2024-05-29 16:10:09 ET
Summary
- Antero Midstream is acquiring midstream assets at bargain prices through a series of small acquisitions.
- The company moves acquired assets to optimize utilization and increase profitability.
- Antero Midstream's stock is likely to continue rising due to the recovery of natural gas stocks (upstream) as production declines.
- The strategy of buying underutilized assets during a time of weak natural gas pricing allows for bargain priced acquisition offers that increase profitability.
- Free cash flow growth is accelerating due to this strategy.
Antero Midstream ( AM ) announced another small $70 million acquisition of some midstream assets. This offer continues the process noted in the previous article to speed company growth while lowering the debt ratio. These small acquisitions have allowed for the accumulation of capital assets at a lower value than it would cost to construct these assets new. The company simply buys assets in good condition and then moves the assets as necessary to optimize the use of the assets. This process decreases the cost of capital needed for the business while increasing cash flow.
Growth
It is also adding a couple of percentage points of growth to Antero Midstream at a time when investors were wondering if Antero Midstream would ever grow again. This company is actually getting a head start on many competitors that are waiting for better times before they grow. Management is also doing this in a way that is likely to save investors' money in the long term....
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For further details see:
Antero Midstream: Blue Light Special Results