Altus Midstream Shares Flow Higher on Q3 Earnings and Plans for $1.50/Share Dividend in Q1/21

Source: Streetwise Reports   11/05/2020

Shares of Altus Midstream Co. traded 170% higher after the firm reported Q3/20 financial results and announced plans to pay a quarterly dividend of $1.50 per share beginning in March 2021.

Permian-to-Gulf Coast midstream oil & gas pipeline company Altus Midstream Co. (ALTM:NASDAQ) today announced its financial results for third quarter 2020 ended September 30, 2020.

Altus Midstream reported that in Q3/20 total revenues were $40.2 million, compared to 34.0 million in Q3/19. The firm indicated that in the same period net income, including noncontrolling interests, was $29.3 million, compared to a loss of $8.2 million in Q3/19. The company added that adjusted EBITDA in Q3/20 was approximately $53 million, which represents a 21% increase over Q2/20

The firm noted that in Q3/20, “gathering and processing (G&P) throughput volumes for the period averaged 531 million cubic feet (MMcf) per day, 71% of which was rich gas.”

Altus Midstream stated that in Q3/20 capital investments totaled around $134 million, which included an investment of $119 million for the Permian Highway Pipeline (PHP). The company advised that it estimates FY/20 capital investments will be in the range of $330-360 million.

The company’s CEO and President Clay Bretches commented, “Altus Midstream delivered another good quarter as commodity prices improved and operators began returning curtailed volumes to production and increasing activity in the Permian…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,” Bretches added.

The company provided an update on some of its operations in the quarter and stated that the PHP is on schedule to be placed into service early in Q1/21 and that construction is already greater than 97% complete. The firm pointed out that “the pipeline is fully subscribed under long-term, binding agreements.”

The firm added that in Q3/20 performance at its Gulf Coast Express pipeline remained strong and was on track to meet forecasted expectations. The company also noted that its Shin Oak NGL and EPIC crude oil pipelines are expected to ramp up in volume in 2021 as drilling in the Permian Basin starts to recover.

Altus Midstream’s CFO Ben Rodgers remarked, “We expect capital spending to decline significantly now that PHP is moving into the final phase of project completion…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.”

Altus Midstream Co. is headquartered in Houston, Tex., and is a pure-play, Permian-to-Gulf Coast midstream oil & gas pipeline firm. The company is structured as a C-corporation and stated that through its subsidiary companies it owns basically all of the gas gathering, processing and transmission assets servicing production from Apache Corp. (APA:NADAQ) at the Delaware Basin’s Alpine High play and additionally has an ownership interest in four separate Permian-to-Gulf Coast natural gas liquids and crude oil pipelines.

Altus Midstream Co. (ALTM:NASDAQ) started off the day with a market capitalization of around $163 million billion with approximately 16.25 million shares outstanding. ALTM shares opened more than 80% higher today at $18.27 (+$8.24, +82.15%) over yesterday’s $10.03 closing price. The stock has traded today between $16.72 and $31.90 per share and is currently trading at $27.19 (+$17.16, +171.09%).

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