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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 25, 2023

 

 

 

ANTERO RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   001-36120   80-0162034
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (I.R.S. Employer
Identification Number)

 

1615 Wynkoop Street

Denver, Colorado 80202

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (303) 357-7310

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  

Trading symbol(s)

  Name of each exchange on which
registered
Common Stock, par value $0.01 Per Share   AR   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

 

 

 

  Item 2.02 Results of Operations and Financial Condition

 

On October 25, 2023, Antero Resources Corporation issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its financial and operational results for the quarter ended September 30, 2023.

 

The information in this Current Report, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act unless specifically identified therein as being incorporated therein by reference.

 

  Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Number
  Description
99.1   Antero Resources Corporation press release dated October 25, 2023.
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  ANTERO RESOURCES CORPORATION
   
  By: /s/ Michael N. Kennedy
    Michael N. Kennedy
    Chief Financial Officer and Senior Vice President – Finance

 

Dated: October 25, 2023

 

2

 

Exhibit 99.1

 

 

Antero Resources Announces Third Quarter 2023 Financial and Operating Results and Increased Production Guidance

 

Denver, Colorado, October 25, 2023—Antero Resources Corporation (NYSE: AR) (“Antero Resources,” “Antero,” or the “Company”) today announced its third quarter 2023 financial and operating results. The relevant consolidated financial statements are included in Antero Resources’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

 

Third Quarter 2023 Highlights:

 

·Net production averaged 3.5 Bcfe/d, an increase of 9% from the year ago period

oLiquids production averaged 202 MBbl/d, an increase of 18% from the year ago period

oNatural gas production averaged 2.3 Bcf/d, up 4% from the year ago period

·Realized a pre-hedge natural gas equivalent price of $3.32 per Mcfe, a $0.77 per Mcfe premium to NYMEX pricing

oRealized a C3+ NGL price of $36.81 per barrel

oRealized a pre-hedge natural gas price of $2.48 per Mcf, a $0.07 per Mcf discount to NYMEX pricing

·Net income was $18 million, Adjusted Net Income was $25 million (Non-GAAP)

·Adjusted EBITDAX was $271 million (Non-GAAP); net cash provided by operating activities was $183 million

 

2023 Guidance Updates:

 

·Increasing full year 2023 production guidance to a range of 3.39 to 3.41 Bcfe/d

·Decreasing cash production costs to a range of $2.35 to $2.40 per Mcfe

·Decreasing net marketing expense to a range of $0.05 to $0.07 per Mcfe

·Decreasing realized natural gas price premium to flat to NYMEX Henry Hub

 

Paul Rady, Chairman, CEO and President of Antero Resources commented, “Our third quarter results continue to benefit from the operating momentum that we have built throughout this year. During the first nine months of 2023 both our drilling and completion teams set numerous Company records. This operational excellence combined with stellar well performance has led to quarterly production volumes above expectations. As a result, we are raising our full year production guidance for the second consecutive quarter, while maintaining the same initial capital budget. We now expect production volumes to increase by approximately 225 MMcfe/d, or 7%, from the 2022 exit rate to the 2023 exit rate.”

 

Mr. Rady continued, “On the macro front, we see natural gas storage levels normalizing on the back of record Natural Gas Power Burn (natural gas fired electrical generation), strong LNG exports and U.S. natural gas exported through pipelines to Mexico. At the same time, we anticipate that U.S. production growth will be limited in the coming months following the dramatic decrease in drilling rigs. We believe this strong fundamental backdrop will support and strengthen the forward natural gas curve. Further, as we move closer to the startup of additional LNG export capacity over the next 12 months, we are seeing increasing premiums at our delivery points within the LNG corridor relative to NYMEX. We are uniquely positioned to benefit from increasing NYMEX prices with approximately 75% of our natural gas being sold at Antero’s premium delivery points in the LNG corridor.”

