DENVER, May 1, 2019 /PRNewswire/ -- Antero
Resources Corporation (NYSE: AR) ("Antero," "Antero
Resources", or the "Company") today released its first quarter
2019 financial and operational results. The relevant
condensed consolidated financial statements are included in
Antero's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2019, which has been filed with the Securities and
Exchange Commission ("SEC").
Basis of Financial Presentation
In connection with the closing of the previously announced
simplification transaction between Antero Midstream GP LP and
Antero Midstream Partners LP ("Antero Midstream Partners") on
March 12, 2019, among other things,
Antero Midstream GP LP converted to a Delaware corporation and changed its name to
Antero Midstream Corporation ("Antero Midstream") and Antero
Midstream Partners became Antero Midstream's wholly owned
subsidiary. As of March 31, 2019, Antero Resources owned
31% of the shares of common stock of Antero Midstream.
Through March 12, 2019, Antero
Midstream Partners' results were consolidated within Antero
Resources' results. Upon closing, Antero Midstream Partners
was deconsolidated from Antero Resources and Antero Resources'
interests in Antero Midstream were accounted for under the equity
method of accounting within Antero Resources' results. The
GAAP results discussed below include the results of Antero
Midstream Partners from January 1,
2019, through March 12, 2019,
on a consolidated basis, and from March 13,
2019 to March 31, 2019, the
results of Antero Midstream Partners are no longer consolidated.
The non-GAAP results discussed below reflect the applicable results
as if the simplification transaction had occurred at the beginning
of the applicable period, unless otherwise noted.
Antero Resources First Quarter 2019 Highlights
Include:
- Net daily gas equivalent production averaged 3,099 MMcfe/d
(29% liquids by volume), a 30% increase over the prior year
period
- Liquids production averaged 148,003
Bbl/d, a 44% increase over the prior year
period, contributing 35% of total product revenues before
hedges
-
- Liquids included oil production of 11,305 Bbl/d, C3+ NGL
production of 97,710 Bbl/d and recovered ethane production of
38,989 Bbl/d, with approximately 135,000 Bbl/d remaining in the gas
stream
- Realized natural gas equivalent price averaged $4.00 per Mcfe after hedges including
liquids
- Realized C3+ NGL price averaged $31.63 per Bbl for the quarter and $34.70 per Bbl during February and March once
Antero began to export significant volumes out of Marcus Hook via Mariner East 2
-
- Represents 58% of NYMEX WTI oil price for the quarter and
61% of WTI during February and March
- Includes a weighted average premium to Mont Belvieu of
$0.17 per gallon on February and
March C3+ volumes that were shipped on Mariner East 2 and
exported
- Antero's 2019 C3+ NGL prices expected to be $4 per barrel higher than January implied
guidance
- Realized natural gas price averaged $3.30 per Mcf, a $0.15 premium to the NYMEX Henry Hub natural gas
price per MMBtu before hedges
- Reported $979 million of Net
Income, or $3.17 per diluted share,
and Adjusted Net Income of $108
million (Non-GAAP), or $0.35
per diluted share
- Reported Adjusted EBITDAX of $443 million (Non-GAAP)
- Reduced debt by $360 million
during the quarter with proceeds from the simplification
transaction and $68 million of Free
Cash Flow generated during the quarter
- Debt to trailing twelve months Adjusted EBITDAX declined to
2.1x
- 755,000 MMBtu/d of natural gas is hedged at a weighted
average price of $3.34 and 1,575,000
MMBtu/d is hedged at a $2.50/MMBtu
floor for the last three quarters of 2019
- Set what we believe is a world record for a horizontal well
by drilling 9,184 lateral feet in 24 hours
Paul Rady, Chairman and CEO said,
"We begin 2019 with significant momentum driven by both
organizational and operational achievements. On the
organizational front, we closed the midstream simplification
transaction in mid-March and reduced leverage to 2.1x with the cash
proceeds. We also deconsolidated Antero Midstream financials from
Antero Resources. We believe this will result in more transparency
for the upstream business and create a simpler story going
forward. On the operational front, we began shipping propane
and butane on Mariner East 2 to the Marcus Hook dock for export in February.
This has resulted in a material uplift to our cash flow, as
international spreads to Mont Belvieu have been attractive. We are
the anchor shipper on Mariner East 2 with nearly one-third of the
total available capacity under contract and additional expansion
rights. As the largest liquids producer in the U.S. with this
geographical advantage out of the Northeast through Mariner East 2,
we are well positioned to achieve superior margins on our liquids
volumes going forward."
Recent Developments
Natural Gas Liquids (NGLs) Update
Beginning in February, Antero gained access to the international
LPG markets via its commitment on the Mariner East 2 pipeline to
the Marcus Hook Terminal located near Philadelphia, Pennsylvania on the Delaware
River. Antero has 50,000 Bbl/d of firm capacity on Mariner East 2,
comprised of 35,000 Bbl/d for propane and 15,000 Bbl/d for butane,
representing nearly one-third of the total Mariner East 2 capacity
today. Antero also has expansion rights on Mariner East 2
that would allow the Company to double its total firm capacity to
100,000 Bbl/d.
As a result of this substantial exposure to international LPG
markets, Antero was able to realize average C3+ NGL prices that
were at a premium to Mont Belvieu pricing during February and
March. Antero's average realized C3+ NGL realized price
before hedging improved from 52% of WTI in January to 61% of WTI,
on average, in February and March. Despite Mont Belvieu
prices being at historical lows as a percentage of WTI during the
first quarter partly due to various shipping constraints, Antero
was able to significantly benefit from exporting nearly 30% of its
C3+ NGLs. For example, in February and March, propane and
butane products were sold at a weighted average premium to Mont
Belvieu of $0.13 and $0.29 per gallon, respectively, at Marcus Hook.
C3+ NGL Product Destination Composition for the First Quarter
2019
As shown in the table below, for the full quarter, Antero
shipped 29% of total C3+ net volume on Mariner East 2 for export
and realized a $0.17 per gallon
premium to Mont Belvieu pricing on this volume at Marcus
Hook. Antero sold the remaining 71% of C3+ net volume at a
$0.09 discount to Mont Belvieu
pricing at Hopedale. For the remaining three quarters of
2019, Antero expects to ship approximately 50% of C3+ NGL
production on Mariner East 2 for export assuming that Mariner East
2 does not increase to full capacity of 275,000 Bbl/d before
year-end 2019. If the capacity increases, Antero will likely
ship a higher percentage of volume on Mariner East 2.
|
Pricing
Point
|
|
Net C3+
NGL Production
(Bbl/d)
|
|
% by
Destination
|
|
Premium
(Discount) To Mont
Belvieu
($/Gal)
|
Propane / Butane
shipped on ME2
|
Marcus
Hook
|
|
28,795
|
|
29%
|
|
$0.17
|
Remaining C3+ NGL
volume (1)
|
Hopedale
|
|
68,915
|
|
71%
|
|
($0.09)
|
Total C3+
NGLs
|
|
|
97,710
|
|
100%
|
|
($0.01)
|
|
(1) Represents Antero C3+
volume sold by third-party midstream providers (domestically or
internationally via exports).
|
C3+ NGL 2019 Pricing Update
For the full year of 2019, Antero expects to receive an
approximate $4 per barrel improvement
in C3+ NGL pricing compared to the original guidance issued in
January 2019 when the WTI futures oil
price averaged approximately $50 per
barrel for 2019. This equates to 55% to 60% of the current
WTI strip pricing of $61 per barrel
for 2019. As it pertains to C3+ volumes sold at Hopedale,
Antero anticipates wider price differentials relative to Mont
Belvieu during the second and third quarters and tighter price
differentials during the fourth quarter, based on current strip
pricing.
|
2019 –
Initial
|
|
2019 –
Revised
|
|
2019 –
Variance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
C3+ NGL Pricing
($/Bbl)
|
$30.00
|
|
$32.50
|
|
$33.55
|
|
$36.60
|
|
$3.55
|
|
$4.10
|
NYMEX WTI Oil Price
($/Bbl)
|
$50.00
|
|
$50.00
|
|
$61.00
(1)
|
|
$61.00
(1)
|
|
|
|
|
Implied C3+ NGL
Pricing % of WTI
|
60%
|
|
65%
|
|
55%
|
|
60%
|
|
|
|
|
|
(1) Revised WTI based on
strip pricing as of April 30, 2019.
|
2019 Ethane Production Guidance
During the first quarter, driven by contracted volumes and
volumes required to meet pipeline specifications, Antero recovered
38,989 Bbl/d of ethane. This represented approximately 11,000 Bbl/d
less volume than Antero's prior guidance, which was based on ethane
pricing that supported further economic ethane recovery. This
resulted in 50 MMcfe/d less production during the first quarter on
a natural gas equivalent basis. Importantly, Antero has the
flexibility to reject any remaining ethane in the stream above its
contracted volume and volumes required to meet pipeline
specifications and sell the ethane at natural gas value to
maximize overall profitability and cash flow.
