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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-38048
Altus Midstream Company
(Exact name of registrant as specified in its charter)
Delaware81-4675947
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400
(Address of principal executive offices) (Zip Code)
(713296-6000
(Registrant’s telephone number, including area code)

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  ALTMNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer 
Non-accelerated filerSmaller reporting company 
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Number of shares of registrant’s Class A common stock, par value $0.0001 per share issued and outstanding as of July 31, 20213,746,460 
Number of shares of registrant’s Class C common stock, par value $0.0001 per share issued and outstanding as of July 31, 202112,500,000 




TABLE OF CONTENTS
 
Item Page
PART I — FINANCIAL INFORMATION
1.
2.
3.
4.
PART II — OTHER INFORMATION
1.
1A.
6.
 

i


FORWARD-LOOKING STATEMENTS AND RISK
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Company’s examination of historical operating trends, production and growth forecasts of Apache Corporation’s Alpine High field development and other data in the Company’s possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, its assumptions about:
the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically the coronavirus disease 2019 (COVID-19) pandemic and any related variants) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;
the availability and effectiveness of any vaccine programs or other therapeutics related to the treatment of COVID-19;
the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;
pipeline and gathering system capacity and availability;
production rates, throughput volumes, reserve levels, and development success of dedicated oil and gas fields;
economic and competitive conditions;
the availability of capital;
cash flow and the timing of expenditures;
capital expenditures and other contractual obligations;
weather conditions;
inflation rates;
the availability of goods and services;
legislative, regulatory, or policy changes;
terrorism or cyberattacks;
occurrence of property acquisitions or divestitures;
the integration of acquisitions;
a decline in oil, natural gas, and NGL production, and the impact of general economic conditions on the demand for oil, natural gas, and NGLs;
the impact of environmental, health and safety, and other governmental regulations and of current or pending legislation;
environmental risks;
the effects of competition;
the retention of key members of senior management and key technical personnel;
ii


increases in interest rates;
the effectiveness of the Company’s business strategy;
changes in technology;
market-related risks, such as general credit, liquidity, and interest-rate risks;
the timing, amount, and terms of the Company’s future issuances of equity and debt securities;
other factors disclosed under Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in the Company’s most recently filed Annual Report on Form 10-K;
other risks and uncertainties disclosed in the Company’s second-quarter 2021 earnings release;
other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; and
any other factors disclosed in the other filings that the Company makes with the Securities and Exchange Commission (SEC).
Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise its forward-looking statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.


iii


GLOSSARY OF TERMS
The following are abbreviations and definitions of certain terms used in this Quarterly Report on Form 10-Q and certain terms which are commonly used in the exploration, production and midstream sectors of the oil and natural gas industry:
Bbl. One stock tank barrel of 42 United States (U.S.) gallons liquid volume used herein in reference to crude oil, condensate or NGLs.
Bbl/d. One Bbl per day.
Bcf. One billion cubic feet of natural gas.
Bcf/d. One Bcf per day.
Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.
Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
Formation. A layer of rock which has distinct characteristics that differs from nearby rock.
MBbl. One thousand barrels of crude oil, condensate or NGLs.
MBbl/d. One MBbl per day.
Mcf. One thousand cubic feet of natural gas.
Mcf/d. One Mcf per day.
MMBbl. One million barrels of crude oil, condensate or NGLs.
MMBtu. One million British thermal units.
MMcf. One million cubic feet of natural gas.
MMcf/d. One MMcf per day.
NGLs. Natural gas liquids. Hydrocarbons found in natural gas, which may be extracted as liquefied petroleum gas and natural gasoline.
References to “Altus,” “ALTM,” and the “Company” mean Altus Midstream Company and its consolidated subsidiaries, unless otherwise specifically stated. References to “Apache” mean Apache Corporation and its consolidated subsidiaries. All references to the Company’s Class A common stock, $0.0001 par value (Class A Common Stock), and Class C common stock, $0.0001 par value (Class C Common Stock), reflect such share amounts as retrospectively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.
iv