 

Michael Kennedy, CFO of Antero Resources said, “Based entirely on the capital efficiency gains achieved this year, we continue to expect 2024 capital requirements to be materially below our 2023 capital guidance. This capital program will target maintaining our increased 2023 production guidance. This reduced maintenance capital combined with a higher natural gas and NGL price strip, is projected to generate substantial Free Cash Flow in 2024 that we will use to pay down debt further and continue to return capital to our shareholders.”

 

For a discussion of the non-GAAP financial measures including Adjusted Net Income, Adjusted EBITDAX, Free Cash Flow and Net Debt please see “Non-GAAP Financial Measures.”

 

 

2023 Guidance Update

 

Antero is increasing its full year 2023 production guidance to 3.39 to 3.41 Bcfe/d, an increase at the midpoint of approximately 25 MMcfe/d. The higher than expected volumes are driven by strong well performance and capital efficiency gains.

 

Antero is decreasing the high end of its cash production expense guidance by $0.05 per Mcfe to a range of $2.35 to $2.40 per Mcfe reflecting lower fuel costs and lower production and ad valorem taxes. Antero is also decreasing its natural gas realized price guidance to flat to NYMEX Henry Hub. This decrease is due to increased exposure to the Columbia Gas Appalachia Hub during the third quarter driven by maintenance at the Cove Point LNG Terminal as well as longer maintenance on a Gulf Coast directed pipeline during the quarter. Antero is reducing its net marketing expense guidance by $0.02 per Mcfe to a range of $0.05 to $0.07 per Mcfe due to higher than expected production lowering unutilized firm transportation expense.

 

   Year 2023 –Initial   Full Year 2023 – July   Full Year 2023 – Current 
Full Year 2023 Guidance  Low   High   Low   High   Low   High 
Net Production (Bcfe/d)   3.25    3.3    3.35    3.4    3.39    3.41 
Net Natural Gas Production (Bcf/d)   2.1    2.15    2.2    2.225    2.22    2.24 
Net Liquids Production (Bbl/d)   184,000    195,000    188,000    199,000    194,000    195,500 
Net Daily C3+ NGL Production   105,000    110,000    110,000    115,000    114,500    115,000 
Net Daily Ethane Production (Bbl/d)   70,000    75,000    67,500    72,500    69,000    69,500 
Net Daily Oil Production (Bbl/d)   9,000    10,000    10,500    11,500    10,500    11,000 
                               
Cash Production Expense ($/Mcfe)  $2.40   $2.50   $2.35   $2.45   $2.35   $2.40 
Natural Gas Realized Price Expected Premium to NYMEX ($/Mcf)  $0.10   $0.20   $0.00   $0.10   $0.00   $0.00 
Net Marketing Expense ($/Mcfe)  $0.07   $0.09   $0.07   $0.09   $0.05   $0.07 

 

Note: Any 2023 guidance items not discussed in this release are unchanged from previously stated guidance.

 

Free Cash Flow

 

During the third quarter of 2023, Free Cash Flow before Changes in Working Capital was ($23) million.

 

   Three Months Ended
September 30,
 
   2022   2023 
Net cash provided by operating activities  $1,087,672    183,381 
Less: Net cash used in investing activities   (243,529)   (276,097)
Less: Proceeds from sale of assets, net   (952)   (136)
Less: Distributions to non-controlling interests in Martica   (46,217)   (21,161)
Free Cash Flow  $796,974    (114,013)
Changes in Working Capital (1)   (241,136)   90,755 
Free Cash Flow before Changes in Working Capital  $555,838    (23,258)

 

(1)Working capital adjustments in the third quarter of 2022 include an increase of $214 million in changes in current assets and liabilities and an increase of $27 million in accounts payable and accrued liabilities for additions to property and equipment. Working capital adjustments in the third quarter of 2023 include a $77 million net decrease in current assets and liabilities and a $14 million decrease in accounts payable and accrued liabilities for additions to property and equipment.