Based on current strip pricing as of April 30, 2019 for ethane, for the remainder of
2019, Antero intends to continue recovering ethane only at levels
necessary to fulfill ethane contracts and meet pipeline
specs. For the full year of 2019, Antero expects to recover
total ethane volumes in a range of 38,000 to 42,000 barrels per
day, down from a previously guided range of 48,000 to 52,000
barrels per day set in January 2019. To the extent ethane
prices improve to levels that support ethane recovery economics,
Antero intends to elect to recover additional ethane volumes.
There has been no change to the expected production guidance
range for the year of 3,150 MMcfe/d to 3,250 MMcfe/d.
Borrowing Base Reaffirmed at $4.5
Billion
As a result of the recent spring borrowing base redetermination,
the borrowing base under Antero Resources' credit facility was
reaffirmed at $4.5 billion.
Lender commitments under the facility will remain at $2.5 billion. The bank syndicate is
currently comprised of 24 banks. As of March 31, 2019, Antero had $50 million of outstanding borrowings under its
credit facility.
First Quarter 2019 Financial Results
For the three months ended March 31, 2019, Antero reported
GAAP net income of $979 million, or
$3.17 per diluted share, compared to
GAAP net income of $15 million, or
$0.05 per diluted share, in the prior
year period. Excluding items detailed in "Non-GAAP Financial
Measures," Adjusted Net Income was $108
million, or $0.35 per diluted
share, compared to an Adjusted Net Income of $136 million during the three months ended
March 31, 2018, or $0.43 per diluted share.
Adjusted EBITDAX was $443 million,
a 9% decrease compared to $488
million in the prior year period, due to a substantial gain
for settled marketing derivatives in the prior year period as a
result of extreme cold weather conditions in the Northeast in
January 2018.
The following table details the components of average net
production and average realized prices for the three months ended
March 31, 2019:
|
|
Three months ended
March 31, 2019
|
|
|
|
Natural Gas
(MMcf/d)
|
|
Oil
(Bbl/d)
|
|
C3+ NGLs
(Bbl/d)
|
|
Ethane
(Bbl/d)
|
|
Combined
Natural Gas
Equivalent
(MMcfe/d)
|
|
Average Net
Production
|
|
|
2,211
|
|
|
11,305
|
|
|
97,710
|
|
|
38,989
|
|
|
3,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized
Prices
|
|
Natural Gas
($/Mcf)
|
|
Oil
($/Bbl)
|
|
C3+ NGLs
($/Bbl)
|
|
Ethane
($/Bbl)
|
|
Combined
Natural Gas
Equivalent
($/Mcfe)
|
|
Average realized
prices before settled derivatives
|
|
$
|
3.30
|
|
$
|
47.23
|
|
$
|
31.63
|
|
$
|
10.12
|
|
$
|
3.65
|
|
Settled commodity
derivatives
|
|
|
0.49
|
|
|
—
|
|
|
(0.04)
|
|
|
—
|
|
|
0.35
|
|
Average realized
prices after settled derivatives
|
|
$
|
3.79
|
|
$
|
47.23
|
|
$
|
31.59
|
|
$
|
10.12
|
|
$
|
4.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX average
price
|
|
$
|
3.15
|
|
$
|
54.83
|
|
|
|
|
|
|
|
$
|
3.15
|
|
Premium /
(Differential) to NYMEX
|
|
$
|
0.64
|
|
$
|
(7.60)
|
|
|
|
|
|
|
|
$
|
0.85
|
|
Net daily natural gas equivalent production in the first quarter
averaged 3,099 MMcfe/d, including 148,003 Bbl/d of liquids (29% of
production), an increase of 30% compared to the prior year period.
Total liquids production grew 44% compared to the prior year
period. Liquids revenue represented approximately 35% of
total product revenue before hedges. Oil production averaged
11,305 Bbl/d, an increase of 92% over the prior year period.
C3+ NGLs production averaged 97,710 Bbl/d, an increase of 54%
over the prior year period. Recovered ethane production
averaged 38,989 Bbl/d, an increase of 16% over the prior year
period. The Mariner East 1 pipeline was temporarily taken out
of service during the quarter. As a result, Antero elected to
reject larger ethane volumes and sell as higher BTU natural gas,
realizing a better net price relative to ethane netback pricing
during the quarter, highlighting the flexibility offered by
Antero's firm transportation portfolio during periods of
operational downtime.
Antero's average realized natural gas price before hedging was
$3.30 per Mcf, representing a 5%
increase versus the prior year period and a $0.15 per Mcf premium to the average NYMEX Henry
Hub price. Including hedges, Antero's average realized
natural gas price was $3.79 per Mcf,
a $0.64 premium to the average NYMEX
price, reflecting the realization of a cash settled natural gas
hedge gain of $97 million, or
$0.49 per Mcf.
Antero's average realized C3+ NGL price before hedging was
$31.63 per barrel, or 58% of the
average NYMEX WTI oil price, representing a 13% increase versus the
prior year period. Antero's average realized C3+ NGL price
before hedging during the February and March months was
$34.70 per barrel, representing 61%
of the average NYMEX WTI oil price, and improving by 29% from
$26.88 per barrel during the month of
January. Antero's average realized C2+ NGL price before
hedging was $25.50 per barrel, or 47%
of the average NYMEX WTI oil price.
Antero's average realized oil price before hedging was
$47.23 per barrel, a $7.60 differential to the average NYMEX WTI price
and a 17% decrease versus the prior year period. The average
realized ethane price was $0.24 per
gallon, or $10.12 per barrel, a 13%
increase compared to $0.21 per
gallon, or $8.94 per barrel, in the
prior year period.
Antero's average natural gas equivalent price including
recovered C2+ NGLs and oil, but excluding hedge settlements, was
$3.65 per Mcfe, representing a 3%
increase compared to the prior year period. Including hedges,
the Company's average natural gas equivalent price was $4.00 per Mcfe, a 1% decrease from the prior year
period. The net cash settled commodity derivative gain on all
products was $97 million, or
$0.35 per Mcfe.
Total revenue in the first quarter was $1.0 billion, approximately equivalent to the
prior year period. Revenue included a $174 million non-cash loss on unsettled commodity
derivatives, while the prior year included a $95 million non-cash loss on unsettled
derivatives. Revenue Excluding Unrealized Derivative Gains
(Losses) (non-GAAP) was $1.2 billion,
an 8% increase versus the prior year period.
Adjusted Net Cash Provided by Operating Activities was
$485 million during the first
quarter.
The following table presents a calculation of Adjusted EBITDAX
margin (non-GAAP measure) on a per Mcfe basis and a reconciliation
to realized price before cash receipts for settled derivatives, the
nearest GAAP financial measure. Adjusted EBITDAX margin
represents Adjusted EBITDAX divided by production, a measure that
helps investors to more meaningfully evaluate and compare the
results of Antero's operations from period to period by removing
the effect of its capital structure from its operating
structure.
|
Three months ended
March 31,
|
|
|
2018
|
|
2019
|
|
Adjusted EBITDAX
margin ($ per Mcfe):
|
|
|
|
|
|
|
Realized price before
cash receipts for settled derivatives
|
$
|
3.56
|
|
|
3.65
|
|
Distributions from
Antero Midstream
|
|
0.19
|
|
|
0.17
|
|
Marketing, net
(1)
|
|
0.27
|
|
|
(0.26)
|
|
Gathering,
compression, processing and transportation costs
|
|
(1.80)
|
|
|
(1.92)
|
|
Lease operating
expense
|
|
(0.15)
|
|
|
(0.15)
|
|
Production and ad
valorem taxes
|
|
(0.12)
|
|
|
(0.12)
|
|
General and
administrative (excluding equity-based compensation)
(2)
|
|
(0.15)
|
|
|
(0.13)
|
|
Adjusted EBITDAX
margin before settled commodity derivatives
|
|
1.80
|
|
|
1.24
|
|
Cash receipts for
settled commodity derivatives
|
|
0.48
|
|
|
0.35
|
|
Adjusted EBITDAX
margin ($ per Mcfe):
|
$
|
2.28
|
|
|
1.59
|
|
|
(1) Includes cash payments
for settled marketing derivative gains of $0.49 per Mcfe in
2018.
|
(2) Excludes $6.3 million
related to one-time midstream simplification transaction
fees.
|
Per unit cash production expense, which equals the sum of lease
operating, gathering, compression, processing, transportation, and
production and ad valorem taxes, was $2.19 per Mcfe, a 6% increase compared to
$2.07 per Mcfe in the prior year
period. The per unit cash production expense for the quarter
included $1.92 per Mcfe for
gathering, compression, processing and transportation costs,
$0.15 per Mcfe for lease operating
costs, and $0.12 per Mcfe for
production and ad valorem taxes. Per unit gathering,
compression, processing and transportation costs reflect higher
expenses related to the commencement of Mariner East 2 pipeline in
February 2019 that enabled Antero to
in turn deliver higher C3+ NGL prices on volumes sold at the
Marcus Hook terminal.