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2021
2020(1)
2021
2020(1)
(In thousands, except per share data)
REVENUES:
Midstream services revenue — affiliate (Note 2)$32,467 $31,616 $63,996 $72,383 
Product sales third parties
3,126  5,743  
Total revenues 35,593 31,616 69,739 72,383 
COSTS AND EXPENSES:
Costs of product sales3,351  5,344  
Operations and maintenance(2)
7,340 9,508 14,742 20,099 
General and administrative(3)
3,475 2,988 6,930 7,166 
Depreciation and accretion4,009 4,062 8,009 7,976 
Impairments  441  
Taxes other than income3,812 3,347 7,620 6,790 
Total costs and expenses21,987 19,905 43,086 42,031 
OPERATING INCOME13,606 11,711 26,653 30,352 
Unrealized derivative instrument gain (loss)31,006 (10,585)14,477 (72,569)
Interest income 1 2 2 9 
Income from equity method interests, net28,466 15,712 50,154 31,554 
Warrants valuation adjustment 222 (417)(442)1,460 
Other 3,155 (97)10,699 (274)
Total other income (loss)62,850 4,615 74,890 (39,820)
Financing costs, net of capitalized interest2,615 292 5,213 565 
NET INCOME (LOSS) BEFORE INCOME TAXES73,841 16,034 96,330 (10,033)
Current income tax benefit   (696)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS73,841 16,034 96,330 (9,337)
Net income attributable to Preferred Unit limited partners24,004 18,764 43,496 37,026 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS49,837 (2,730)52,834 (46,363)
Net income (loss) attributable to Apache limited partner38,174 (1,779)40,991 (37,331)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$11,663 $(951)$11,843 $(9,032)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS, PER SHARE
Basic$3.11 $(0.25)$3.16 $(2.41)
Diluted$1.31 $(0.25)$2.50 $(2.85)
WEIGHTED AVERAGE SHARES
Basic3,7463,7463,7463,746
Diluted32,5883,74620,08816,246
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Includes amounts of $1.5 million and $1.3 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $2.3 million and $2.8 million for the six months ended June 30, 2021 and 2020, respectively. Refer to Note 2—Transactions with Affiliates.
(3)Includes amounts of $2.3 million and $1.6 million associated with related parties for the three months ended June 30, 2021 and 2020, respectively, and $4.6 million and $3.6 million associated with related parties for the six months ended June 30, 2021 and 2020, respectively. Refer to Note 2—Transactions with Affiliates.

The accompanying notes to consolidated financial statements are an integral part of this statement.
1


ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021
2020(1)
2021
2020(1)
(In thousands)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS$73,841 $16,034 $96,330 $(9,337)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income (loss) 390 630 (794)
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS73,841 16,424 96,960 (10,131)
Comprehensive income attributable to Preferred Unit limited partners24,004 18,764 43,496 37,026 
Comprehensive income (loss) attributable to Apache limited partner38,174 (1,479)41,476 (37,942)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS$11,663 $(861)$11,988 $(9,215)
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.










































The accompanying notes to consolidated financial statements are an integral part of this statement.
2


ALTUS MIDSTREAM COMPANY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,December 31,
 2021
2020(1)
(In thousands, except per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$75,092 $24,188 
Accounts receivable1,956 1,033 
Accounts receivable from Apache Corporation (Note 1)797 446 
Revenue receivables (Note 3)10,964 11,378 
Inventories3,440 3,597 
Prepaid assets and other5,957 2,127 
98,206 42,769 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment209,650 208,870 
Less: Accumulated depreciation and accretion(18,858)(13,034)
190,792 195,836 
OTHER ASSETS:
Equity method interests1,554,385 1,555,182 
Deferred charges and other10,271 5,843 
1,564,656 1,561,025 
Total assets$1,853,654 $1,799,630 
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY
CURRENT LIABILITIES:
Distributions payable to Preferred Unit limited partners$11,562 $ 
Dividends payable  5,620 
Distributions payable to Apache Corporation  18,750 
Other current liabilities (Note 6)13,582 5,613 
25,144 29,983 
LONG-TERM DEBT657,000 624,000 
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Asset retirement obligation66,157 64,062 
Embedded derivative 124,532 139,009 
Other noncurrent liabilities6,765 6,424 
197,454 209,495 
Total liabilities879,598 863,478 
COMMITMENTS AND CONTINGENCIES (Note 7)
Redeemable noncontrolling interest — Apache limited partner863,063 575,125 
Redeemable noncontrolling interest — Preferred Unit limited partners617,191 608,381 
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at June 30, 2021 and December 31, 2020
1 1 
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at June 30, 2021 and December 31, 2020
1 1 
Additional paid-in capital 122,222 
Accumulated deficit(506,200)(369,433)
Accumulated other comprehensive loss (145)
(506,198)(247,354)
Total liabilities, noncontrolling interests, and equity$1,853,654 $1,799,630 
(1)The Consolidated Balance Sheet as of December 31, 2020 has been derived from the audited consolidated financial statements, revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.