 

2

 

Third Quarter 2023 Financial Results

 

Net daily natural gas equivalent production in the third quarter averaged 3.5 Bcfe/d, including 202 MBbl/d of liquids, an increase of 9% from the third quarter of 2022. As a result of Antero’s focus on its liquids-rich Marcellus acreage, liquids volumes increased 18%, while natural gas volumes increased 4%, each compared to the year ago period.

 

Antero’s average realized natural gas price before hedging was $2.48 per Mcf, a $0.07 per Mcf discount to the average first-of-month (“FOM”) NYMEX Henry Hub price. The wider discount to NYMEX was due to higher volumes being sold into the Columbia Gas Appalachia Hub as a result of maintenance at the Cove Point LNG Terminal and the Tennessee 500 Leg Pipeline. During the quarter, Antero sold approximately 15% of its volume into the Columbia Gas Appalachia Hub, 5% above levels during the first six months of the year.

 

The following table details average net production and average realized prices for the three months ended September 30, 2023:

 

   Three Months Ended September 30, 2023 
   Natural
Gas
(MMcf/d)
   Oil
(Bbl/d)
   C3+ NGLs
(Bbl/d)
   Ethane
(Bbl/d)
   Natural
Gas
Equivalent
(MMcfe/d)
 
Average Net Production   2,261    9,978    119,315    72,783    3,474 

 

                   Combined 
                   Natural
Gas
 
   Natural Gas   Oil   C3+ NGLs   Ethane   Equivalent 
Average Realized Prices  ($/Mcf)   ($/Bbl)   ($/Bbl)   ($/Bbl)   ($/Mcfe) 
Average realized prices before settled derivatives  $2.48   $68.22   $36.81   $11.73   $3.32 
NYMEX average price (1)  $2.55   $82.26             $2.55 
Premium / (Discount) to NYMEX  $(0.07)  $(14.04)            $0.77 
                          
Settled commodity derivatives (2)  $(0.02)  $(0.31)  $(0.05)  $   $(0.02)
Average realized prices after settled derivatives  $2.46   $67.91   $36.76   $11.73   $3.30 
Premium / (Discount) to NYMEX  $(0.09)  $(14.35)            $0.75 

 

(1)The average index prices for natural gas and oil represent the New York Mercantile Exchange average first-of-month price and the Energy Information Administration (EIA) calendar month average West Texas Intermediate future price, respectively.

(2)These commodity derivative instruments include contracts attributable to Martica Holdings LLC (“Martica”), Antero’s consolidated variable interest entity. All gains or losses from Martica’s derivative instruments are fully attributable to the noncontrolling interests in Martica, which includes portions of the natural gas and all oil and C3+ NGL derivative instruments during the three months ended September 30, 2023.

 

Antero’s average realized C3+ NGL price was $36.81 per barrel. Antero shipped 52% of its total C3+ NGL net production on Mariner East 2 (“ME2”) for export and realized a $0.06 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 48% of C3+ NGL net production at an $0.07 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 119 MBbl/d of net C3+ NGL production was a $0.01 per gallon premium to Mont Belvieu pricing.

 

   Three Months Ended September 30, 2023 
   Pricing Point  Net C3+ NGL
Production
(Bbl/d)
   % by
Destination
   Premium (Discount)
To Mont Belvieu
($/Gal)
 
Propane / Butane on ME2 - Exported  Marcus Hook, PA   61,961    52%  $0.06 
Remaining C3+ NGL Volume – Sold Domestically  Hopedale, OH   57,354    48%  $(0.07)
Total C3+ NGLs/Blended Premium      119,315    100%  $0.01 

 

All-in cash expense, which includes lease operating, gathering, compression, processing, and transportation, production and ad valorem taxes was $2.31 per Mcfe in the third quarter, a 19% decrease compared to $2.84 per Mcfe average during the third quarter of 2022. The decrease was due to lower production tax and transportation expense due to lower fuel costs as a result of lower commodity prices. Net marketing expense was $0.05 per Mcfe in the third quarter, a decrease from $0.09 per Mcfe during the third quarter of 2022. The decrease in net marketing expense was due to higher than expected production lowering unutilized firm transportation expense.

