue from short-term storage and transport deals,” continued Bretches. 

“I’m very thankful for our dedicated team. They have done a tremendous job keeping the business running safely during the COVID-19 pandemic,” concluded Bretches.

CFO Comment

“Following team and community safety, our priority in this challenging time is to maintain our strong liquidity position,” said Ben Rodgers, Altus Midstream chief financial officer. “The vast majority of our capital for the remainder of 2020 will be directed to the completion of PHP. With the startup of that pipeline in early 2021, all four of our JV pipeline projects will be in service and contributing to Altus’ earnings.” 

For updated financial guidance, please refer to the investor presentation released today at www.altusmidstream.com/investors.

Conference Call

Altus will host its first-quarter 2020 results conference call Thursday, May 7, 2020, 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 7 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 5785178.

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 the gas gathering, processing and transmission assets servicing production from Apache Corporation (“Apache”) (NYSE, Nasdaq: APA) in the Alpine High play in the Delaware Basin and owns equity interests in four Permian-to-Gulf Coast pipelines. Altus posts announcements, operational updates, investor information and press releases on its website, www.altusmidstream.com.

Additional information

Additional information follows, including a reconciliation of Adjusted EBITDA, Capital Investments and Growth 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, Capital Investments and Growth 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. Wherever a non-GAAP financial measure is disclosed in this earnings release, the non-GAAP 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, 2019, and in our Quarterly Reports on Form 10-Q, 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) 296-6100    Patrick Cassidy        


Click here for the full release with quarterly financial statements.


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