The accompanying notes to consolidated financial statements are an integral part of this statement.
3


ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
 Six Months Ended June 30,
 2021
2020(1)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests$96,330 $(9,337)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized derivative instrument (gain) loss(14,477)72,569 
Depreciation and accretion8,009 7,976 
Income from equity method interests, net(50,154)(31,554)
Distributions from equity method interests62,091 37,536 
Impairments441  
Power credit, net(7,609) 
Warrants valuation adjustment442 (1,460)
Other307 489 
Changes in operating assets and liabilities:
Decrease in inventories157 256 
Increase in prepaid assets and other(689)(541)
Increase in accounts receivable(923)(101)
Decrease in revenue receivables (Note 2)414 1,889 
Decrease in account receivables from/payable to affiliate551 1,301 
Increase in accrued expenses7,895 6,392 
Increase (decrease) in deferred charges, deferred credits, and other noncurrent liabilities(1,730)1,382 
NET CASH PROVIDED BY OPERATING ACTIVITIES101,055 86,797 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(2,447)(26,520)
Proceeds from sale of assets1,669 6,773 
Contributions to equity method interests(24,155)(154,386)
Distributions from equity method interests13,645 4,211 
Capitalized interest paid (5,373)
NET CASH USED IN INVESTING ACTIVITIES(11,288)(175,295)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to Preferred Unit limited partners(23,124) 
Distributions paid to Apache limited partner(37,500) 
Dividends paid(11,239) 
Proceeds from revolving credit facility33,000 97,000 
Finance lease (11,789)
Deferred facility fees  (816)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES(38,863)84,395 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS50,904 (4,103)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR24,188 5,983 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$75,092 $1,880 
SUPPLEMENTAL CASH FLOW DATA:
Accrued capital expenditures(2)
$ $1,409 
Interest paid, net of capitalized interest4,643  
Cash received for income tax refunds 696 
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Includes $0.7 million due to Apache for the six months ended June 30, 2020, pursuant to the terms of the COMA (as defined herein). Refer to Note 2—Transactions with Affiliates for more information.



The accompanying notes to consolidated financial statements are an integral part of this statement.
4


ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
(Unaudited)
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(2)
Redeemable Noncontrolling Interest — Apache Limited PartnerClass A Common StockClass C Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Total Equity
 
Shares(3)
Amount
Shares(3)
Amount
(In thousands)(In thousands)
For the Quarter Ended June 30, 2020(1)
Balance at March 31, 2020 (Revised)$573,861 $230,827 3,746 $1 12,500 $1 $451,037 $(380,305)$(539)$70,195 
Net income (loss)18,764 (1,779)— — — — — (951)— (951)
Accumulated other comprehensive income— 300 — — — — — — 90 90 
Balance at June 30, 2020 (Revised)$592,625 $229,348 3,746 $1 12,500 $1 $451,037 $(381,256)$(449)$69,334 
For the Quarter Ended June 30, 2021
Balance at March 31, 2021$604,749 $662,432 3,746 $1 12,500 $1 $38,217 $(369,253)$ $(331,034)
Distributions payable to Preferred Unit limited partners(11,562)— — — — — — — — — 
Distributions to Apache limited partner— (18,750)— — — — — — — — 
Common Dividends ($1.50 per share)
— — — — — — (5,620)— — (5,620)
Net income24,004 38,174 — — — — — 11,663 — 11,663 
Change in redemption value of noncontrolling interests— 181,207 — — — — (32,597)(148,610)— (181,207)
Balance at June 30, 2021$617,191 $863,063 3,746 $1 12,500 $1 $ $(506,200)$ $(506,198)
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 10—Series A Cumulative Redeemable Preferred Units.
(3)Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.