 

3

 

Third Quarter 2023 Operating Results

 

Antero placed 20 horizontal Marcellus wells to sales during the third quarter with an average lateral length of 14,400 feet. Of the wells placed to sales, 14 of these wells have been on line for at least 60 days. The average 60-day rate per well was 24 MMcfe/d with approximately 1,150 Bbl/d of liquids per well assuming 25% ethane recovery. The remaining six wells were completed in mid-September and had an average lateral length of approximately 18,400 feet.

 

Marcellus highlights include:

 

·A seven well pad with an average lateral length of 15,448 feet that had an average 60-day rate per well of 32 MMcfe/d, including approximately 1,600 Bbl/d of liquids per well assuming 25% ethane recovery

·A completion crew averaged a company record 13.7 completion stages per day, or 96 total stages in a single week in August

 

In the Utica, Antero has two pads consisting of seven total wells scheduled to be turned in line during the fourth quarter. These wells are located in the highly rich 1300 BTU window of the Utica, with the natural gas volumes being sold into the premium Chicago market this winter. Antero also set numerous company drilling and completion records for the Utica during the third quarter.

 

Utica records include:

 

·Average stages per day of an entire pad of 10.9 stages per day

·A single-day of 15 stages per day achieved in September

·Utica single well drillout of 4,850 lateral feet per day

 

Third Quarter 2023 Capital Investment

 

Antero’s accrued drilling and completion capital expenditures for the three months ended September 30, 2023, were $231 million. Through the first nine months of 2023, the Company has completed approximately 80% of its 2023 expected completion stages.

 

In addition to capital invested in drilling and completion activities, the Company invested $27 million in land during the third quarter. During the quarter, Antero added approximately 4,000 net acres, representing over 14 incremental drilling locations. Through the first nine months of 2023, Antero has added approximately 26,000 net acres representing 93 incremental drilling locations at an average cost of approximately $1 million per location. Antero’s organic leasing efforts focus on acreage in close proximity to its current development plan. These incremental locations more than offset Antero’s maintenance capital plan that requires an average of 60 to 65 wells per year. In addition, these efforts allow Antero to increase the average lateral length in its development program, which is expected to average 14,500 feet for wells drilled in 2023, or 7% longer than the 2022 average of 13,600 feet. The Company believes this organic leasing program is the most cost effective approach to lengthening its core inventory position.

 

Commodity Derivative Positions

 

Antero did not enter into any new natural gas, NGL or oil hedges during the third quarter of 2023.

 

Please see Antero’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, for more information on all commodity derivative positions. For detail on current commodity positions, please see the Hedge Profile presentations at www.anteroresources.com.

 

Conference Call

 

A conference call is scheduled on Thursday, October 26, 2023 at 9:00 am MT to discuss the financial and operational results. A brief Q&A session for security analysts will immediately follow the discussion of the results. To participate in the call, dial in at 877-407-9079 (U.S.), or 201-493-6746 (International) and reference “Antero Resources.” A telephone replay of the call will be available until Thursday, November 2, 2023 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13741536. To access the live webcast and view the related earnings conference call presentation, visit Antero's website at www.anteroresources.com. The webcast will be archived for replay until Thursday, November 2, 2023 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.

 

4

 

Non-GAAP Financial Measures

 

Adjusted Net Income

 

Adjusted Net Income as set forth in this release represents net income, adjusted for certain items. Antero believes that Adjusted Net Income 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 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 GAAP measure most directly comparable to Adjusted Net Income is net income. The following table reconciles net income to Adjusted Net Income (in thousands):

 

