Antero Midstream Corporation (NYSE:AM) Q1 2023 Results Conference Call April 27, 2023 12:00 PM ET

Company Participants

Justin Agnew - Director, Finance and IR

Paul Rady - Chairman, CEO and President, Antero Resources and Antero Midstream

Brendan Krueger - CFO, Antero Midstream

Michael Kennedy - CFO, Antero Resources and Director Antero Midstream

Conference Call Participants

Colton Bean - Tudor, Pickering, Holt

Marc Solecitto - Barclays

Sunil Sibal - Seaport Global Securities

Ned Baramov - Wells Fargo

Operator

Greetings, and welcome to the Antero Midstream First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Justin Agnew, Director of Finance and Investor Relations. Thank you. You may begin.

Justin Agnew

Good morning, and thanks for joining us for Antero Midstream's first quarter investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I would also like to direct you to the homepage of our website at www.anteromidstream.com, where we've provided a separate earnings call presentation that will be reviewed during today's call.

Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure.

Joining me on the call today are Paul Rady, Chairman, CEO and President of Antero Resources and Antero Midstream; Brendan Krueger, CFO of Antero Midstream; and Michael Kennedy, CFO of Antero Resources and Director of Antero Midstream.

With that, I'll turn the call over to Paul.

Paul Rady

Thanks, Justin.

I will start my comments on slide number 3 titled Increasing Lateral Lengths Enhancing AM Economics. The left-hand side of the page illustrates the increase in lateral lengths of completed wells over the last several years. In 2023, the average lateral length for completed wells is expected to be approximately 13,500 feet. During the first quarter, longer laterals and higher completion stages per day drove a 41% increase in freshwater delivery volumes year-over-year. This was despite servicing only two additional wells year-over-year.

As shown on the right-hand side of the page, longer laterals improved AM economics by approximately $1.7 million per well for every 1,000 feet of incremental lateral given that there is no additional well connect capital required. Since 2017, lateral lengths have increased by approximately 4,000 feet on average. This has resulted in nearly $7 million of incremental revenue per well, assuming an EUR of 2.0 Bcf per 1,000 feet. The longer laterals, in addition to incremental locations, are a result of AR's consistent organic leasing program. During the first quarter, AR invested $72 million on organic leasehold, adding the equivalent of over 50 drilling locations. With AM servicing 23 well completions during the first quarter, these organic leasing efforts replenished the wells completed and added 27 more locations.