We are a growth-oriented limited partnership formed by Antero Resources Corporation
(“Antero Resources”) to own, operate and develop midstream energy
assets to service Antero Resources’ rapidly increasing production. Our
assets consist of gathering pipelines, compressor stations, processing and fractionation
plants and water handling and treatment assets, through which we provide midstream
services to Antero Resources under long-term, fixed-fee contracts. Our assets
are located in the rapidly developing liquids-rich Marcellus Shale and Utica
Shale located in West Virginia and Ohio, two of the premier North American shale
plays. We believe that our strategically located assets and our relationship
with Antero Resources position us to become a leading midstream energy company
serving the Marcellus and Utica Shales.
Antero Midstream Partners LP’s (the “Partnership” or “Antero
Midstream”) assets consist of gathering pipelines, compressor stations,
interests in processing and fractionation plants, and water handling and treatment
infrastructure, through which Antero Midstream and its affiliates provide gathering,
compression, processing, fractionation and integrated water services, including
fresh water delivery services and other fluid handling services. These services
are provided to Antero Resources under long-term, fixed-fee contracts, limiting
Antero Midstream’s direct exposure to commodity price risk. As of December
31, 2017, all of Antero Resources’ approximate 705,000 gross acres (620,000
net acres) are dedicated to Antero Midstream for gathering, compression and
water services, except for approximately 156,000 gross acres subject to third-party
gathering and compression commitments. Antero Midstream also owns a 15% equity
interest in the gathering system of Stonewall Gas Gathering LLC (“Stonewall”)
and a 50% equity interest in the Joint Venture to develop processing and fractionation
assets in Appalachia with MarkWest, a wholly owned subsidiary of MPLX. In connection
with Antero Midstream’s entry into the Joint Venture with MarkWest, Antero
Midstream released to the Joint Venture its right to provide certain processing
and fractionation services on 195,000 gross acres held by Antero Resources in
Ritchie, Tyler and Wetzel Counties in West Virginia. Under its agreements with
Antero Midstream, and subject to any pre-existing dedications or other third-party
commitments, Antero Resources has dedicated to Antero Midstream all of its current
and future acreage in West Virginia, Ohio and Pennsylvania for gathering and
compression services and all of its acreage within defined services areas in
West Virginia and Ohio for water services. Antero Midstream also has certain
rights of first offer with respect to gathering, compression, processing, and
fractionation services, and water services for acreage located outside of the
existing dedicated areas. The gathering and compression and water services agreements
each have a 20-year initial term and are subject to automatic annual renewal
after the initial term.
On September 23, 2015, Antero Resources contributed (the “Water Acquisition”)
(i) all of the outstanding limited liability company interests of Antero Water
LLC (“Antero Water”) to the Partnership and (ii) all of the assets,
contracts, rights, permits and properties owned or leased by Antero Resources
and used primarily in connection with the construction, ownership, operation,
use or maintenance of Antero Resources’ advanced wastewater treatment
complex undergoing testing and commissioning in Doddridge County, West Virginia,
to Antero Treatment LLC (“Antero Treatment”) (collectively, (i)
and (ii) are referred to herein as the “Contributed Assets”). Our
results for the year ended December 31, 2015 has been recast to include the
historical results of Antero Water because the transaction was between entities
under common control. Antero Water’s operations prior to the Water Acquisition
consisted entirely of fresh water delivery operations.
The agreement includes certain minimum fresh water delivery commitments that
require Antero Resources to take delivery or pay a fee on a minimum volume of
fresh water deliveries in calendar years 2016 through 2019. Minimum volume commitments
are 90,000 barrels per day in 2016, 100,000 barrels per day in 2017 and 120,000
barrels per day in 2018 and 2019. We have a secondment agreement whereby Antero
Resources provides seconded employees to perform certain operational services
with respect to our assets for a 20-year period that commenced at the Water
Acquisition date. Additionally, we have a services agreement whereby Antero
Resources provides certain administrative services to us for a 20-year period,
that commenced at the Initial Public Offering (“IPO”) date.
In connection with the Water Acquisition, we have agreed to pay Antero Resources
(a) $125 million in cash if we deliver 176 million barrels or more of fresh
water during the period between January 1, 2017 and December 31, 2019 and (b)
an additional $125 million in cash if we deliver 219 million barrels or more
of fresh water during the period between January 1, 2018 and December 31, 2020.
Our gathering and compression assets consist of 8-, 12-, 16-, 20-, 24-, and
30-inch high and low pressure gathering pipelines, compressor stations, and
processing and fractionation plants that collect and process natural gas, NGLs
and oil from Antero Resources’ wells in West Virginia and Ohio. The Partnership’s
water handling and treatment assets include two independent systems that deliver
fresh water from sources including the Ohio River, local reservoirs as well
as several regional waterways. The water handling and treatment assets also
consist of flowback and produced water assets used to provide services for well
completion and production operations in Antero Resources’ operating areas.
The fresh water delivery services systems consist of permanent buried pipelines,
surface pipelines and fresh water storage facilities, as well as pumping stations
and impoundments to transport fresh water throughout the systems. The flowback
and produced water services assets consist of wastewater transportation, disposal,
and a wastewater treatment facility that is currently undergoing testing and
commissioning. As of December 31, 2017, we had the ability to store 5.4 million
barrels of fresh water in 38 impoundments.
Due to the extensive geographic distribution of our water pipeline systems
in both West Virginia and Ohio, we have provided water delivery services to
other oil and gas producers operating within and adjacent to Antero Resources’
operating area, and we are able to provide water delivery services to other
oil and gas producers in the area, subject to our availability to provide the
services, in an effort to further leverage our existing system to reduce water
truck traffic.
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