Reporting Segments

6 Months Ended

Jun. 30, 2020

Reporting Segments

Reporting Segments

(16) Reporting Segments

Prior to the closing of the Transactions, AMGP had no reporting segment results. Following the completion of the Transactions, the Company’s operations, which are located in the United States, are organized into two reporting segments: (i) gathering and processing and (ii) water handling.

Gathering and Processing

The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in West Virginia and Ohio. The gathering and processing segment also includes equity in earnings from the Company’s investments in the Joint Venture and Stonewall.

Water Handling

The Company’s water handling segment includes two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs and several regional waterways. The water handling segment also includes the Clearwater Facility that was placed in service in 2018 and idled in September 2019 (See Note 4—Clearwater Facility Idling), as well as other fluid handling services, which includes high rate transfer, wastewater transportation, disposal and treatment. See Note 8—Property and Equipment.

These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Management evaluates the performance of the Company’s business segments based on operating income. Interest expense is primarily managed and evaluated on a consolidated basis.

The summarized operating results and assets of the Company’s reportable segments were as follows for the three and six months ended June 30, 2019 and 2020:

	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated (1)		Total
Three months ended June 30, 2019
Revenues:
Revenue–Antero Resources	$	168,925		95,181		—		264,106
Revenue–third-party		—		46		—		46
Amortization of customer contracts		(2,402)		(6,132)		—		(8,534)
Total revenues		166,523		89,095		—		255,618
Operating expenses:
Direct operating		12,377		51,621		—		63,998
General and administrative (excluding equity-based compensation)		7,335		3,958		1,786		13,079
Equity-based compensation		2,286		926		18,331		21,543
Impairment of property and equipment		592		2		—		594
Depreciation		12,721		23,726		—		36,447
Accretion and change in fair value of contingent acquisition consideration		—		2,297		—		2,297
Accretion of asset retirement obligations		—		69		—		69
Total expenses		35,311		82,599		20,117		138,027
Operating income	$	131,212		6,496		(20,117)		117,591
Equity in earnings of unconsolidated affiliates	$	13,623		—		—		13,623
Total assets	$	4,916,854		1,844,385		7,770		6,769,009
Additions to property and equipment	$	81,529		43,656		—		125,185

(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.

	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated (1)		Total
Three months ended June 30, 2020
Revenues:
Revenue–Antero Resources	$	173,991		63,351		—		237,342
Amortization of customer relationships		(9,239)		(8,367)		—		(17,606)
Total revenues		164,752		54,984		—		219,736
Operating expenses:
Direct operating		14,059		28,008		—		42,067
General and administrative (excluding equity-based compensation)		5,440		2,694		1,591		9,725
Facility idling		—		2,475		—		2,475
Equity-based compensation		2,266		431		—		2,697
Depreciation		14,406		13,339		—		27,745
Accretion of asset retirement obligations		—		61		—		61
Loss on asset sale		—		240		—		240
Total expenses		36,171		47,248		1,591		85,010
Operating income	$	128,581		7,736		(1,591)		134,726
Equity in earnings of unconsolidated affiliates	$	20,947		—		—		20,947
Total assets	$	4,387,102		1,149,355		178,598		5,715,055
Additions to property and equipment	$	49,278		6,153		—		55,431

(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.

	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated (1)		Total
Six months ended June 30, 2019
Revenues:
Revenue–Antero Resources	$	202,459		117,532		—		319,991
Revenue–third-party		—		50		—		50
Amortization of customer relationships		(2,903)		(7,412)		—		(10,315)
Total revenues		199,556		110,170		—		309,726
Operating expenses:
Direct operating		15,312		63,668		—		78,980
General and administrative (excluding equity-based compensation)		8,355		4,532		8,578		21,465
Equity-based compensation		2,663		1,139		29,164		32,966
Impairment of property and equipment		592		2		—		594
Depreciation		15,281		28,816		—		44,097
Accretion and change in fair value of contingent acquisition consideration		—		3,346		—		3,346
Accretion of asset retirement obligations		—		79		—		79
Total operating expenses		42,203		101,582		37,742		181,527
Operating income	$	157,353		8,588		(37,742)		128,199
Equity in earnings of unconsolidated affiliates	$	16,503		—		—		16,503
Total assets	$	4,916,854		1,844,385		7,770		6,769,009
Additions to property and equipment	$	89,206		51,984		—		141,190

(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.

	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated (1)		Total
Six months ended June 30, 2020
Revenues:
Revenue–Antero Resources	$	337,120		161,535		—		498,655
Amortization of customer relationships		(18,477)		(16,734)		—		(35,211)
Total revenues		318,643		144,801		—		463,444
Operating expenses:
Direct operating		27,450		63,345		—		90,795
General and administrative (excluding equity-based compensation)		10,484		5,599		3,841		19,924
Facility idling		—		11,153		—		11,153
Impairment of goodwill		575,461		—		—		575,461
Impairment of property and equipment		—		89,083		—		89,083
Equity-based compensation		4,799		986		250		6,035
Depreciation		27,456		27,632		—		55,088
Accretion of asset retirement obligations		—		103		—		103
Loss on asset sale		—		240		—		240
Total operating expenses		645,650		198,141		4,091		847,882
Operating loss	$	(327,007)		(53,340)		(4,091)		(384,438)
Equity in earnings of unconsolidated affiliates	$	40,024		—		—		40,024
Total assets	$	4,387,102		1,149,355		178,598		5,715,055
Additions to property and equipment, net	$	103,937		19,477		—		123,414

(1) Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.