Per unit net marketing expense was $0.26 per Mcfe compared to $0.27 per Mcfe gain reported in the prior year
period. Excluding prior year settled marketing derivative
gains of $0.49 per Mcfe, net
marketing expense modestly increased due to higher unutilized
capacity related to incremental firm transportation that was placed
in service during the previous quarter with the completion of
TransCanada subsidiary Columbia Pipeline Group's Mountaineer Xpress
and Gulf Xpress. All of Antero's natural gas firm
transportation commitments are now in service. The first
quarter 2019 net marketing expense is expected to decline
materially over the next couple of years as the firm transportation
commitments are filled with Antero production growth.
Per unit general and administrative expense, excluding non-cash
equity-based compensation expense and $6.3
million in non-recurring midstream simplification
transaction fees, decreased by 9% to $0.13 per Mcfe, compared to the prior year
period. General and administrative expense on a per Mcfe
basis decreased due to increased production levels.
Adjusted EBITDAX margin after commodity derivatives was
$1.59 per Mcfe, a 30% decrease from
the prior year period, primarily due to a substantial gain for
settled marketing derivatives in the prior year period.
Excluding prior year settled marketing derivatives, adjusted
EBITDAX margin declined 4%.
Operating Update
First Quarter 2019
Marcellus Shale —
Antero placed 23 horizontal Marcellus wells to sales during the
first quarter of 2019 with an average lateral length of 9,500 feet
and an average 60-day rate per well of 18.6 MMcfe/day on choke. The
60-day average rate per well included 953 Bbl/d of liquids,
including oil, C3+ NGLs and assuming 25% ethane recovery.
Noteworthy results from the wells placed to sales during the first
quarter are below:
- A 12-well pad with an average lateral length of 9,900 feet
produced a 60-day average rate of 215 MMcfe/d, or 17.9 MMcfe/d per
well, including 160 Bbl/d of oil, 650 Bbl/d of C3+ NGLs and 200
Bbl/d of recovered ethane, assuming 25% ethane recovery
- A 10-well pad with an average lateral length of 9,150 feet
produced a 60-day average rate of 200 MMcfe/d, or 20 MMcfe/d per
well, including 75 Bbl/d of oil, 590 Bbl/d of C3+ NGLs and 225
Bbl/d of recovered ethane, assuming 25% ethane recovery
During the period, Antero drilled 36 wells with an average
lateral length of 10,000 feet in an average of 11.6 total days from
spud to final rig release, which represents a 6% reduction in total
drilling time from 2018 levels. In addition, Antero drilled
an average of 5,300 lateral feet per day in the quarter, the
highest quarterly rate in company history, representing a 14%
increase in lateral footage performance compared to 2018. And
also, significantly, Antero set what it believes is a world record
for a horizontal well by drilling 9,184 feet of lateral in 24
hours. Completion efficiencies also improved materially
during the first quarter, as the Company averaged 5.3 stages per
day, a 23% increase from 4.3 stages per day during the first
quarter of 2018.
For the remainder of 2019, Antero plans to operate an average of
four drilling rigs, including three large rigs, and an average of
three completion crews. This is a reduction from the five
drillings rigs and four completion crews operating in the first
quarter. In 2019, the Company expects to drill 120 to 130
wells and place 115 to 125 wells online, which is consistent with
the Company's prior guidance.
First Quarter 2019 Capital Investment
Antero's accrued drilling and completion capital expenditures
for the three months ended March 31, 2019, were $380 million. Antero placed 23 wells to
sales and drilled 36 wells during the first quarter. As a
result of the reduced drilling rig and completion crew count for
the remainder of 2019, Antero expects the drilling and completion
capital expenditures in the second and third quarters of 2019 to be
in the low $300 million range.
Additionally, Antero is reducing its 2019 drilling and completion
capital budget to $1.3 billion to
$1.375 billion. Approximately
65 For a reconciliation of accrued drilling and completion
capital expenditures to cash drilling and completion capital
expenditures for the three months ended March 31, 2019, see the supplemental table at the
end of this press release.
In addition to capital invested in drilling and completion
costs, the Company invested $27
million for land.
President and CFO, Glen Warren,
commented, "Antero Resources is a clear leader in the Appalachian
basin, with a highly profitable business driven by our leading
natural gas liquids and natural gas sales portfolios. With the
largest exposure to favorably priced international markets on the
NGL side, and a firm transportation portfolio on the natural gas
side that reaches the top demand centers in the U.S., particularly
the LNG corridor. Antero is well positioned to continue delivering
best-in-class EBITDA margins and growing the business. We
believe profitable growth, a strong balance sheet and greater
transparency in our financial statements provide an attractive
value for investors today."
Mr. Warren continued, "The financial and operational
achievements of the first quarter provide us with significant
momentum for the remainder of the year. We brought 23 wells
to sales during the quarter, and an additional 23 wells in the
month of April, driving an attractive growth trajectory, which we
expect to achieve at lower quarterly capital expenditures in the
coming quarters."
Balance Sheet and Liquidity
As of March 31, 2019, Antero's debt was $3.5 billion, of which $50
million were borrowings outstanding under the Company's
revolving credit facility. Total lender commitments under
this facility were $2.5
billion. Debt to trailing twelve months Adjusted
EBITDAX ratio was 2.1x.
Commodity Derivative Positions
Antero has hedged 1.3 Tcf of natural gas at a weighted average
index price of $3.05 per MMBtu
through 2023 with a combination of fixed price swap positions and
collar agreements. Antero also has oil hedges entered into
subsequent to the end of the first quarter of 2019 that totaled
5,000 Bbls/day at a weighted average price of $60.16 from May
2019 through December 2020. As of March 31, 2019,
the Company's estimated fair value of commodity derivative
instruments was $432 million.
Antero's estimated natural gas production for 2019 is fully
hedged with a combination of fixed price swap positions and collar
agreements. As of March 31,
2019, the Company had fixed price swaps totaling 755,000
MMbtu/day of natural gas for April
2019 through December 2019
fixed at a weighted average price of $3.34 per MMbtu. Collar agreements for
April 2019 through December 2019 total 1,575,000 MMBtu/day of
natural gas at a weighted average floor and ceiling of $2.50 and $3.37,
respectively. During 2019, Antero also has oil fixed price
swap positions on 5,000 Bbls/day at a weighted average price of
$61.83 from May 2019 through December
2019.
Please see Antero's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, for more information on all
commodity derivative positions.
The following tables summarize Antero's natural gas hedge
position as of March 31, 2019:
Fixed price natural gas positions from April 1, 2019 through December 31, 2023 were as follows:
|
|
Natural
gas MMbtu/day
|
|
Weighted average
index price
|
|
Three months ending
June 30, 2019:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
755,000
|
|
$
|
3.26
|
|
Total
|
|
755,000
|
|
|
|
|
Three months ending
September 30, 2019:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
755,000
|
|
$
|
3.32
|
|
Total
|
|
755,000
|
|
|
|
|
Three months ending
December 31, 2019:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
755,000
|
|
$
|
3.45
|
|
Total
|
|
755,000
|
|
|
|
|
Year ending
December 31, 2020:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
1,417,500
|
|
$
|
3.00
|
|
Year ending
December 31, 2021:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
710,000
|
|
$
|
3.00
|
|
Year ending
December 31, 2022:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
850,000
|
|
$
|
3.00
|
|
Year ending
December 31, 2023:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
90,000
|
|
$
|
2.91
|
|
Natural gas collar positions from April
1, 2019 through December 31,
2019 were as follows:
|
|
Natural
gas
|
|
Weighted average
index price
|
|
|
|
MMbtu/day
|
|
Ceiling
price
|
|
Floor
price
|
|
Three months ending
June 30, 2019:
|
|
|
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
1,575,000
|
|
$
|
3.30
|
|
$
|
2.50
|
|
Three months ending
September 30, 2019:
|
|
|
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
1,575,000
|
|
$
|
3.30
|
|
$
|
2.50
|
|
Three months ending
December 31, 2019:
|
|
|
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
1,575,000
|
|
$
|
3.52
|
|
$
|
2.50
|
|
Fixed price oil positions from May 1,
2019 through December 31, 2020
are as follows:
|
|
Oil
Bbl/day
|
|
Weighted average index price
|
|
Three months ending
June 30, 2019:
|
|
|
|
|
|
|
NYMEX WTI
($/Bbl)
|
|
3,352
|
|
$
|
61.83
|
|
Three months ending
September 30, 2019:
|
|
|
|
|
|
|
NYMEX WTI
($/Bbl)
|
|
5,000
|
|
$
|
61.83
|
|
Three months ending
December 31, 2019:
|
|
|
|
|
|
|
NYMEX WTI
($/Bbl)
|
|
5,000
|
|
$
|
61.83
|
|
Year ending
December 31, 2020:
|
|
|
|
|
|
|
NYMEX WTI
($/Bbl)
|
|
5,000
|
|
$
|
59.03
|
|
Conference Call
A conference call is scheduled on Thursday, May 2, 2019 at 9:00 am MT to discuss the quarterly
results. A brief Q&A session for security analysts will
immediately follow the discussion of the results for the
quarter. To participate in the call, dial in at 877-407-9079
(U.S.), 201-493-6746 (International) and reference "Antero
Resources". A telephone replay of the call will be available until
Thursday, May 9, 2019 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415
(International).
