8-K
Altus Midstream Co false 0001692787 0001692787 2021-05-05 2021-05-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2021

 

 

Altus Midstream Company

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38048   81-4675947

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

One Post Oak Central, 2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Class A common stock, $0.0001 par value   ALTM   Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

 

Item 2.02.

Results of Operations and Financial Condition.

On May 5, 2021, Altus Midstream Company issued a press release announcing estimated financial and operating results for the fiscal quarter ended March 31, 2021. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.    Description
99.1    Press Release of Altus Midstream Company dated May 5, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      ALTUS MIDSTREAM COMPANY
Date: May 6, 2021      

/s/ Rebecca A. Hoyt

      Rebecca A. Hoyt
      Senior Vice President, Chief Accounting Officer,
      and Controller (Principal Accounting Officer)
EX-99.1

Exhibit 99.1

 

LOGO    NEWS RELEASE

Altus Midstream Announces Estimated First-Quarter 2021 Results

 

   

All four joint venture pipelines are in service, delivering natural gas, oil and NGLs;

 

   

Decreased gathering and processing operating costs for the seventh consecutive quarter; and

 

   

Paid first cash dividend in March; declared $1.50 per share dividend payable in June.

HOUSTON, May 5, 2021 – Altus Midstream Company (Nasdaq: ALTM) today announced its estimated results for the three-month period ending March 31, 2021.

The company reported an estimated first-quarter 2021 net income of $22 million including noncontrolling interests. Estimated Adjusted EBITDA for the first quarter 2021 was $65 million, and growth capital expenditures were approximately $21 million. Gathering and processing (G&P) throughput volumes for the period averaged 436 million cubic feet (MMcf) per day, approximately 72% of which was rich gas.

CEO Comment

“Altus Midstream continued its positive momentum in the first quarter of 2021 achieving free cash flow for the first full quarter, a significant milestone for the company. Our team also delivered remarkable safety and operational performance during the severe weather in February,” said Clay Bretches, Altus Midstream CEO and president. “Despite the challenges of the winter storm, our assets and operations quickly returned to pre-storm levels.

“We are optimistic that U.S. oil and gas demand will continue to recover in 2021. Our team remains focused on safe operations, bringing in third-party business, and asset optimization.”

CFO Comment

“With higher expected G&P volumes and a strong first-quarter performance, we are raising the midpoint of our 2021 EBITDA guidance to $255 million,” said Ben Rodgers, Altus Midstream chief financial officer. “Altus is in a stable financial position with ample operating cash flow and liquidity. Our growth capital obligations are minimal, and we remain on track to meet our annual guidance estimate of $30-40 million. Finally, we are pleased that the Board has declared our second quarterly dividend.”


ALTUS MIDSTREAM ANNOUNCES ESTIMATED FIRST-QUARTER 2021 RESULTS — PAGE 2 of 4

 

Dividend Announcement

The board of directors declared a cash dividend on the company’s Class A common shares. The dividend on Class A common shares is payable June 30, 2021, to stockholders of record on May 28, 2021, at a rate of $1.50 per share.

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 2021 estimated results conference call Thursday, May 6, 2021, 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 6 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 3586726.

About Altus Midstream Company

Altus Midstream Company is a pure-play, Permian-to-Gulf Coast midstream C-corporation. Through its consolidated subsidiaries, Altus owns gas gathering, processing and transmission assets servicing production 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


ALTUS MIDSTREAM ANNOUNCES ESTIMATED FIRST-QUARTER 2021 RESULTS — PAGE 3 of 4

 

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,” “prospects,” “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 on Form 10-K for the fiscal year ended December 31, 2020, 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.

The company is currently finalizing its standard financial reporting procedures for the quarter ended March 31, 2021. As a result, all financial data included in this news release is preliminary, unaudited, and subject to change. While the financial data included in this news release is based on the most current


ALTUS MIDSTREAM ANNOUNCES ESTIMATED FIRST-QUARTER 2021 RESULTS — PAGE 4 of 4

 

information available to management, actual results for the quarter ended March 31, 2021 may differ materially from such estimates as a result of the completion of normal quarter-end accounting procedures and adjustments, primarily related to the completion of the review of the accounting treatment of the company’s public and private warrants based on the April 12, 2021 SEC Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACS). Other factors that could cause actual results for the quarter ended March 31, 2021 to differ materially from the estimates contemplated by the forward-looking statements included in this news release include, but are not limited to, inaccurate assumptions, changes in estimates or judgments, and facts or circumstances affecting the application of the company’s critical accounting policies. During the course of the preparation of the consolidated financial statements for the quarter ended March 31, 2021, items may be identified that could cause final reported results to be materially different from the preliminary financial estimates presented herein.