The accompanying notes to consolidated financial statements are an integral part of this statement.
5


ALTUS MIDSTREAM COMPANY
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS — (Continued)
(Unaudited)
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(2)
Redeemable Noncontrolling Interest — Apache Limited PartnerClass A Common StockClass C Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Total Equity
 
Shares(3)
Amount
Shares(3)
Amount
(In thousands)(In thousands)
For the Six Months Ended June 30, 2020(1)
Balance at December 31, 2019 (Revised)$555,599 $701,000 3,746 $1 12,500 $1 $17,327 $(372,224)$(266)$(355,161)
Net income (loss)37,026 (37,331)— — — — — (9,032)— (9,032)
Change in redemption value of noncontrolling interests— (433,710)— — — — 433,710 — — 433,710 
Accumulated other comprehensive loss— (611)— — — — — — (183)(183)
Balance at June 30, 2020 (Revised)$592,625 $229,348 3,746 $1 12,500 $1 $451,037 $(381,256)$(449)$69,334 
For the Six Months Ended June 30, 2021
Balance at December 31, 2020 (Revised)$608,381 $575,125 3,746 $1 12,500 $1 $122,222 $(369,433)$(145)$(247,354)
Distributions paid to Preferred Unit limited partners(23,124)— — — — — — — — — 
Distributions payable to Preferred Unit limited partners(11,562)— — — — — — — — — 
Distributions to Apache limited partner— (18,750)— — — — — — — — 
Common Dividends ($1.50 per share)
— — — — — — (5,620)— — (5,620)
Net income43,496 40,991 — — — — — 11,843 — 11,843 
Change in redemption value of noncontrolling interests— 265,212 — — — — (116,602)(148,610)— (265,212)
Accumulated other comprehensive income— 485 — — — — — — 145 145 
Balance at June 30, 2021$617,191 $863,063 3,746 $1 12,500 $1 $ $(506,200)$ $(506,198)
(1)This period presented has been revised to reflect the Company’s fair value change of its underlying warrants. Refer to Note 1—Summary of Significant Accounting Policies, see the section titled Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment for further information.
(2)Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 10—Series A Cumulative Redeemable Preferred Units.
(3)Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note 9—Equity for further information.





The accompanying notes to consolidated financial statements are an integral part of this statement.
6


ALTUS MIDSTREAM COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These consolidated financial statements have been prepared by Altus Midstream Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Altus Midstream Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (Form 10-K), which contains a summary of the Company’s significant accounting policies and other disclosures. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Form 10-K.
Unless the context otherwise requires, the “Company,” “ALTM” and “Altus” refers to Altus Midstream Company and its consolidated subsidiaries. “Altus Midstream” refers to Altus Midstream LP and its consolidated subsidiaries. “Apache” refers to Apache Corporation and its consolidated subsidiaries. All references to the Company’s Class A common stock, $0.0001 par value (Class A Common Stock), and Class C common stock, $0.0001 par value (Class C Common Stock), reflect such share amounts as retrospectively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020. Refer to Note—9 Equity for further information.
Nature of Operations
Through its consolidated subsidiaries, the Company owns gas gathering, processing, and transmission assets in the Permian Basin of West Texas. Construction on the assets began in the fourth quarter of 2016, and operations commenced in the second quarter of 2017. Additionally, the Company owns equity interests in four separate Permian Basin pipeline entities that have access to various points along the Texas Gulf Coast. The Company’s operations consist of one reportable segment.
Organization
The Company originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp. (KAAC) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. KAAC completed its initial public offering in the second quarter of 2017.
On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC. On August 8, 2018, KAAC and Altus Midstream LP entered into a contribution agreement (the Contribution Agreement) with certain wholly-owned subsidiaries of Apache, including four Delaware limited partnerships (collectively, Altus Midstream Operating) and their general partner (Altus Midstream Subsidiary GP LLC, a Delaware limited liability company, and together with Altus Midstream Operating, the Altus Midstream Entities). The Altus Midstream Entities were formed by Apache between May 2016 and January 2017 for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (Alpine High).
On November 9, 2018 (the Closing Date) and pursuant to the terms of the Contribution Agreement, KAAC acquired from Apache the entire equity interests of the Altus Midstream Entities and options to acquire equity interests in five separate third-party pipeline projects (the Pipeline Options). The acquisition of the entities and the Pipeline Options is referred to herein as the Business Combination. In exchange, the consideration provided to Apache included economic voting and non-economic voting shares in KAAC and common partnership units representing limited partner interests in Altus Midstream LP (Common Units). Following the Closing Date and in connection with the completion of the Business Combination, KAAC changed its name to Altus Midstream Company.