   Three Months Ended September 30, 
   2022   2023 
Net income and comprehensive income attributable to Antero Resources Corporation  $559,759    17,808 
Net income and comprehensive income attributable to noncontrolling interests   34,748    14,834 
Unrealized commodity derivative gains   (109,424)   (9,172)
Amortization of deferred revenue, VPP   (9,478)   (7,701)
Loss (gain) on sale of assets   214    (136)
Impairment of property and equipment   33,924    13,476 
Equity-based compensation   10,402    18,458 
Loss on early extinguishment of debt   30,307     
Loss on convertible note inducement   169     
Equity in earnings of unconsolidated affiliate   (14,972)   (22,207)
Contract termination and loss contingency   17,995    13,659 
Tax effect of reconciling items (1)   9,486    (1,371)
    563,130    37,648 
Martica adjustments (2)   (31,984)   (12,161)
Adjusted Net Income  $531,146    25,487 
           
Diluted Weighted Average Shares Outstanding (3)   325,997    311,534 

 

(1)Deferred taxes were approximately 23% and 21% for 2022 and 2023, respectively.

(2)Adjustments reflect noncontrolling interest in Martica not otherwise adjusted in amounts above.

(3)Diluted weighted average shares outstanding does not include securities that would have had an anti-dilutive effect on the computation of diluted earnings per share. Anti-dilutive weighted average shares outstanding for the three months ended September 30, 2022 and 2023 were 0.3 million and 1.6 million, respectively.

 

Net Debt

 

Net Debt is calculated as total long-term debt less cash and cash equivalents. Management uses Net Debt to evaluate the Company’s financial position, including its ability to service its debt obligations.

 

The following table reconciles consolidated total long-term debt to Net Debt as used in this release (in thousands):

 

   December 31,   September 30, 
   2022   2023 
Credit Facility  $34,800    474,100 
8.375% senior notes due 2026   96,870    96,870 
7.625% senior notes due 2029   407,115    407,115 
5.375% senior notes due 2030   600,000    600,000 
4.250% convertible senior notes due 2026   56,932    39,418 
Unamortized debt issuance costs   (12,241)   (10,608)
Total long-term debt  $1,183,476    1,606,895 
Less: Cash and cash equivalents        
Net Debt  $1,183,476    1,606,895 

 

5

 

Free Cash Flow

 

Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow or as a measure of liquidity. The Company defines Free Cash Flow as net cash provided by operating activities, less net cash used in investing activities, which includes drilling and completion capital and leasehold capital, plus payments for early contract termination or derivative monetization, less proceeds from asset sales or derivative monetization and less distributions to non-controlling interests in Martica.

 

The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts.

 

Free Cash Flow is a useful indicator of the Company’s ability to internally fund its activities, service or incur additional debt and estimate our ability to return capital to shareholders. There are significant limitations to using Free Cash Flow 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 Free Cash Flow reported by different companies. Free Cash Flow does 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 EBITDAX

 

Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), adjusted for certain items detailed below.

 

Adjusted EBITDAX as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, working capital movement, or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:

 

·is widely used by investors in the oil and natural gas industry to measure operating performance without regard to items excluded from the calculation of such term, which may vary substantially from company to company depending upon accounting methods and the 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 our operations from period to period by removing the effect of our capital and legal structure from our operating structure;

·is used by our management team for various purposes, including as a measure of our operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting: and

·is used by our Board of Directors as a performance measure in determining executive compensation.

 

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.

 

The GAAP measures most directly comparable to Adjusted EBITDAX are net income (loss) and net cash provided by operating activities. The following table represents a reconciliation of Antero’s net income (loss), including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of Antero’s Adjusted EBITDAX to net cash provided by operating activities per our consolidated statements of cash flows, in each case, for the three months ended September 30, 2022 and 2023. Adjusted EBITDAX also excludes the noncontrolling interests in Martica, and these adjustments are disclosed in the table below as Martica related adjustments.