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 Alexandra Franceschi

Investors:    (281) 302-2286 Patrick Cassidy

-end-


ALTUS MIDSTREAM COMPANY

STATEMENT OF CONSOLIDATED OPERATIONS

(Estimated and Unaudited)

(In thousands)

 

     For the Quarter Ended  
     March 31,  
     2021     2020(1)  

REVENUES:

    

Midstream services revenue - affiliate

   $ 31,529     $ 40,767  

Product sales - third parties

     2,617       102  
  

 

 

   

 

 

 

Total revenues

     34,146       40,869  
  

 

 

   

 

 

 

COSTS AND EXPENSES:

    

Costs of product sales

     1,993       91  

Operations and maintenance

     7,402       10,591  

General and administrative

     3,455       4,178  

Depreciation and accretion

     4,000       3,914  

Impairments

     441       —    

Taxes other than income

     3,808       3,443  
  

 

 

   

 

 

 

Total costs and expenses

     21,099       22,217  
  

 

 

   

 

 

 

OPERATING INCOME

     13,047       18,652  

OTHER INCOME (LOSS):

    

Unrealized derivative instrument loss

     (16,529     (61,984

Interest income

     1       7  

Income from equity method interests, net:

     21,688       15,842  

Warrants valuation adjustment

     (664     1,877  

Other

     7,544       (188
  

 

 

   

 

 

 

Total other income (loss)

     12,040       (44,446

Financing costs, net of capitalized interest

     2,598       273  
  

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     22,489       (26,067

Current income tax benefit

     —         (696
  

 

 

   

 

 

 

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS

     22,489       (25,371

Net income attributable to Preferred Unit limited partners

     19,492       18,262  
  

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

     2,997       (43,633

Net income (loss) attributable to Apache limited partner

     2,817       (35,552
  

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS

   $ 180     $ (8,081
  

 

 

   

 

 

 

 

(1)

This period has been adjusted to reflect the estimated effect of applying the guidance in the SEC’s April 12, 2021 Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”).

 

Page 1


ALTUS MIDSTREAM COMPANY

SUPPLEMENTAL FINANCIAL INFORMATION AND OPERATING STATISTICS

(Estimated and Unaudited)

(In thousands)

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter Ended  
     March 31,  
     2021     2020  

Net cash provided by operating activities

   $ 43,272     $ 51,538  

Net cash used in investing activities

     (13,222     (97,615

Net cash provided by (used in) financing activities

     (2,932     59,395  

SUMMARY BALANCE SHEET INFORMATION

 

     March 31,     December 31,  
     2021     2020(1)  

Cash and cash equivalents

   $ 51,306     $ 24,188  

Other current assets

     24,888       18,581  

Property, plant and equipment, net

     193,416       195,836  

Equity method interests

     1,566,672       1,555,182  

Deferred charges and other

     6,294       5,843  
  

 

 

   

 

 

 

Total assets

   $ 1,842,576     $ 1,799,630  
  

 

 

   

 

 

 

Current liabilities

   $ 21,884     $ 29,983  

Long-term debt

     657,000       624,000  

Deferred credits and other noncurrent liabilities

     227,545       209,495  

Redeemable noncontrolling interest - Apache limited partner

     662,432       575,125  

Redeemable noncontrolling interest - Preferred Unit limited partners

     604,749       608,381  

Shareholders’ equity (deficit)

     (331,034     (247,354
  

 

 

   

 

 

 

Total liabilities, noncontrolling interests, and shareholders’ equity

   $ 1,842,576     $ 1,799,630  
  

 

 

   

 

 

 

 

(1)

This period has been adjusted to reflect the estimated effect of applying the guidance in the SEC’s April 12, 2021 Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”).

