Antero Midstream has struck a pair of deals designed to expand its footprint in the core Marcellus Shale while exiting its Ohio Utica position, announcing a definitive agreement to acquire HG II Energy Midstream Holdings for $1.1 billion in cash and a separate agreement to divest its Ohio Utica Shale midstream assets for $400 million.
The Denver-based midstream operator said the HG Midstream acquisition is expected to close in the second quarter of 2026, subject to customary regulatory approvals and closing adjustments, while the Utica divestiture is expected to close in the first quarter of 2026. Antero Midstream’s board unanimously approved both transactions.
The company framed the HG Midstream deal as a bolt-on acquisition that is contiguous with Antero Midstream’s existing gathering and water infrastructure in the Marcellus and is dedicated to investment-grade customer Antero Resources. Antero Midstream said the acquisition is expected to be immediately accretive to free cash flow after dividends by more than 15% on a non-GAAP basis. The company also expects the acquired system to add roughly 900 MMcf/d of throughput in 2026 and to bring more than 400 undeveloped Marcellus locations dedicated to Antero Midstream.
Antero Midstream said it expects the acquisition to be priced at approximately 7.5x the average annual EBITDA over the next three years on a non-GAAP basis and that it has identified more than $100 million in discounted future capital-avoidance savings. With those savings, the company said the adjusted multiple would be about 7.0x. In contrast, Antero Midstream said its Utica asset sale values the divested business at a multiple above 11x the next three years’ average annual EBITDA.
The acquired HG Midstream assets include about 50 miles of gathering pipelines capable of bi-directionally transporting dry, lean, and liquids-rich natural gas under a fixed-fee agreement with Antero Resources. The package also includes roughly 50 miles of water pipelines, above-ground storage, and water withdrawal points. Antero Midstream said it expects to integrate the gathering pipelines immediately upon closing, while it plans to fold the water assets into its closed-loop fresh and recycled water system over the course of 2026.
Antero Midstream said it expects to fund the $1.1 billion acquisition using borrowings under its revolving credit facility, proceeds from the Utica divestiture, and or debt capital markets transactions, depending on market conditions. The company said it currently has approximately $900 million of liquidity under its revolving credit facility and that Royal Bank of Canada and Wells Fargo Bank, N.A. have jointly provided $700 million of additional committed financing in connection with the transaction.
On the divestiture side, Antero Midstream said it will sell all of its gathering, compression, and water-handling assets in the Ohio Utica Shale for $400 million. The company said only three wells are expected to be turned in line to its Utica gathering system over the next several years. The average annual EBITDA attributable to the divested assets under that development plan would be approximately $35 million over the next three years.
The transactions are paired with upstream moves announced separately by Antero Resources, which said it plans to acquire HG II Energy Production Holdings, LLC’s upstream assets for $2.8 billion and to divest its own upstream Ohio Utica Shale assets for $800 million, each subject to customary closing adjustments.
Support: RBC Capital Markets served as financial advisor to Antero Midstream on the HG Midstream acquisition, with Evercore advising Antero Midstream’s conflicts committee. Vinson & Elkins L.L.P. served as legal counsel to Antero Midstream and Latham & Watkins LLP advised the conflicts committee. On the Utica divestiture, Antero Midstream said RBC Capital Markets acted as lead financial advisor, and Wells Fargo also served as a financial advisor.
KEY QUOTES:
“Today’s strategic announcements further enhance the scale of Antero Midstream’s asset base, solidifying it as a premier pure-play midstream company in North America’s lowest cost basin. With the backbone of the gathering system already in operation, the acquired assets are highly capital-efficient and complementary to our existing infrastructure portfolio. Importantly, this acquisition expands Antero Midstream’s multi-decade dedicated inventory by another 5 years in the liquids core of the Marcellus Shale. In combination, today’s strategic transactions high-grade our asset base from a reservoir quality, midstream capital efficiency, and Free Cash Flow trajectory standpoint creating significant shareholder value.”
Michael Kennedy, CEO and President, Antero Midstream
“Antero Midstream’s strong balance sheet and peer-leading leverage profile allow us to debt finance this acquisition while maintaining our credit profile and ratings. The significant Free Cash Flow on our legacy assets, over $100 million of expected asset-level Free Cash Flow on the acquired assets, and attractive divestiture price allows us to meet our 3.0x leverage target almost immediately after closing the transactions. These credit-enhancing, strategic transactions position us well for further debt reduction and additional return of capital to shareholders.”
Justin Agnew, CFO, Antero Midstream
