8-K

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): November 4, 2020

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 November 4, 2020, Altus Midstream Company issued a press release announcing financial and operating results for the fiscal quarter ended September 30, 2020. 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 November 4, 2020.
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: November 5, 2020	/s/ Rebecca A. Hoyt
	Rebecca A. Hoyt
	Senior Vice President, Chief Accounting Officer, and Controller (Principal Accounting Officer)

EX-99.1

Exhibit 99.1

NEWS RELEASE

Altus Midstream Announces Third-Quarter 2020 Results

• JV pipelines and improvement in G&P business drive results;

• Continued focus on costs leads to fifth consecutive quarter of lower operating expenses; and

• Plan to recommend to the board of directors a quarterly dividend of $1.50 per share beginning in March 2021.

HOUSTON, Nov. 4, 2020 – Altus Midstream Company (Nasdaq: ALTM) today announced its results for the three-month period ending Sept. 30, 2020.

The company reported third-quarter 2020 net income, including noncontrolling interests, of $29 million. Adjusted EBITDA for the third quarter 2020 was approximately $53 million, a 21% increase over the preceding quarter. Gathering and processing (G&P) throughput volumes for the period averaged 531 million cubic feet (MMcf) per day, 71% of which was rich gas.

Capital investments during the quarter were approximately $134 million, including $119 million for the Permian Highway Pipeline (PHP). Altus expects growth capital investments for the full-year 2020 to range between $330 million and $360 million.

CEO Comment

“Altus Midstream delivered another good quarter as commodity prices improved and operators began returning curtailed volumes to production and increasing activity in the Permian,” said Clay Bretches, Altus Midstream CEO and president. “The startup of the Permian Highway Pipeline in early 2021 will complete our plan to establish Altus as a diversified midstream company with a mix of long-haul pipeline equity ownership and state-of-the-art processing facilities. Expected earnings from our joint venture pipelines and our relentless focus on cost reduction give us a positive financial outlook for the year ahead.

“Following an extensive review of strategic alternatives and with increased confidence in forecasted cash flows, we believe a dividend is the best option to generate shareholder value. Later this year, we plan to recommend to the board of directors a quarterly dividend of $1.50 per share beginning in March 2021.”

ALTUS MIDSTREAM ANNOUNCES THIRD-QUARTER 2020 RESULTS

— PAGE 2 of 4

Infrastructure Update

PHP is more than 97% mechanically complete and is on schedule to be placed into service early in the first quarter of 2021. The pipeline is fully subscribed under long-term, binding agreements.

The Gulf Coast Express pipeline continued its strong and steady performance during the third quarter, delivering results in line with company forecasts.

As drilling begins to recover in the Permian Basin, Altus expects volumes to gradually ramp up during 2021 for both the Shin Oak NGL pipeline and the EPIC crude oil pipeline.

CFO Comment

“We expect capital spending to decline significantly now that PHP is moving into the final phase of project completion,” said Ben Rodgers, Altus Midstream chief financial officer. “With the improved outlook across our portfolio, we are raising the midpoint of our 2020 and 2021 Adjusted EBITDA guidance levels. Should the board approve a quarterly dividend, we will continue to have a sound balance sheet, manageable leverage profile and ample liquidity to address expected capital needs.”

For updated financial guidance, please refer to the investor presentation released today at www.altusmidstream.com/investors.

Conference Call

Altus will host its third-quarter 2020 results conference call Thursday, Nov. 5, 2020, 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 Nov. 5 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 3645066.

ALTUS MIDSTREAM ANNOUNCES THIRD-QUARTER 2020 RESULTS

— PAGE 3 of 4

About Altus Midstream Company

Altus Midstream Company is a pure-play, Permian-to-Gulf Coast midstream C-corporation. Through its consolidated subsidiaries, Altus owns substantially all the gas gathering, processing and transmission assets servicing production from Apache Corporation (“Apache”) (Nasdaq: APA) in the Alpine High play 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 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

ALTUS MIDSTREAM ANNOUNCES THIRD-QUARTER 2020 RESULTS

— PAGE 4 of 4

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, 2019, 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. 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

Click here for the full release with quarterly financial statements.

-end-

ALTUS MIDSTREAM COMPANY

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In thousands)

	For the Quarter Ended						For the Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
REVENUES:
Midstream services revenue - affiliate	$	38,869		$	34,009		$	111,252		$	91,994
Product sales - third parties		1,303			—			1,900			—
Total revenues		40,172			34,009			113,152			91,994
COSTS AND EXPENSES:
Costs of product sales		1,177			—			1,693			—
Operations and maintenance		8,960			13,063			29,059			43,466
General and administrative		2,936			3,242			10,102			8,314
Depreciation and accretion		4,008			11,710			11,984			28,468
Impairments		—			9,338			—			9,338
Taxes other than income		4,143			3,239			10,933			9,702
Total costs and expenses		21,224			40,592			63,771			99,288
OPERATING INCOME (LOSS)		18,948			(6,583	)		49,381			(7,294	)
OTHER INCOME (LOSS):
Unrealized derivative instrument loss		(3,533	)		(3,769	)		(76,102	)		(3,769	)
Interest income		—			617			9			3,584
Income from equity method interests, net		14,320			1,564			47,541			536
Other		—			—			(355	)		(17	)
Total other income (loss)		10,787			(1,588	)		(28,907	)		334
Financing costs, net of capitalized interest		413			522			978			1,508
NET INCOME (LOSS) BEFORE INCOME TAXES		29,322			(8,693	)		19,496			(8,468	)
Current income tax benefit		—			—			(696	)		—
Deferred income tax benefit		—			(505	)		—			(510	)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS		29,322			(8,188	)		20,192			(7,958	)
Net income attributable to Preferred Unit limited partners		19,332			17,480			56,358			21,623
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		9,990			(25,668	)		(36,166	)		(29,581	)
Net income (loss) attributable to Apache limited partner		7,687			(20,804	)		(28,361	)		(23,524	)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS	$	2,303		$	(4,864	)	$	(7,805	)	$	(6,057	)