 

6

 

   Three Months Ended September 30, 
   2022   2023 
Reconciliation of net income to Adjusted EBITDAX:          
Net income and comprehensive income attributable to Antero Resources Corporation  $559,759    17,808 
Net income and comprehensive income attributable to noncontrolling interests   34,748    14,834 
Unrealized commodity derivative gains   (109,424)   (9,172)
Amortization of deferred revenue, VPP   (9,478)   (7,701)
Loss (gain) on sale of assets   214    (136)
Interest expense, net   28,326    31,634 
Loss on early extinguishment of debt   30,307     
Loss on convertible note inducement   169     
Income tax expense   135,823    13,663 
Depletion, depreciation, amortization and accretion   170,237    177,148 
Impairment of property and equipment   33,924    13,476 
Exploration expense   1,263    591 
Equity-based compensation expense   10,402    18,458 
Equity in earnings of unconsolidated affiliate   (14,972)   (22,207)
Dividends from unconsolidated affiliate   31,285    31,285 
Contract termination, loss contingency, transaction expense and other   18,080    13,649 
    920,663    293,330 
Martica related adjustments (1)   (42,563)   (22,127)
Adjusted EBITDAX  $878,100    271,203 
           
Reconciliation of our Adjusted EBITDAX to net cash provided by operating activities:          
Adjusted EBITDAX  $878,100    271,203 
Martica related adjustments (1)   42,563    22,127 
Interest expense, net   (28,326)   (31,634)
Amortization of debt issuance costs, debt discount and debt premium   943    869 
Exploration expense   (1,263)   (591)
Changes in current assets and liabilities   213,999    (76,808)
Contract termination, loss contingency, transaction expense and other   (18,080)   (1,748)
Other items   (264)   (37)
Net cash provided by operating activities  $1,087,672    183,381 

 

(1)Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above.

 

   Twelve 
   Months Ended 
   September 30, 
   2023 
Reconciliation of net income to Adjusted EBITDAX:     
Net income and comprehensive income attributable to Antero Resources Corporation  $878,451 
Net income and comprehensive income attributable to noncontrolling interests   141,588 
Unrealized commodity derivative gains   (974,908)
Payments for derivative monetizations   202,339 
Amortization of deferred revenue, VPP   (32,330)
Gain on sale of assets   (2,047)
Interest expense, net   110,382 
Loss on early extinguishment of debt   652 
Loss on convertible note inducement   86 
Income tax expense   186,403 
Depletion, depreciation, amortization, and accretion   688,177 
Impairment of property and equipment   114,728 
Exploration   2,716 
Equity-based compensation expense   57,209 
Equity in earnings of unconsolidated affiliate   (76,450)
Dividends from unconsolidated affiliate   125,138 
Contract termination, loss contingency, transaction expense and other   55,542 
    1,477,676 
Martica related adjustments (1)   (114,896)
Adjusted EBITDAX  $1,362,780 

 

(1)Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above.

 

7

 

Drilling and Completion Capital Expenditures

 

For a reconciliation between cash paid for drilling and completion capital expenditures and drilling and completion accrued capital expenditures during the period, please see the capital expenditures section below (in thousands):

 

   Three Months Ended
September 30,
 
   2022   2023 
Drilling and completion costs (cash basis)  $195,587    242,261 
Change in accrued capital costs   31,539    (11,191)
Adjusted drilling and completion costs (accrual basis)  $227,126    231,070 

 

Notwithstanding their use for comparative purposes, the Company’s non-GAAP financial measures may not be comparable to similarly titled measures employed by other companies.

 

Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S. 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 not under Antero Resources’ control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as those regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management, return of capital, expected results, future commodity prices, future production targets, realizing potential future fee rebates or reductions, including those related to certain levels of production, future earnings, leverage targets and debt repayment, future capital spending plans, improved and/or increasing capital efficiency, estimated realized natural gas, NGL and oil prices, expected drilling and development plans, projected well costs and cost savings initiatives, future financial position, the participation level of our drilling partner and the financial and production results to be achieved as a result of that drilling partnership, the other key assumptions underlying our projections, 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 Resources 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. Except as required by law, Antero Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

 

Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond the Antero Resources’ control. These risks include, but are not limited to, commodity price volatility, inflation, supply chain or other disruption, lack of availability and cost of drilling, completion and production equipment and services and cost of drilling, completion and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes or changes in law, the uncertainty inherent in estimating natural gas, NGLs and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, impacts of geopolitical and world health events, cybersecurity risks, our ability to achieve our greenhouse gas reduction targets and the costs associated therewith, the state of markets for, and availability of, verified quality carbon offsets and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources’ Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

 

For more information, contact Daniel Katzenberg, Director - Finance and Investor Relations of Antero Resources at (303) 357-7219 or dkatzenberg@anteroresources.com.