A simultaneous webcast of the call may be accessed over the
internet at www.anteroresources.com. The webcast will be
archived for replay on the Company's website until Thursday, May 9, 2019 at 9:00 am MT.
Presentation
An updated presentation will be posted to the Company's website
before the conference call. The presentation can be
found at www.anteroresources.com on the homepage. Information
on the Company's website does not constitute a portion of, and is
not incorporated by reference into, this press release.
Guidance
Included in this release are updates to certain 2019 guidance
projections. Any 2019 projections not discussed in this release are
unchanged from previously stated guidance.
Non-GAAP Financial Measures
Revenue Excluding Unrealized Derivative (Gains)
Losses
Revenue Excluding Unrealized Derivative (Gains) Losses as set
forth in this release represents total revenue adjusted for
non-cash (gains) losses on unsettled derivatives. Antero
believes that Revenue Excluding Unrealized Derivative (Gains)
Losses is useful to investors in evaluating operational trends of
the Company and its performance relative to other oil and gas
producing companies. Revenue Excluding Unrealized Derivative
(Gains) Losses is not a measure of financial performance under GAAP
and should not be considered in isolation or as a substitute for
total revenue as an indicator of financial performance. The
following table reconciles total revenue to Revenue Excluding
Unrealized Derivative (Gains) Losses (in thousands):
|
Three months ended
March 31,
|
|
|
2018
|
|
2019
|
|
Total
revenue
|
$
|
1,028,101
|
|
$
|
1,037,407
|
|
Commodity derivative
fair value (gains) losses
|
|
(22,437)
|
|
|
77,368
|
|
Marketing derivative
fair value gains
|
|
(94,234)
|
|
|
—
|
|
Gains on settled
commodity derivatives
|
|
101,341
|
|
|
97,092
|
|
Gains on settled
marketing derivatives
|
|
110,042
|
|
|
—
|
|
Revenue Excluding
Unrealized Derivative Gains
|
$
|
1,122,813
|
|
$
|
1,211,867
|
|
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) as set forth in this release
represents net income, adjusted for certain items. Antero
believes that Adjusted Net Income (Loss) and Adjusted net income
(loss) per share is useful to investors in evaluating
operational trends of the Company and its performance relative to
other oil and gas producing companies. Adjusted Net Income
(Loss) is not a measure of financial performance under GAAP and
should not be considered in isolation or as a substitute for net
income as an indicator of financial performance. The
following tables reconcile net income (loss) before income taxes to
Adjusted Net Income (Loss) (in thousands):
|
Three months
ended
|
|
|
March 31,
2019
|
|
|
2018
|
|
2019
|
|
|
|
|
|
|
|
|
Net income
attributable to Antero Resources Corp
|
$
|
14,833
|
|
$
|
978,763
|
|
Commodity derivative
fair value (gains) losses
|
|
(22,437)
|
|
|
77,368
|
|
Gains on settled
commodity derivatives
|
|
101,341
|
|
|
97,092
|
|
Marketing derivative
fair value gains
|
|
(94,234)
|
|
|
—
|
|
Gains on settled
marketing derivatives
|
|
110,042
|
|
|
—
|
|
Impairment of unproved
properties
|
|
50,536
|
|
|
81,244
|
|
Equity-based
compensation
|
|
14,945
|
|
|
6,426
|
|
Gain on deconsolidation
of Antero Midstream Partners LP
|
|
—
|
|
|
(1,406,042)
|
|
Contract termination
and rig stacking
|
|
—
|
|
|
8,360
|
|
Simplification
transaction fees
|
|
—
|
|
|
6,297
|
|
Tax effect of
reconciling items (1)
|
|
(38,751)
|
|
|
264,809
|
|
Other tax items
(2)
|
|
—
|
|
|
(6,513)
|
|
Adjusted Net
Income
|
$
|
136,275
|
|
$
|
107,804
|
|
|
|
|
|
|
|
|
Fully Diluted Shares
Outstanding
|
|
316,911
|
|
|
308,788
|
|
Per Share
Amounts
|
|
|
Three months
ended
|
|
March 31,
2019
|
|
2018
|
|
2019
|
Net income
attributable to Antero Resources Corp
|
$
|
0.05
|
|
|
3.17
|
Commodity derivative
fair value (gains) losses
|
|
(0.07)
|
|
|
0.25
|
Gains on settled
commodity derivatives
|
|
0.32
|
|
|
0.31
|
Marketing derivative
fair value gains
|
|
(0.30)
|
|
|
—
|
Gains on settled
marketing derivatives
|
|
0.35
|
|
|
—
|
Impairment of
unproved properties
|
|
0.16
|
|
|
0.26
|
Equity-based
compensation
|
|
0.04
|
|
|
0.02
|
Gain on
deconsolidation of Antero Midstream Partners LP
|
|
—
|
|
|
(4.55)
|
Contract termination
and rig stacking
|
|
—
|
|
|
0.03
|
Simplification
transaction fees
|
|
—
|
|
|
0.02
|
Tax effect of
reconciling items (1)
|
|
(0.12)
|
|
|
0.86
|
Other tax items
(2)
|
|
—
|
|
|
(0.02)
|
Adjusted Net
Income
|
$
|
0.43
|
|
|
0.35
|
|
(1) Deferred taxes
were approximately 24% for 2018 and 23% for 2019.
|
(2) Tax adjustment related
to the previously announced simplification
transaction.
|
Adjusted Net Cash Provided by Operating Activities and Free
Cash Flow
Adjusted Net Cash Provided by Operating Activities as presented
in this release represents net cash provided by operating
activities excluding net cash provided by operating activities from
Antero Midstream Partners consolidated through March 12, 2019. Adjusted Net Cash Provided
by Operating Activities is widely accepted by the investment
community as a financial indicator of an oil and gas company's
ability to generate cash to internally fund exploration and
development activities and to service debt. Adjusted Net Cash
Provided by Operating Activities is also useful because it is
widely used by professional research analysts in valuing,
comparing, rating and providing investment recommendations of
companies in the oil and gas exploration and production
industry. In turn, many investors use this published research
in making investment decisions. Free Cash Flow as defined by
the Company represents Adjusted Net Cash Provided by Operating
Activities, less drilling and completion capital, less drilling and
completion capital paid to Antero Midstream Partners from
January 1 to March 12, 2019, less
land capital.
Management believes that Adjusted Net Cash Provided by Operating
Activities and Free Cash Flow are useful indicators of the
company's ability to internally fund its activities and to service
or incur additional debt.
There are significant limitations to using Adjusted Net Cash
Provided by Operating Activities and Free Cash Flow as measures of
performance, including the inability to analyze the effect of
certain recurring and non-recurring items that materially affect
the company's net income, the lack of comparability of results of
operations of different companies and the different methods of
calculating Adjusted Net Cash Provided by Operating Activities and
Free Cash Flow reported by different companies. Adjusted Net
Cash Provided by Operating Activities and Free Cash Flow do not
represent funds available for discretionary use because those funds
may be required for debt service, land acquisitions and lease
renewals, other capital expenditures, working capital, income
taxes, exploration expenses, and other commitments and
obligations.
Adjusted Net Cash Provided by Operating Activities and Free Cash
Flow are not measures of financial performance under GAAP and
should not be considered in isolation or as a substitute for cash
flows from operating, investing, or financing activities, as an
indicator of cash flows, or as a measure of liquidity.
Furthermore, we may calculate such measures differently from
similarly titled measures used by other companies.