Page 1

ALTUS MIDSTREAM COMPANY

SUPPLEMENTAL FINANCIAL INFORMATION AND OPERATING STATISTICS

(Unaudited)

(In thousands)

SUMMARY CASH FLOW INFORMATION

	For the Quarter Ended						For the Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net cash provided by operating activities	$	50,650		$	17,748		$	137,447		$	39,436
Net cash used in investing activities		(125,985	)		(617,349	)		(301,280	)		(1,315,047	)
Net cash provided by financing activities		75,438			225,275			159,833			828,270

SUMMARY BALANCE SHEET INFORMATION

	September 30, 2020		Decemeber 31, 2019
Cash and cash equivalents	$	1,983	$	5,983
Other current assets		18,404		25,754
Property, plant and equipment, net		205,310		205,802
Equity method interests		1,524,410		1,258,048
Deferred charges and other		6,263		5,267
Total assets	$	1,756,370	$	1,500,854
Current liabilities	$	16,544	$	33,692
Long-term debt		580,000		396,000
Deferred credits and other noncurrent liabilities		247,785		167,638
Redeemable noncontrolling interest - Apache limited partner		238,842		701,000
Redeemable noncontrolling interest - Preferred Unit limited partners		600,395		555,599
Shareholders’ equity (deficit)		72,804		(353,075	)
Total liabilities, noncontrolling interests, and shareholders’ equity	$	1,756,370	$	1,500,854
Common shares outstanding at the end of the period(a):
Class A Common Stock, $0.0001 par value		3,746		3,746
Class C Common Stock, $0.0001 par value		12,500		12,500

(a) Share amounts have been retroactively restated to reflect the Company’s reverse stock split which was effected June 30, 2020.

SUMMARY OPERATING STATISTICS

	For the Quarter Ended				For the Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Throughput volumes of natural gas (MMcf/d)
Rich wellhead gas		378		340		377		292
Lean wellhead gas		153		127		137		172
Total throughput		531		467		514		464

Page 2

ALTUS MIDSTREAM COMPANY

NON-GAAP FINANCIAL MEASURES

(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							For the Nine Months Ended
	September 30,		June 30,		September 30,			September 30,		September 30,
	2020		2020		2019			2020		2019
Net income (loss) including noncontrolling interests	$	29,322	$	17,662	$	(8,188	)	$	20,192	$	(7,958	)
Add:
Financing costs, net of capitalized interest		413		292		522			978		1,508
Depreciation and accretion		4,008		4,062		11,710			11,984		28,468
Impairments		—		—		9,338			—		9,338
Unrealized derivative instrument loss		3,533		10,585		3,769			76,102		3,769
Equity method interests Adjusted EBITDA		29,952		28,231		2,707			81,869		2,873
Other		—		—		644			290		644
Less:
Gain on asset sales, net		—		264		—			76		—
Interest income		—		2		617			9		3,584
Income from equity method interests, net		14,320		16,923		1,564			47,541		536
Income tax benefit		—		—		505			696		510
Other		—		2		—			2		—
Adjusted EBITDA (Non-GAAP)	$	52,908	$	43,641	$	17,816		$	143,091	$	34,012
Other midstream actvity
Cash distributions received from our equity method interests	$	32,923	$	19,210	$	3,391		$	74,670	$	3,391

Page 3

ALTUS MIDSTREAM COMPANY

TOTAL GROWTH CAPITAL INVESTMENTS

(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 also believes that including our proportionate share of capital in relation to equity method interests funded by cash contributions and the partner’s project financing is useful for investors to assess Altus’ total growth capital investments. 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							For the Nine Months Ended
	September 30,		June 30,		September 30,			September 30,		September 30,
	2020		2020		2019			2020		2019
Costs incurred in midstream activity
Property, plant and equipment, gross	$	1,868	$	2,276	$	41,242		$	11,223	$	279,665
Equity method interests		131,840		71,560		569,634			286,227		1,008,037
Total cost incurred in midstream activity	$	133,708	$	73,836	$	610,876		$	297,450	$	1,287,702
Reconciliation of costs incurred to midstream capital investment:
Asset retirement obligations incurred and revisions	$	—	$	—	$	(904	)	$	—	$	(3,406	)
Asset retirement obligations settled		—		—		—			—		—
Total capital investments		133,708		73,836		609,972			297,450		1,284,296
Equity method interest capital investments funded by project financing		—		15,191		71,250			22,091		142,500
Total growth capital investments	$	133,708	$	89,027	$	681,222		$	319,541	$	1,426,796

Page 4

XML

Document and Entity Information	Nov. 04, 2020
Cover [Abstract]
Entity Registrant Name	Altus Midstream Co
Amendment Flag	false
Entity Central Index Key	0001692787
Document Type	8-K
Document Period End Date	Nov. 04, 2020
Entity Incorporation State Country Code	DE
Entity File Number	001-38048
Entity Tax Identification Number	81-4675947
Entity Address, Address Line One	One Post Oak Central
Entity Address, Address Line Two	2000 Post Oak Boulevard
Entity Address, Address Line Three	Suite 100
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056-4400
City Area Code	(713)
Local Phone Number	296-6000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A common stock, $0.0001 par value
Trading Symbol	ALTM
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Entity Ex Transition Period	false