 

8

 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

 

       (Unaudited) 
   December 31,   September 30, 
   2022   2023 
Assets          
Current assets:          
Accounts receivable  $35,488    36,928 
Accrued revenue   707,685    373,391 
Derivative instruments   1,900    2,563 
Prepaid expenses and other current assets   42,452    9,537 
Total current assets   787,525    422,419 
Property and equipment:          
Oil and gas properties, at cost (successful efforts method):          
Unproved properties   997,715    1,020,394 
Proved properties   13,234,777    13,773,718 
Gathering systems and facilities   5,802    5,802 
Other property and equipment   83,909    95,317 
    14,322,203    14,895,231 
Less accumulated depletion, depreciation and amortization   (4,683,399)   (4,957,449)
Property and equipment, net   9,638,804    9,937,782 
Operating leases right-of-use assets   3,444,331    3,128,584 
Derivative instruments   9,844    6,627 
Investment in unconsolidated affiliate   220,429    220,110 
Other assets   17,106    21,035 
Total assets  $14,118,039    13,736,557 
Liabilities and Equity          
Current liabilities:          
Accounts payable  $77,543    81,904 
Accounts payable, related parties   80,708    89,350 
Accrued liabilities   461,788    335,093 
Revenue distributions payable   468,210    338,244 
Derivative instruments   97,765    31,134 
Short-term lease liabilities   556,636    551,037 
Deferred revenue, VPP   30,552    27,990 
Other current liabilities   1,707    6,302 
Total current liabilities   1,774,909    1,461,054 
Long-term liabilities:          
Long-term debt   1,183,476    1,606,895 
Deferred income tax liability, net   759,861    805,775 
Derivative instruments   345,280    52,584 
Long-term lease liabilities   2,889,854    2,581,323 
Deferred revenue, VPP   87,813    67,524 
Other liabilities   59,692    63,214 
Total liabilities   7,100,885    6,638,369 
Commitments and contingencies          
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; 297,393 shares issued and 297,359 outstanding as of December 31, 2022, and 300,386 shares issued and outstanding as of September 30, 2023   2,974    3,004 
Additional paid-in capital   5,838,848    5,822,013 
Retained earnings   913,896    1,037,064 
Treasury stock, at cost; 34 shares and zero shares as of December 31, 2022 and September 30, 2023, respectively   (1,160)    
Total stockholders' equity   6,754,558    6,862,081 
Noncontrolling interests   262,596    236,107 
Total equity   7,017,154    7,098,188 
Total liabilities and equity  $14,118,039    13,736,557 

 

9

 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In thousands, except per share amounts)

 

   Three Months Ended September 30, 
   2022   2023 
Revenue and other:          
Natural gas sales  $1,736,039    516,214 
Natural gas liquids sales   620,816    482,570 
Oil sales   67,025    62,629 
Commodity derivative fair value gains (losses)   (530,523)   3,448 
Marketing   159,985    53,068 
Amortization of deferred revenue, VPP   9,478    7,701 
Other revenue and income   1,804    546 
Total revenue   2,064,624    1,126,176 
Operating expenses:          
Lease operating   27,453    33,484 
Gathering, compression, processing and transportation   716,388    671,886 
Production and ad valorem taxes   92,998    32,258 
Marketing   185,377    69,542 
Exploration and mine expenses   2,975    591 
General and administrative (including equity-based compensation expense of $10,402 and $18,458 in 2022 and 2023, respectively)   42,903    58,425 
Depletion, depreciation and amortization   169,607    176,259 
Impairment of property and equipment   33,924    13,476 
Accretion of asset retirement obligations   630    889 
Contract termination and loss contingency   17,995    13,659 
Loss (gain) on sale of assets   214    (136)
Other operating expense       111 
Total operating expenses   1,290,464    1,070,444 
Operating income   774,160    55,732 
Other income (expense):          
Interest expense, net   (28,326)   (31,634)
Equity in earnings of unconsolidated affiliate   14,972    22,207 
Loss on early extinguishment of debt   (30,307)    
Loss on convertible note inducement   (169)    
Total other expense   (43,830)   (9,427)
Income before income taxes   730,330    46,305 
Income tax expense   (135,823)   (13,663)
Net income and comprehensive income including noncontrolling interests   594,507    32,642 
Less: net income and comprehensive income attributable to noncontrolling interests   34,748    14,834 
Net income and comprehensive income attributable to Antero Resources Corporation  $559,759    17,808 
           