The following table reconciles net cash provided by operating
activities to Adjusted Net Cash Provided by Operating Activities
and Free Cash Flow as used in this release (in thousands):
|
Three months ended
March 31,
|
|
2018
|
|
2019
|
Net cash provided by
operating activities
|
$
|
541,549
|
|
|
539,004
|
Antero Midstream
Partners net cash provided by operating activities
(1)
|
|
(43,291)
|
|
|
(54,100)
|
Adjusted Net Cash
Provided By Operating Activities
|
|
498,258
|
|
|
484,904
|
Additions to unproved
properties
|
|
(49,569)
|
|
|
(27,463)
|
Drilling and
completion costs (2)
|
|
(420,627)
|
|
|
(389,252)
|
Free Cash
Flow
|
$
|
28,062
|
|
|
68,189
|
|
(1) Represents Antero
Midstream Partners net cash provided by operating activities that
was consolidated in Antero Resources' financial results in the
first quarter of 2018 and from January 1, 2019, to March 12,
2019.
|
(2) Represents Antero
Resources' drilling and completion costs inclusive of costs paid to
Antero Midstream Partners that were consolidated in Antero
Resources' financial results in the first quarter of 2018 and from
January 1, 2019, to March 12, 2019.
|
Net Debt
Net Debt is calculated as total debt less cash and cash
equivalents. Management uses Net Debt to evaluate its
financial position, including its ability to service its debt
obligations.
The following table reconciles consolidated total debt to Net
Debt as used in this release (in thousands):
|
December
31,
|
|
March 31,
|
|
2018
|
|
2019
|
|
|
|
|
|
|
AR bank credit
facility
|
$
|
405,000
|
|
|
50,000
|
AM bank credit
facility (1)
|
|
990,000
|
|
|
—
|
5.375% AR senior
notes due 2021
|
|
1,000,000
|
|
|
1,000,000
|
5.125% AR senior
notes due 2022
|
|
1,100,000
|
|
|
1,100,000
|
5.625% AR senior
notes due 2023
|
|
750,000
|
|
|
750,000
|
5.375% AM senior
notes due 2024 (1)
|
|
650,000
|
|
|
—
|
5.000% AR senior
notes due 2025
|
|
600,000
|
|
|
600,000
|
Net unamortized
premium
|
|
1,241
|
|
|
1,168
|
Net unamortized debt
issuance costs (1)
|
|
(34,553)
|
|
|
(25,218)
|
Consolidated total
debt
|
$
|
5,461,688
|
|
|
3,475,950
|
Less: AR cash and cash
equivalents
|
|
—
|
|
|
—
|
Less: AM cash and cash
equivalents (1)
|
|
—
|
|
|
—
|
Consolidated net
debt
|
$
|
5,461,688
|
|
|
3,475,950
|
|
|
|
|
|
|
Less: Antero Midstream
Partners debt net of cash and unamortized premium and debt issuance
costs (1)
|
$
|
1,632,147
|
|
|
—
|
Net Debt
|
$
|
3,829,541
|
|
|
3,475,950
|
|
(1) Effective March 13,
2019, Antero Midstream Partners is no longer consolidated in
Antero's results
|
Adjusted EBITDAX
Adjusted EBITDAX as defined by the Company represents income or
loss, including noncontrolling interests, before interest expense,
interest income, gains or losses from commodity derivatives and
marketing derivatives, but including net cash receipts or payments
on derivative instruments included in derivative gains or losses
other than proceeds from derivative monetizations, income taxes,
impairment, depletion, depreciation, amortization, and accretion,
exploration expense, equity-based compensation, gain or loss on
early extinguishment of debt, gain or loss on sale of assets, gain
or loss on changes in the fair value of contingent acquisition
consideration , contract termination and rig stacking costs, and
equity in earnings or loss of Antero Midstream. Adjusted EBITDAX
also includes distributions received from limited partner interests
in Antero Midstream common units prior to the closing of the
simplification transaction on March 12,
2019.
The GAAP financial measure nearest to Adjusted EBITDAX is net
income or loss including noncontrolling interest that will be
reported in Antero's condensed consolidated financial
statements. While there are limitations associated with the
use of Adjusted EBITDAX described below, management believes that
this measure is useful to an investor in evaluating the Company's
financial performance because it:
- is widely used by investors in the oil and gas industry to
measure a company's operating performance without regard to items
excluded from the calculation of such term, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which assets were acquired, among other factors;
- helps investors to more meaningfully evaluate and compare the
results of Antero's operations from period to period by removing
the effect of its capital structure from its operating structure;
and
- is used by management for various purposes, including as a
measure of Antero's operating performance, in presentations to the
Company's board of directors, and as a basis for strategic planning
and forecasting. Adjusted EBITDAX is also used by the board of
directors as a performance measure in determining executive
compensation. Adjusted EBITDAX, as defined by our credit facility,
is used by our lenders pursuant to covenants under our revolving
credit facility and the indentures governing the Company's senior
notes.
There are significant limitations to using Adjusted EBITDAX as a
measure of performance, including the inability to analyze the
effect of certain recurring and non-recurring items that materially
affect the Company's net income, the lack of comparability of
results of operations of different companies and the different
methods of calculating Adjusted EBITDAX reported by different
companies. In addition, Adjusted EBITDAX provides no
information regarding a company's capital structure, borrowings,
interest costs, capital expenditures, and working capital movement
or tax position.
The following table represents a reconciliation of Adjusted
EBITDAX to net income (loss), including noncontrolling interest,
and net cash provided by operating activities per our consolidated
statements of cash flows.
|
|
Three months ended
March 31,
|
(in
thousands)
|
|
2018
|
|
2019
|
Reconciliation of
net income to Adjusted EBITDAX:
|
|
|
|
|
|
|
Net income and
comprehensive income attributable to Antero Resources
Corporation
|
|
$
|
14,833
|
|
$
|
978,763
|
Net income and
comprehensive income attributable to noncontrolling
interests
|
|
|
65,977
|
|
|
46,993
|
Commodity derivative
fair value (gains) losses (1)
|
|
|
(22,437)
|
|
|
77,368
|
Gains on settled
commodity derivatives (1)
|
|
|
101,341
|
|
|
97,092
|
Marketing derivative
fair value gains (1)
|
|
|
(94,234)
|
|
|
—
|
Gains on settled
marketing derivatives (1)
|
|
|
110,042
|
|
|
—
|
Gain on
deconsolidation of Antero Midstream Partners LP
|
|
|
—
|
|
|
(1,406,042)
|
Interest
expense
|
|
|
64,426
|
|
|
71,950
|
Income tax
expense
|
|
|
9,120
|
|
|
288,710
|
Depletion,
depreciation, amortization, and accretion
|
|
|
228,934
|
|
|
241,177
|
Impairment of unproved
properties
|
|
|
50,536
|
|
|
81,244
|
Impairment of
gathering systems and facilities
|
|
|
—
|
|
|
6,982
|
Exploration
expense
|
|
|
1,885
|
|
|
126
|
Equity-based
compensation expense
|
|
|
21,156
|
|
|
8,903
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(7,862)
|
|
|
(14,081)
|
Distributions from
unconsolidated affiliates
|
|
|
7,085
|
|
|
12,605
|
Contract termination
and rig stacking
|
|
|
—
|
|
|
8,360
|
Simplification
transaction fees
|
|
|
—
|
|
|
6,297
|
|
|
|
550,802
|
|
|
506,447
|
|
|
|
|
|
|
|
Net income and
comprehensive income attributable to noncontrolling
interests
|
|
|
(65,977)
|
|
|
(46,993)
|
Antero Midstream
Partners interest expense (2)
|
|
|
(10,928)
|
|
|
(16,815)
|
Antero Midstream
Partners depreciation, accretion of ARO and accretion of contingent
consideration (2)
|
|
|
(36,340)
|
|
|
(21,770)
|
Antero Midstream
Partners impairment
|
|
|
—
|
|
|
(6,982)
|
Antero Midstream
Partners equity-based compensation expense
(2)
|
|
|
(6,211)
|
|
|
(2,477)
|
Antero Midstream
Partners equity in earnings of unconsolidated affiliates
(2)
|
|
|
7,862
|
|
|
12,264
|
Antero Midstream
Partners distributions from unconsolidated affiliates
(2)
|
|
|
(7,085)
|
|
|
(12,605)
|
Equity in earnings of
Antero Midstream Partners (2)
|
|
|
20,128
|
|
|
(15,021)
|
Distributions from
Antero Midstream Partners (2)
|
|
|
36,088
|
|
|
46,469
|
Antero Midstream
Partners related adjustments
|
|
|
(62,463)
|
|
|
(63,930)
|
Adjusted
EBITDAX
|
|
$
|
488,339
|
|
|
442,517
|
|
|
|
|
|
|
|
Reconciliation of
our Adjusted EBITDAX to net cash provided by operating
activities:
|
|
|
|
|
|
|
Adjusted
EBITDAX
|
|
$
|
488,339
|
|
|
442,517
|
Antero Midstream
Partners related adjustments
|
|
|
62,463
|
|
|
63,930
|
Interest
expense
|
|
|
(64,426)
|
|
|
(71,950)
|
Exploration
expense
|
|
|
(1,885)
|
|
|
(126)
|
Changes in current
assets and liabilities
|
|
|
56,089
|
|
|
109,065
|
Simplification
transaction fees
|
|
|
—
|
|
|
(6,297)
|
Other
|
|
|
—
|
|
|
(9,216)
|
Other non-cash
items
|
|
|
969
|
|
|
11,081
|
Net cash provided by
operating activities
|
|
$
|
541,549
|
|
|
539,004
|
|
|
|
|
|
|
|
Adjusted
EBITDAX
|
|
$
|
488,339
|
|
$
|
442,517
|
Production
(MMcfe)
|
|
|
213,854
|
|
|
278,868
|
Adjusted EBITDAX
margin per Mcfe
|
|
$
|
2.28
|
|
$
|
1.59
|
|
(1) The adjustments for the
derivative fair value gains and losses and gains on settled
derivatives have the effect of adjusting net income (loss) from
operations for changes in the fair value of unsettled derivatives,
which are recognized at the end of each accounting period. As
a result, derivative gains included in the calculation Adjusted
EBITDAX only reflect derivatives which settled during the
period. The adjustments do not include proceeds from
derivatives monetization.