7


Ownership of Altus Midstream LP
As of and following the Closing Date and in connection with the completion of the Business Combination, the Company’s wholly-owned subsidiary, Altus Midstream GP LLC, a Delaware limited liability company (Altus Midstream GP), is the sole general partner of Altus Midstream LP. The Company operates its business through Altus Midstream LP and its subsidiaries, which include Altus Midstream Operating. The Company holds approximately 23.1 percent of the outstanding Common Units, and a controlling interest, in Altus Midstream, while Apache holds the remaining 76.9 percent.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).
The consolidated financial results of Altus Midstream are included in the Company’s consolidated financial statements due to the Company’s 100 percent ownership interest in Altus Midstream GP, and Altus Midstream GP’s control of Altus Midstream.
The Company has no independent operations or material assets other than its partnership interests in Altus Midstream, which constitutes all of its business. Additionally, the Company’s balance sheet reflects the presentation of noncontrolling interest ownership attributable to the limited partner interests in Altus Midstream held by Apache and the holders of Series A Cumulative Redeemable Preferred Units (the Preferred Units). Refer to Note 9—Equity and Note 10—Series A Cumulative Redeemable Preferred Units for further information.
Variable Interest Entity
Altus Midstream is a variable interest entity (VIE) because the partners in Altus Midstream with equity at risk lack the power, through voting or similar rights, to direct the activities that most significantly impact Altus Midstream’s economic performance.
A reporting entity that concludes it has a variable interest in a VIE must evaluate whether it has a controlling financial interest in the VIE, such that it is the VIE’s primary beneficiary and should consolidate. The Company is the primary beneficiary of Altus Midstream, and therefore should consolidate Altus Midstream because (i) the Company has the ability to direct the activities of Altus Midstream that most significantly affect its economic performance, and (ii) the Company has the right to receive benefits or the obligation to absorb losses that could be potentially significant to Altus Midstream.
Redeemable Noncontrolling Interest — Apache Limited Partner
The Company’s redeemable noncontrolling interest presented in the consolidated financial statements consists of Common Units representing limited partner interests in Altus Midstream held by Apache. Pursuant to certain provisions of the partnership agreement of Altus Midstream (as amended in connection with the Business Combination, and subsequent issuance of Preferred Units, the Amended LPA), the limited partner interests held by Apache are equal to the number of shares of the Company’s Class C Common Stock, held by Apache.
The Company initially recorded the redeemable noncontrolling interest upon the issuance of the Common Units to Apache as part of the Business Combination and based on the recapitalization value ascribed at the Closing Date to the limited partner interest. All or a portion of these Common Units may be redeemed at Apache’s option. The Company has the ability to settle the redemption option either (i) in shares of Class A Common Stock, on a one-for-one basis, or (ii) in cash (based on the fair market value of the Class A Common Stock as determined pursuant to the Contribution Agreement), subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. Upon the future redemption or exchange of Common Units held by Apache, a corresponding number of shares of Class C Common Stock will be cancelled.
The Company’s policy is to record the redeemable noncontrolling interest represented by the Common Units held by Apache at the higher of (i) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the redemption value as of the balance sheet date.
See discussion and additional detail further discussed in Note 9—Equity.
8


