Where Does Antero Midstream Stand Compared to Its Peers?



AM’s enterprise value

Antero Midstream Partners (AM) is the third-largest company in its peer group by enterprise value (or EV), preceded by EQT Midstream Partners (EQM) and Western Gas Partners (WES). Currently, AM has an enterprise value of $4.4 billion.

Enterprise value—approximately equal to market equity value plus net debt—is an important metric for the valuation of a business. Equity value alone just gives a company’s value to equity holders. Together, EQM and WES account for 1.4% of the First Trust ISE-Revere Natural Gas ETF (FCG).

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AM’s EV-to-EBITDA multiple

Antero Midstream’s forward EV-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of 13.7x is the highest among its selected peers. At the same time, Rice Midstream Partners has the lowest forward EV-to-EBITDA at 9.4x.

We discussed the possible reasons behind Antero Midstream’s strong valuation in the previous article. AM forms 0.26% of the Global X MLP & Energy Infrastructure ETF (MLPX).

AM’ leverage position

Antero Midstream’s leverage of 2.8x is higher than the peer average of 2.4x. However, a leverage multiple of 2.8x is considered very good in the current energy price environment. MLPs usually target a ratio below 4x.

AM’s leverage situation looks better compared to most of its MLP counterparts, including Western Gas Partners, Williams Partners (WPZ), and DCP Midstream Partners (DPM).

AM’s distribution yield

Antero Midstream’s distribution yield of 4.8% is the lowest among its selected peers after EQT Midstream Partners. Cone Midstream Partners (CNNX) has the highest distribution yield of 8.4%.

A low distribution yield indicates low riskiness and a low cost of equity capital. Recently, Antero Resources (AR), AM’s sponsor, announced a secondary offering of Antero Midstream’s 8 million common units. According to the related press release, “Antero Midstream will not receive any proceeds from the sale of common units in the offering.”


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