Altus Midstream Announces Fourth-Quarter 2018 Results
HOUSTON, Feb. 27, 2019 – Altus Midstream Company (NASDAQ: ALTM) today announced its results for the three-month period ending Dec. 31, 2018. Altus was created following a recapitalization transaction that closed on Nov. 9, 2018, with an effective date of Oct. 1, 2018. The transaction combined Apache Corporation’s Alpine High midstream assets and funding from Kayne Anderson Acquisition Corp. This is the company’s first reporting period since the closing. Full-year 2018 results for the Alpine High operating entities that are now a part of Altus will be included as part of Altus’ 10-K, to be filed with the SEC on Feb. 28, 2019.
Fourth-Quarter 2018 Results
Fourth-quarter 2018 net income attributable to Class A common shareholders was $632,000. Gathering and processing volumes for the period averaged 471 million cubic feet per day, approximately 49 percent of which was rich gas.
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the fourth quarter of 2018 was $8.2 million.
Capital investments in midstream infrastructure during the fourth quarter of 2018 were $274 million, which included $91 million for the exercise of Altus’ option associated with a 15 percent joint venture equity ownership in Gulf Coast Express, the Kinder Morgan-operated natural gas line from Waha to Agua Dulce near the Texas Gulf Coast, scheduled to begin service in October 2019.
“We are laser-focused on operational excellence and execution as we build out midstream infrastructure and continue to diversify our portfolio with equity in top-tier Permian pipelines,” said Clay Bretches, Altus CEO and president. “Construction of Altus’ three new cryogenic plants, designed to maximize the value of the rich gas at Alpine High, is well underway, and the facilities are tracking to be online at the end of the second quarter and during the third and fourth quarters of 2019, respectively. We continue to expand our gathering and compression assets to support Apache’s Alpine High growth as well as discuss opportunities with other producers in the region. Altus owns 15 percent of Gulf Coast Express Pipeline and recently exercised its option to participate in 15 percent of EPIC Crude Oil Pipeline. We are excited about the opportunity to invest in additional Permian Basin takeaway pipeline projects, and we currently expect to exercise our remaining options in Shin Oak Pipeline, Permian Highway Pipeline and the Salt Creek NGL Line.”
Ben Rodgers, Altus Midstream chief financial officer, added, “We are actively managing our capital investment and will maintain flexibility to respond quickly to the development pace at Alpine High. To reflect the recent downturn in commodity prices and reduced 2019 activity level by our upstream sponsor, we are decreasing approximately $400 million of planned gathering and processing capital over the next three years. As a result, we will more than double our 2021 free cash flow compared to prior guidance, which will position us to achieve our balance sheet and dividend goals. We have a unique and diverse opportunity set ahead of us, anchored by the vast, multi-zone, multi-phase Alpine High play and our wellhead-to-water connectivity. We look forward to generating long-term growth and delivering strong returns from these assets and other future investment opportunities.”
EPIC Crude Oil Pipeline Option Exercise
On Feb. 1, 2019, Altus exercised its option to acquire a 15 percent equity interest in the EPIC Crude Oil Pipeline. The transaction is expected to close in early March. The EPIC crude line will extend from Orla, Texas to the Port of Corpus Christi, Texas and is scheduled to come online in January 2020. However, with the conversion of EPIC’s NGL line to transport crude on an interim basis, EPIC expects to generate EBITDA in the second half of 2019 from this project.
Altus has updated its guidance for 2019-2021, which is detailed in an updated investor presentation posted to Altus’ website at www.altusmidstream.com/investors/events-and-presentations.
Altus will host its fourth-quarter 2018 results conference call Thursday, Feb. 28, 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 Feb. 28 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 5868685.
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.
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. Altus’ updated investor presentation is available at www.altusmidstream.com/investors/events-and-presentations.
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.
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, 2017 (and in our Annual Report Form 10-K for the fiscal year ended December 31, 2018, when filed) and in our Definitive Proxy Statement dated October 22, 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.
Media: (713) 296-7276 Phil West
Investors: (281) 302-2286 Gary Clark
Click here for the full release with quarterly financial statements and an updated investor presentation.