Redeemable Noncontrolling Interest — Preferred Unit Limited Partners
On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering, and the purchasers of the Preferred Units were admitted as limited partners of Altus Midstream. The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of the closing of the Preferred Unit offering or upon the occurrence of specified events, unless otherwise redeemed by Altus Midstream.
The Preferred Units are accounted for on the Company’s consolidated balance sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units. Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value and are accounted for on the Company’s consolidated balance sheet as a long-term liability embedded derivative.
See discussion and additional detail further discussed in Note 10—Series A Cumulative Redeemable Preferred Units.
Equity Method Interests
The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity interests are carried originally at acquisition cost, increased by Altus’ proportionate share of the equity interest’s net income and contributions made by Altus, and decreased by Altus’ proportionate share of the equity interest’s net losses and distributions received by Altus. Please refer to Note 8—Equity Method Interests, for further details of the Company’s equity method interests.
Use of Estimates
Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its financial statements, and changes in these estimates are recorded when known.

9


Revision of Previously Issued Consolidated Financial Statements for Immaterial Adjustment
Warrants
On April 12, 2021, the SEC Staff issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACs) (the SEC Staff Statement). The SEC Staff Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to the Company’s public and private warrants outstanding at the time of the Business Combination. The SEC determined that certain features of warrants issued in SPAC transactions common across many entities, such as those outstanding for the Company, should be recorded as a derivative liability under ASC 815 “Derivatives and Hedges” with any changes in fair value being recorded as a gain or loss in the Company’s Statement of Consolidated Operations. The Company has historically accounted for its warrants as equity, with no change in fair value being recorded in the applicable period. The Company has concluded that the previous accounting policy to account for its warrants as equity rather than as a liability was an immaterial error. The Company has corrected this immaterial error by revising its consolidated financial statements as of and for the year ended December 31, 2020 and as of and for the three and six months ended June 30, 2020 and related notes included herein to include the effect of accounting for the warrants as a liability from the date of the Business Combination. Note 12—Net Income (Loss) Per Share and Note 13—Fair Value Measurements have also been updated to reflect this revision. In addition, management has also corrected previously identified immaterial errors related to income from its equity method interests unrelated to the SEC Staff Statement.
The impacts of this adjustment in fiscal year 2020, as presented in the accompanying financial statements, are as follows:
Statement of Consolidated Operations:
Three Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Income from equity method interests, net$16,923 $(1,211)$15,712 
Warrants valuation adjustment (417)(417)
Total other income (loss)6,243 (1,628)4,615 
Net income (loss) before income taxes17,662 (1,628)16,034 
Net income (loss) including noncontrolling interests17,662 (1,628)16,034 
Net income (loss) attributable to common shareholders(1,102)(1,628)(2,730)
Net income (loss) attributable to Apache limited partner(847)(932)(1,779)
Net income (loss) attributable to Class A common shareholders(255)(696)(951)
Net Income (Loss) Attributable To Class A Common Shareholders, Per Share
Basic$(0.07)$(0.18)$(0.25)
Diluted$(0.07)$(0.18)$(0.25)
10


Six Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)
Income from equity method interests, net$33,221 $(1,667)$31,554 
Warrants valuation adjustment 1,460 1,460 
Total other income (loss)(39,613)(207)(39,820)
Net income (loss) before income taxes(9,826)(207)(10,033)
Net income (loss) including noncontrolling interests(9,130)(207)(9,337)
Net income (loss) attributable to common shareholders(46,156)(207)(46,363)
Net income (loss) attributable to Apache limited partner(36,048)(1,283)(37,331)
Net income (loss) attributable to Class A common shareholders(10,108)1,076 (9,032)
Net Income (Loss) Attributable To Class A Common Shareholders, Per Share
Basic$(2.70)$0.29 $(2.41)
Diluted$(2.84)$(0.01)$(2.85)
(1)All changes related to Income from equity method interests, net above relate to an immaterial prior period adjustment unrelated to the SEC Staff Statement.
Statement of Consolidated Comprehensive Income (Loss):
Three Months Ended June 30, 2020
As Reported
Change(1)
As Revised
(In thousands)