|
|
(2) Amounts reflected are
net of any elimination adjustments for intercompany activity and
include activity related to Antero Partners through March 12, 2019
(date of deconsolidation). Effective March 13, 2019, Antero
accounts for its unconsolidated investment in Antero Midstream
using the equity method of accounting. See Note 5 to the
unaudited condensed consolidated financial statements in Antero's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019
for further discussion on equity method investments.
|
The following table reconciles Antero's net income to Adjusted
EBITDAX for the twelve months ended March 31, 2019, as used in
this release (in thousands):
|
|
Twelve months
ended
|
(in
thousands)
|
|
March 31,
2019
|
Net income and
comprehensive income attributable to Antero Resources
Corporation
|
|
$
|
566,413
|
Commodity derivative
fair value gains
|
|
|
187,399
|
Gains on settled
commodity derivatives
|
|
|
238,863
|
Marketing derivative
fair value gains
|
|
|
153
|
Losses on settled
marketing derivatives
|
|
|
(37,355)
|
Gain on deconsolidation
of Antero Midstream Partners LP
|
|
|
(1,406,042)
|
Interest
expense
|
|
|
226,614
|
Income tax
expense
|
|
|
150,733
|
Depletion,
depreciation, amortization, and accretion
|
|
|
868,075
|
Impairment of unproved
properties
|
|
|
580,145
|
Impairment of gathering
systems and facilities
|
|
|
4,470
|
Exploration
expense
|
|
|
3,199
|
Gain on change in fair
value of contingent acquisition consideration
|
|
|
96,893
|
Equity-based
compensation expense
|
|
|
40,822
|
Equity in (earnings)
loss of Antero Midstream Partners LP
|
|
|
(31,485)
|
Equity in (earnings)
loss of unconsolidated affiliates
|
|
|
(1,817)
|
Distributions from
Antero Midstream Partners LP
|
|
|
169,562
|
Contract termination
and rig stacking
|
|
|
8,360
|
Simplification
transaction fees
|
|
|
6,297
|
Adjusted
EBITDAX
|
|
$
|
1,671,299
|
Drilling and Completion Capital Expenditures
The following tables reconcile Antero's drilling and completion
costs as reported on a cash basis to drilling and completion costs
on an accrual basis (in thousands):
|
Three months ended
March 31,
|
|
2018
|
|
2019
|
Drilling and
completion costs (as reported; cash basis)
|
$
|
359,868
|
|
|
368,687
|
Drilling and
completion costs paid to Antero Midstream Partners (cash basis)
(1)
|
|
60,759
|
|
|
20,565
|
Adjusted drilling and
completion costs (cash basis)
|
|
420,627
|
|
|
389,252
|
Change in accrued
capital costs
|
|
21,054
|
|
|
(9,601)
|
Adjusted drilling and
completion costs (accrual basis)
|
$
|
441,681
|
|
|
379,651
|
|
(1) Represents
drilling and completion costs paid to Antero Midstream Partners
that were consolidated in Antero Resources' financial results in
the first quarter of 2018 and from January 1, 2019, to March 12,
2019.
|
Antero Resources is an independent natural gas and oil
company engaged in the acquisition, development and production of
unconventional liquids-rich natural gas properties located in the
Appalachian Basin in West Virginia
and Ohio. The Company's website is
located at www.anteroresources.com.
This release includes "forward-looking statements".
Such forward-looking statements are subject to a number of risks
and uncertainties, many of which are beyond Antero's control. All
statements, except for statements of historical fact, made in this
release regarding activities, events or developments Antero
expects, believes or anticipates will or may occur in the future,
such as those regarding the expected sources of funding and timing
for completion of the share repurchase program if at all,
statements regarding expected results in 2019, future commodity
prices, future production targets, completion of natural gas or
natural gas liquids transportation projects, future earnings,
Adjusted EBITDAX, Adjusted Net Cash Provided by Operating
Activities, Free Cash Flow, leverage targets, future capital
spending plans, improved and/or increasing capital efficiency,
continued utilization of existing infrastructure, gas
marketability, estimated realized natural gas, natural gas liquids
and oil prices, acreage quality, access to multiple gas markets,
expected drilling and development plans (including the number,
type, lateral length and location of wells to be drilled, the
number and type of drilling rigs and the number of wells per pad),
projected well costs, future financial position, future technical
improvements and future marketing opportunities, are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All forward-looking statements speak only as of
the date of this release. Although Antero believes that the plans,
intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance
that these plans, intentions or expectations will be achieved.
Therefore, actual outcomes and results could materially differ from
what is expressed, implied or forecast in such statements.
Antero cautions you that these forward-looking
statements are subject to all of the risks and uncertainties, most
of which are difficult to predict and many of which are beyond the
Antero's control, incident to the exploration for and development,
production, gathering and sale of natural gas, NGLs and oil. These
risks include, but are not limited to, commodity price volatility,
inflation, lack of availability of drilling and production
equipment and services, environmental risks, drilling and other
operating risks, regulatory changes, the uncertainty inherent in
estimating natural gas and oil reserves and in projecting future
rates of production, cash flow and access to capital, the timing of
development expenditures, and the other risks described under the
heading "Item 1A. Risk Factors" in Antero's Annual Report on Form
10-K for the year ended December 31,
2018.