SUMMARY OPERATING STATISTICS

 

     For the Quarter Ended  
     March 31,  
     2021      2020  

Throughput volumes of natural gas (MMcf/d)

     

Rich wellhead gas

     316        430  

Lean wellhead gas

     120        147  
  

 

 

    

 

 

 

Total throughput

     436        577  

 

Page 2


ALTUS MIDSTREAM COMPANY

NON-GAAP FINANCIAL MEASURES

(Estimated and Unaudited)

(In thousands)

Reconciliation of net income (loss) including noncontrolling interest to Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) including noncontrolling interests before financing costs (net of capitalized interest), interest income, income taxes, depreciation and accretion and adjust such equivalent items from our income from equity method interests. We also exclude (when applicable) impairments, unrealized gains or losses on derivative instruments, and other items affecting comparability of results to peers. Our management believes Adjusted EBITDA is useful for evaluating our operating performance and comparing results of our operations from period-to-period and against peers without regard to financing or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) including noncontrolling interests or any other measure determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance, such as our cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. The presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Additionally, our computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income (loss) including noncontrolling interests. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income (loss) including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income (loss) including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Our definitions of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in our industry, thereby diminishing its utility.

Our management compensates for the limitations of Adjusted EBITDA as an analytical tool, by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income (loss) including noncontrolling interests and incorporating this knowledge into its decision-making processes. Our management believes that investors benefit from having access to the same financial measures that the Company uses in evaluating operating results.

 

     For the Quarter Ended  
     March 31,      March 31,  
     2021      2020(1)  

Net income (loss) including noncontrolling interests

   $ 22,489      $ (25,371

Add:

     

Financing costs, net of capitalized interest

     2,598        273  

Depreciation and accretion

     4,000        3,914  

Impairments

     441        —    

Unrealized derivative instrument loss

     16,529        61,984  

Equity method interests Adjusted EBITDA

     39,911        23,686  

Warrants valuation adjustment

     664        (1,877

Loss on sales of assets

     —          188  

Other

     169        290  

Less:

     

Gain on asset sales

     76        —    

Interest income

     1        7  

Income from equity method interests, net

     21,688        15,842  

Income tax benefit

     —          696  
  

 

 

    

 

 

 

Adjusted EBITDA (Non-GAAP)

   $ 65,036      $ 46,542  
  

 

 

    

 

 

 

 

(1)

This period has been adjusted to reflect the estimated effect of applying the guidance in the SEC’s April 12, 2021 Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”).

 

Other midstream activity

     

Cash distributions received from our equity method interests

   $ 31,350      $ 22,537  

 

Page 3


ALTUS MIDSTREAM COMPANY

TOTAL GROWTH CAPITAL INVESTMENTS

(Estimated and Unaudited)

(In thousands)

Reconciliation of costs incurred in midstream activity to capital investments and growth capital investments

Management believes the presentation of capital investments and growth capital investments is useful for investors to assess Altus’ expenditures related to our midstream capital activity. We define capital investments as costs incurred in midstream activities, adjusted to exclude asset retirement obligation revisions and liabilities incurred, while including amounts paid during the period for abandonment and decommissioning expenditures given the uncertainty and timing of when the actual abandonment activity will occur. Management believes total growth capital investments provides a more accurate reflection of Altus’ current-period expenditures related to midstream capital activity and is consistent with how we plan our capital budget.

 

     For the Quarter Ended  
     March 31,      March 31,  
     2021      2020  

Costs incurred in midstream activity

     

Property, plant and equipment, gross

   $ 995      $ 7,079  

Equity method interests

     20,522        82,827  
  

 

 

    

 

 

 

Total cost incurred in midstream activity

   $ 21,517      $ 89,906  
  

 

 

    

 

 

 

Reconciliation of costs incurred to midstream capital investment:

     

Asset retirement obligations incurred and revisions

   $ —        $ —    

Asset retirement obligations settled

     —          —    
  

 

 

    

 

 

 

Total capital investments

     21,517        89,906  

Less: Maintenance capital costs incurred

     (858      —    
  

 

 

    

 

 

 

Total growth capital investments

   $ 20,659      $ 89,906  
  

 

 

    

 

 

 

 

Page 4