Greetings, and welcome to Antero Midstream's Q1 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Justin Agnew, Director of Finance.

Good morning, and thank you 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 have provided a separate earnings call presentation that will be reviewed during today's call. Before we start our comments, I would first like to remind you that during this call, Antero management will make forward-looking statements. Such statements are based on our current judgments regarding factors that will impact the future performance of Antero Resources and Antero Midstream and are subject to a number of risks and uncertainties, many of which are beyond Antero's control. Actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. 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 measures. Joining me on the call today are Paul Rady, Chairman and CEO 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.

Thanks, Justin. In my comments today, I will discuss AM's unique position in the LNG value chain, also our derisked business model and our efforts to minimize the impacts of inflation and tight supply chains. Brendan will then discuss the highlights from our first quarter earnings and our long-term outlook. I'll start my comments on Slide #3 titled The Critical First Link to LNG Supply. This slide illustrates AM's unique position in the increasingly important LNG value chain. Given the recent geopolitical events, it is clear that there will be a significant call on safe and reliable natural gas and LNG from the U.S. AM's custom-built, irreplaceable and integrated gathering and processing infrastructure is the critical first step in transporting natural gas to LNG facilities. As depicted on the left-hand side of the page, AM's infrastructure directly connects AR's production to one of the largest firm transportation hubs in Appalachia at the Sherwood and Smithburg processing complex. As a reminder, Sherwood and Smithburg is the largest processing complex in North America with 2.8 Bcf a day of processing capacity. AR currently has 2.3 Bcf of firm transportation that delivers gas to various LNG facilities or approximately 75% of its gross gas residue production. This 2.3 Bcf a day includes 2.0 to the Gulf Coast LNG facilities and 330 million a day to Cove Point. With this connectivity, AM is uniquely positioned to benefit from the increasing global LNG demand despite not operating along the Gulf Coast. In fact, operating in Appalachia has significant competitive advantages. First, Appalachia is the lowest-cost natural gas basin in the U.S. Finding and development or F&D costs for AR are approximately $0.30 per Mcfe. This compares favorably to other natural gas plays such as the Haynesville, where F&D costs are often 2x to 3x higher.…

Thanks, Paul. I will begin my comments with first quarter results at AM on Slide #5 titled Year-Over-Year Midstream Throughput Growth. During the first quarter, AM's low pressure gathering volumes were 2.9 Bcf a day, a 3% increase year-over-year. Compression volumes were 2.8 Bcf a day, a 4% increase year-over-year, and joint venture processing volumes were 1.5 Bcf a day, which reflects a 6% increase year-over-year. Looking ahead, we expect throughput to be approximately flat in the second quarter as compared to the first quarter, and then are expecting an increase in throughput in the back half of 2022. As Paul mentioned, we have derisked this growth profile through our visibility into AR's development plan and integrated business model, acting as the first step in the LNG value chain. Moving on to the water side of the business. Fresh water delivery volumes in the first quarter averaged 87,000 barrels per day with 21 wells serviced. These 21 wells serviced include 7 wells on a pad that was utilizing simultaneous completions in late March, resulting in wells that started completion operations in the first quarter, but will have water volumes primarily delivered in the second quarter. This is expected to result in an increase in freshwater volumes in the second quarter as compared to the first quarter of 2022. Moving to Slide #6. We wanted to highlight the consistent track record of AM growth and peer-leading return on invested capital. Our organic business model has resulted in consistent EBITDA growth since our IPO in 2014, despite the volatility in commodity prices during the high-growth shale era. While the industry and AR have transitioned to maintenance capital programs, we still expect to generate attractive low to mid-single-digit EBITDA growth over the next 5 years as a result of volume growth from the…

[Operator Instructions]. Our first question today comes from John Mackay of Goldman Sachs.

Wanted to ask about some of the moving pieces on CapEx. So I think it makes your comments on kind of getting ahead of inflation makes sense there. But you also have some comments on, I guess, prebuying for 2023. So I'm just curious if you could spend a little more time kind of walking through whether or not that's kind of properly pulling forward some of what we would have expected in 2023 into the '22 budget? Or maybe just if that was already in there? Really just kind of looking for the kind of curve on CapEx over the next couple of quarters off of that.

Yes, John, thanks for the question. I think the quick answer is there's no change, I think, to the guidance and targets we put out there previously. So still expect to be in that $275 million to $300 million for capital in 2022. And then I think we've highlighted on previous quarterly calls, we do have a couple of projects in 2022, particularly a high-pressure line. It's about $50 million in 2022 and then some additional compression capital in 2022 that will not be there in 2023. So as we look forward to 2023, we'd expect that to be more in the $200 million to $225 million of capital at AM. So nice move down and expect to be in that low $200 million level or lower in the years ahead to hit the $1 billion overall 5-year capital targets that we've put out there. So no change to that.

All right. That's helpful. Maybe just one in the weeds here. So you mentioned kind of the timing driver for why water was down a little bit quarter-over-quarter. I think that makes sense. In the release, there's also a comment though around starting water again back up in the Utica and some higher costs around that. Is that like a one-off start-up cost? Or is that kind of a slightly higher cost rate going forward?

No, that was just related to a pad that we completed in the first quarter. So we had a 6-well pad in the Utica we completed in the first quarter. It was placed to sales early in the second quarter. But overall, that was just 1 pad. We don't have development plan in the Utica beyond that this year.

[Operator Instructions]. Our next question is from Michael Cusimano of Pickering Energy.

To start, how are we thinking about capital allocation after you hit the 3x leverage multiple? I imagine whenever you get to that point, is it an all of the above approach do you continue to take leverage down? Or just if you could talk through how you'll think about it today.

Yes. I think we -- just a reminder, the 3x target, we do expect to hit that in the, call it, 2024 period. And at that time then we'll evaluate what is appropriate from further return of capital. I think as we sit here today, and we've talked about this in the past, share buyback certainly look attractive just given the valuation of AM today on a number of different factors, whether that be relative valuation. We look at some just inherent discounted cash flow valuation. And having that visibility that AM has as we talked about during the call in terms of decades of visibility into the infrastructure needed, that gives us a lot of comfort into the overall inherent value of AM. And then so I think as most importantly, as Paul touched on earlier, I mean, AM has such an irreplaceable asset base in terms of being the first link to this growing LNG demand on the global scale. So we really like where AM is positioned. And if you look at what makes sense today from a return of capital, share buybacks certainly look very attractive to us.

Got it. Yes, that definitely makes sense. And then I have 1 follow-up. I guess, it's kind of a 2-part question on the Veolia lawsuit. One, if there's any comments you'll have with an update on that process? And then second, if you can comment at all on how you view the OpEx and G&A costs associated with that plant trending kind of over time? And I don't know if you'll quantify it, it seems like it's like around $10 million of annual cost. Is that something that we should just expect to continue from here? Or does that roll off whenever this lawsuit resolves?

Yes. So I'll take the first one on the lawsuit. There's no change. I think we put in the Q, you can see that court case ended -- the jury ended in end of February, and we're just awaiting a decision on that. So no timing update other than that. And then as you think about costs, we'd expect going forward, at least this year, about $500,000 to $1 million per quarter in overall costs as we move forward related to that facility.

There are no additional questions at this time. I'd like to turn the call back to Justin Agnew for closing remarks.

Thanks, everyone, for joining us today on today's call. Please feel free to reach out with any further questions.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.