ANTERO RESOURCES
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
March 31,
2018 and 2019
|
(unaudited)
|
(In thousands,
except per share amounts)
|
|
|
December 31,
2018
|
|
March 31,
2019
|
Assets
|
Current
assets:
|
|
|
|
|
|
Accounts
receivable
|
$
|
51,073
|
|
|
48,979
|
Accrued
revenue
|
|
474,827
|
|
|
365,151
|
Derivative
instruments
|
|
245,263
|
|
|
122,425
|
Other current
assets
|
|
35,450
|
|
|
8,341
|
Total current
assets
|
|
806,613
|
|
|
544,896
|
Property and
equipment:
|
|
|
|
|
|
Oil and gas
properties, at cost (successful efforts method):
|
|
|
|
|
|
Unproved
properties
|
|
1,767,600
|
|
|
1,701,002
|
Proved
properties
|
|
12,705,672
|
|
|
13,056,874
|
Water handling and
treatment systems
|
|
1,013,818
|
|
|
—
|
Gathering systems and
facilities
|
|
2,470,708
|
|
|
17,825
|
Other property and
equipment
|
|
65,842
|
|
|
68,535
|
|
|
18,023,640
|
|
|
14,844,236
|
Less accumulated
depletion, depreciation, and amortization
|
|
(4,153,725)
|
|
|
(3,872,886)
|
Property and
equipment, net
|
|
13,869,915
|
|
|
10,971,350
|
Operating leases
right-of-use assets
|
|
—
|
|
|
3,433,515
|
Derivative
instruments
|
|
362,169
|
|
|
313,909
|
Investments in
unconsolidated affiliates
|
|
433,642
|
|
|
1,989,612
|
Other
assets
|
|
47,125
|
|
|
35,448
|
Total
assets
|
$
|
15,519,464
|
|
|
17,288,730
|
|
|
|
|
|
|
Liabilities and
Equity
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
66,289
|
|
|
48,096
|
Accounts payable,
related parties
|
|
—
|
|
|
110,980
|
Accrued
liabilities
|
|
465,070
|
|
|
384,707
|
Revenue distributions
payable
|
|
310,827
|
|
|
301,066
|
Derivative
instruments
|
|
532
|
|
|
3,894
|
Short-term lease
liabilities
|
|
2,459
|
|
|
413,103
|
Other current
liabilities
|
|
8,363
|
|
|
4,935
|
Total current
liabilities
|
|
853,540
|
|
|
1,266,781
|
Long-term
liabilities:
|
|
|
|
|
|
Long-term
debt
|
|
5,461,688
|
|
|
3,475,950
|
Deferred income tax
liability
|
|
650,788
|
|
|
1,171,866
|
Long-term lease
liabilities
|
|
2,873
|
|
|
3,024,582
|
Other
liabilities
|
|
63,098
|
|
|
56,753
|
Total
liabilities
|
|
7,031,987
|
|
|
8,995,932
|
Commitments and
contingencies (Notes 13 and 14)
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred stock, $0.01
par value; authorized - 50,000 shares; none issued
|
|
—
|
|
|
—
|
Common stock, $0.01
par value; authorized - 1,000,000 shares; 308,594 shares and
308,741 shares issued and outstanding at December 31, 2018 and
March 31, 2019, respectively
|
|
3,086
|
|
|
3,087
|
Additional paid-in
capital
|
|
6,485,174
|
|
|
6,133,400
|
Accumulated
earnings
|
|
1,177,548
|
|
|
2,156,311
|
Total stockholders'
equity
|
|
7,665,808
|
|
|
8,292,798
|
Noncontrolling
interests in consolidated subsidiary
|
|
821,669
|
|
|
—
|
Total
equity
|
|
8,487,477
|
|
|
8,292,798
|
Total liabilities and
equity
|
$
|
15,519,464
|
|
|
17,288,730
|
ANTERO RESOURCES
CORPORATION
|
Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)
|
Three Months Ended
March 31, 2018 and 2019
|
(unaudited)
|
(In thousands,
except per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2019
|
Revenue and
other:
|
|
|
|
|
|
Natural gas
sales
|
$
|
497,663
|
|
|
657,266
|
Natural gas liquids
sales
|
|
234,170
|
|
|
313,685
|
Oil sales
|
|
30,273
|
|
|
48,052
|
Commodity derivative
fair value gains (losses)
|
|
22,437
|
|
|
(77,368)
|
Gathering,
compression, water handling and treatment
|
|
4,935
|
|
|
4,479
|
Marketing
|
|
144,389
|
|
|
91,186
|
Marketing derivative
fair value gains
|
|
94,234
|
|
|
—
|
Other
income
|
|
—
|
|
|
107
|
Total
revenue
|
|
1,028,101
|
|
|
1,037,407
|
Operating
expenses:
|
|
|
|
|
|
Lease
operating
|
|
26,722
|
|
|
41,732
|
Gathering,
compression, processing, and transportation
|
|
291,938
|
|
|
424,529
|
Production and ad
valorem taxes
|
|
25,823
|
|
|
35,678
|
Marketing
|
|
195,739
|
|
|
163,084
|
Exploration
|
|
1,885
|
|
|
126
|
Impairment of unproved
properties
|
|
50,536
|
|
|
81,244
|
Impairment of
gathering systems and facilities
|
|
—
|
|
|
6,982
|
Depletion,
depreciation, and amortization
|
|
228,244
|
|
|
240,201
|
Accretion of asset
retirement obligations
|
|
690
|
|
|
976
|
General and
administrative (including equity-based compensation expense of
$21,156 and $8,903 in 2018 and 2019, respectively)
|
|
60,030
|
|
|
68,202
|
Contract termination
and rig stacking
|
|
—
|
|
|
8,360
|
Total operating
expenses
|
|
881,607
|
|
|
1,071,114
|
Operating income
(loss)
|
|
146,494
|
|
|
(33,707)
|
Other income
(expenses):
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
7,862
|
|
|
14,081
|
Interest
|
|
(64,426)
|
|
|
(71,950)
|
Gain on
deconsolidation of Antero Midstream Partners LP
|
|
—
|
|
|
1,406,042
|
Total other
expenses
|
|
(56,564)
|
|
|
1,348,173
|
Income before income
taxes
|
|
89,930
|
|
|
1,314,466
|
Provision for income
tax expense
|
|
(9,120)
|
|
|
(288,710)
|
Net income and
comprehensive income including noncontrolling interests
|
|
80,810
|
|
|
1,025,756
|
Net income and
comprehensive income attributable to noncontrolling
interests
|
|
65,977
|
|
|
46,993
|
Net income and
comprehensive income attributable to Antero Resources
Corporation
|
$
|
14,833
|
|
|
978,763
|
|
|
|
|
|
|
Earnings per common
share—basic
|
$
|
0.05
|
|
|
3.17
|
|
|
|
|
|
|
Earnings per common
share—assuming dilution
|
$
|
0.05
|
|
|
3.17
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
Basic
|
|
316,471
|
|
|
308,694
|
Diluted
|
|
316,911
|
|
|
308,788
|
ANTERO RESOURCES
CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
Three Months Ended
March 31, 2018 and 2019
|
(In
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2019
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
Net income including
noncontrolling interests
|
$
|
80,810
|
|
|
1,025,756
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depletion,
depreciation, amortization, and accretion
|
|
228,934
|
|
|
241,177
|
Impairment of unproved
properties
|
|
50,536
|
|
|
81,244
|
Impairment of
gathering systems and facilities
|
|
—
|
|
|
6,982
|
Commodity derivative
fair value (gains) losses
|
|
(22,437)
|
|
|
77,368
|
Gains on settled
commodity derivatives
|
|
101,341
|
|
|
97,092
|
Marketing derivative
fair value gains
|
|
(94,234)
|
|
|
—
|
Gains on settled
marketing derivatives
|
|
110,042
|
|
|
—
|
Deferred income tax
expense
|
|
9,120
|
|
|
287,854
|
Equity-based
compensation expense
|
|
21,156
|
|
|
8,903
|
Equity in earnings of
unconsolidated affiliates
|
|
(7,862)
|
|
|
(14,081)
|
Distributions of
earnings from unconsolidated affiliates
|
|
7,085
|
|
|
12,605
|
Gain on
deconsolidation of Antero Midstream Partners LP
|
|
—
|
|
|
(1,406,042)
|
Other
|
|
969
|
|
|
11,081
|
Changes in current
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
8,204
|
|
|
42,168
|
Accrued
revenue
|
|
20,199
|
|
|
109,677
|
Other current
assets
|
|
(1,431)
|
|
|
1,364
|
Accounts
payable
|
|
(8,042)
|
|
|
(21,370)
|
Accrued
liabilities
|
|
10,359
|
|
|
(14,965)
|
Revenue distributions
payable
|
|
28,290
|
|
|
(9,761)
|
Other current
liabilities
|
|
(1,490)
|
|
|
1,952
|
Net cash provided by
operating activities
|
|
541,549
|
|
|
539,004
|
Cash flows provided
by (used in) investing activities:
|
|
|
|
|
|
Additions to unproved
properties
|
|
(49,569)
|
|
|
(27,463)
|
Drilling and
completion costs
|
|
(359,868)
|
|
|
(368,687)
|
Additions to water
handling and treatment systems
|
|
(40,285)
|
|
|
(24,416)
|
Additions to gathering
systems and facilities
|
|
(93,670)
|
|
|
(48,239)
|
Additions to other
property and equipment
|
|
(2,571)
|
|
|
(3,128)
|
Investments in
unconsolidated affiliates
|
|
(17,389)
|
|
|
(25,020)
|
Proceeds from the
Antero Midstream Partners LP Transactions
|
|
—
|
|
|
296,611
|
Change in other
assets
|
|
(217)
|
|
|
(4,475)
|
Net cash used in
investing activities
|
|
(563,569)
|
|
|
(204,817)
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
Issuance of senior
notes
|
|
—
|
|
|
650,000
|
Borrowings
(repayments) on bank credit facilities, net
|
|
75,000
|
|
|
(270,000)
|
Payments of deferred
financing costs
|
|
—
|
|
|
(8,259)
|
Distributions to
noncontrolling interests in Antero Midstream Partners LP
|
|
(55,915)
|
|
|
(85,076)
|
Employee tax
withholding for settlement of equity compensation awards
|
|
(1,084)
|
|
|
(479)
|
Other
|
|
(1,269)
|
|
|
(841)
|
Net cash provided by
financing activities
|
|
16,732
|
|
|
285,345
|
Effect of
deconsolidation of Antero Midstream Partners LP
|
|
—
|
|
|
(619,532)
|
Net decrease in cash
and cash equivalents
|
|
(5,288)
|
|
|
—
|
Cash and cash
equivalents, beginning of period
|
|
28,441
|
|
|
—
|
Cash and cash
equivalents, end of period
|
$
|
23,153
|
|
|
—
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
Cash paid during the
period for interest
|
$
|
42,010
|
|
|
37,081
|
|
|
|
|
|
|
Increase in accounts
payable and accrued liabilities for additions to property and
equipment
|
$
|
12,691
|
|
|
22,825
|
ANTERO RESOURCES CORPORATION
The following tables set forth selected operating data for the
three months ended March 31, 2018 and
2019:
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
Three months ended
March 31,
|
|
Increase
|
|
Percent
|
|
(in thousands)
|
|
2018
|
|
2019
|
|
(Decrease)
|
|
Change
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
sales
|
|
$
|
497,663
|
|
$
|
657,266
|
|
$
|
159,603
|
|
32
|
%
|
NGLs sales
|
|
|
234,170
|
|
|
313,685
|
|
|
79,515
|
|
34
|
%
|
Oil sales
|
|
|
30,273
|
|
|
48,052
|
|
|
17,779
|
|
59
|
%
|
Commodity derivative
fair value gains (losses)
|
|
|
22,437
|
|
|
(77,368)
|
|
|
(99,805)
|
|
(445)
|
%
|
Gathering, compression,
water handling and treatment
|
|
|
4,935
|
|
|
4,479
|
|
|
(456)
|
|
(9)
|
%
|
Marketing
|
|
|
144,389
|
|
|
91,186
|
|
|
(53,203)
|
|
(37)
|
%
|
Marketing derivative
fair value gains
|
|
|
94,234
|
|
|
—
|
|
|
(94,234)
|
|
(100)
|
%
|
Other income
|
|
|
—
|
|
|
107
|
|
|
107
|
|
*
|
|
Total
revenue
|
|
|
1,028,101
|
|
|
1,037,407
|
|
|
9,306
|
|
1
|
%
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating
|
|
|
26,722
|
|
|
41,732
|
|
|
15,010
|
|
56
|
%
|
Gathering, compression,
processing, and transportation
|
|
|
291,938
|
|
|
424,529
|
|
|
132,591
|
|
45
|
%
|
Production and ad
valorem taxes
|
|
|
25,823
|
|
|
35,678
|
|
|
9,855
|
|
38
|
%
|
Marketing
|
|
|
195,739
|
|
|
163,084
|
|
|
(32,655)
|
|
(17)
|
%
|
Exploration
|
|
|
1,885
|
|
|
126
|
|
|
(1,759)
|
|
(93)
|
%
|
Impairment of unproved
properties
|
|
|
50,536
|
|
|
81,244
|
|
|
30,708
|
|
61
|
%
|
Impairment of gathering
systems and facilities
|
|
|
—
|
|
|
6,982
|
|
|
6,982
|
|
*
|
|
Depletion,
depreciation, and amortization
|
|
|
228,244
|
|
|
240,201
|
|
|
11,957
|
|
5
|
%
|
Accretion of asset
retirement obligations
|
|
|
690
|
|
|
976
|
|
|
286
|
|
41
|
%
|
General and
administrative (excluding equity-based compensation)
|
|
|
38,874
|
|
|
59,299
|
|
|
20,425
|
|
53
|
%
|
Equity-based
compensation
|
|
|
21,156
|
|
|
8,903
|
|
|
(12,253)
|
|
(58)
|
%
|
Contract termination
and rig stacking
|
|
|
—
|
|
|
8,360
|
|
|
8,360
|
|
*
|
|
Total operating
expenses
|
|
|
881,607
|
|
|
1,071,114
|
|
|
189,507
|
|
21
|
%
|
Operating income
(loss)
|
|
|
146,494
|
|
|
(33,707)
|
|
|
(180,201)
|
|
(123)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other earnings
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliate
|
|
|
7,862
|
|
|
14,081
|
|
|
6,219
|
|
79
|
%
|
Interest
expense
|
|
|
(64,426)
|
|
|
(71,950)
|
|
|
(7,524)
|
|
12
|
%
|
Gain on deconsolidation
of Antero Midstream Partners LP
|
|
|
—
|
|
|
1,406,042
|
|
|
—
|
|
*
|
|
Total other
expenses
|
|
|
(56,564)
|
|
|
1,348,173
|
|
|
(1,305)
|
|
2
|
%
|
Income before income
taxes
|
|
|
89,930
|
|
|
1,314,466
|
|
|
(181,506)
|
|
(202)
|
%
|
Income tax
expense
|
|
|
(9,120)
|
|
|
(288,710)
|
|
|
(279,590)
|
|
3,066
|
%
|
Net income and
comprehensive income including noncontrolling interest
|
|
|
80,810
|
|
|
1,025,756
|
|
|
(461,096)
|
|
(571)
|
%
|
Net income and
comprehensive income attributable to noncontrolling
interest
|
|
|
65,977
|
|
|
46,993
|
|
|
(18,984)
|
|
(29)
|
%
|
Net income and
comprehensive income attributable to Antero Resources
Corporation
|
|
$
|
14,833
|
|
$
|
978,763
|
|
$
|
(442,112)
|
|
(2,981)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAX
|
|
$
|
488,339
|
|
$
|
442,517
|
|
$
|
(44,355)
|
|
(9)
|
%
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
Three months ended
March 31,
|
|
Increase
|
|
Percent
|
|
|
|
2018
|
|
2019
|
|
(Decrease)
|
|
Change
|
|
Production
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
|
|
158
|
|
|
199
|
|
|
41
|
|
26
|
%
|
C2 Ethane
(MBbl)
|
|
|
3,029
|
|
|
3,509
|
|
|
480
|
|
16
|
%
|
C3+ NGLs
(MBbl)
|
|
|
5,693
|
|
|
8,794
|
|
|
3,101
|
|
54
|
%
|
Oil (MBbl)
|
|
|
530
|
|
|
1,017
|
|
|
487
|
|
92
|
%
|
Combined
(Bcfe)
|
|
|
214
|
|
|
279
|
|
|
65
|
|
30
|
%
|
Daily combined
production (MMcfe/d)
|
|
|
2,376
|
|
|
3,099
|
|
|
723
|
|
30
|
%
|
Average prices
before effects of derivative settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (per
Mcf)
|
|
$
|
3.14
|
|
$
|
3.30
|
|
$
|
0.16
|
|
5
|
%
|
C2 Ethane (per
Bbl)
|
|
$
|
8.94
|
|
$
|
10.12
|
|
$
|
1.18
|
|
13
|
%
|
C3+ NGLs (per
Bbl)
|
|
$
|
36.38
|
|
$
|
31.63
|
|
$
|
(4.75)
|
|
(13)
|
%
|
Oil (per
Bbl)
|
|
$
|
57.14
|
|
$
|
47.23
|
|
$
|
(9.91)
|
|
(17)
|
%
|
Weighted Average
Combined (per Mcfe)
|
|
$
|
3.56
|
|
$
|
3.65
|
|
$
|
0.09
|
|
3
|
%
|
Average realized
prices after effects of derivative settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (per
Mcf)
|
|
$
|
3.85
|
|
$
|
3.79
|
|
$
|
(0.06)
|
|
(2)
|
%
|
C2 Ethane (per
Bbl)
|
|
$
|
8.94
|
|
$
|
10.12
|
|
$
|
1.18
|
|
13
|
%
|
C3+ NGLs (per
Bbl)
|
|
$
|
35.17
|
|
$
|
31.59
|
|
$
|
(3.58)
|
|
(10)
|
%
|
Oil (per
Bbl)
|
|
$
|
51.12
|
|
$
|
47.23
|
|
$
|
(3.89)
|
|
(8)
|
%
|
Weighted Average
Combined (per Mcfe)
|
|
$
|
4.04
|
|
$
|
4.00
|
|
$
|
(0.04)
|
|
(1)
|
%
|
Average costs (per
Mcfe):
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating
|
|
$
|
0.15
|
|
$
|
0.15
|
|
$
|
—
|
|
—
|
%
|
Gathering,
compression, processing, and transportation
|
|
$
|
1.80
|
|
$
|
1.92
|
|
$
|
0.12
|
|
7
|
%
|
Production and ad
valorem taxes
|
|
$
|
0.12
|
|
$
|
0.12
|
|
$
|
—
|
|
—
|
%
|
Marketing expense,
net
|
|
$
|
0.24
|
|
$
|
0.26
|
|
$
|
0.02
|
|
8
|
%
|
Depletion,
depreciation, amortization, and accretion
|
|
$
|
0.92
|
|
$
|
0.79
|
|
$
|
(0.13)
|
|
(14)
|
%
|
General and
administrative (excluding equity-based compensation)
|
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.01
|
|
7
|
%
|
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SOURCE Antero Resources Corporation