Income per share—basic  $1.83    0.06 
Income per share—diluted  $1.72    0.06 
           
Weighted average number of shares outstanding:          
Basic   305,343    300,141 
Diluted   325,997    311,534 

 

10

 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

   Nine Months Ended September 30, 
   2022   2023 
Cash flows provided by (used in) operating activities:          
Net income including noncontrolling interests  $1,231,844    225,911 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depletion, depreciation, amortization and accretion   515,268    518,218 
Impairments   79,749    44,746 
Commodity derivative fair value losses (gains)   1,807,565    (137,924)
Losses on settled commodity derivatives   (1,484,660)   (16,511)
Payments for derivative monetizations       (202,339)
Deferred income tax expense   307,326    45,914 
Equity-based compensation expense   23,222    44,988 
Equity in earnings of unconsolidated affiliate   (54,863)   (58,986)
Dividends of earnings from unconsolidated affiliate   93,854    93,854 
Amortization of deferred revenue   (28,125)   (22,852)
Amortization of debt issuance costs, debt discount and debt premium   3,458    2,601 
Settlement of asset retirement obligations   (946)   (633)
Contract termination and loss contingency       11,901 
Loss (gain) on sale of assets   2,071    (447)
Loss on early extinguishment of debt   45,375     
Loss on convertible note inducement   169    86 
Changes in current assets and liabilities:          
Accounts receivable   55,229    (1,440)
Accrued revenue   (332,900)   334,294 
Other current assets   (13,664)   32,584 
Accounts payable including related parties   59,222    12,236 
Accrued liabilities   36,632    (118,316)
Revenue distributions payable   237,453    (129,966)
Other current liabilities   (7,222)   4,627 
Net cash provided by operating activities   2,576,057    682,546 
Cash flows provided by (used in) investing activities:          
Additions to unproved properties   (120,139)   (139,121)
Drilling and completion costs   (589,093)   (759,852)
Additions to other property and equipment   (12,188)   (13,073)
Proceeds from asset sales   1,147    447 
Change in other assets   1,910    (2,538)
Net cash used in investing activities   (718,363)   (914,137)
Cash flows provided by (used in) financing activities:          
Repurchases of common stock   (675,412)   (75,356)
Repayment of senior notes   (1,011,313)    
Borrowings on bank credit facilities, net   9,000    439,300 
Payment of debt issuance costs   (814)    
Convertible note inducement   (169)   (86)
Distributions to noncontrolling interests in Martica Holdings LLC   (113,515)   (104,245)
Employee tax withholding for settlement of equity compensation awards   (65,029)   (27,443)
Other   (442)   (579)
Net cash provided by (used in) financing activities   (1,857,694)   231,591 
Net increase in cash and cash equivalents        
Cash and cash equivalents, beginning of period        
Cash and cash equivalents, end of period  $     
           
Supplemental disclosure of cash flow information:          
Cash paid during the period for interest  $148,668    100,067 
Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment  $23,633    (22,300)

 

11

 

The following table sets forth selected financial data for the three months ended September 30, 2022 and 2023:

 

   Three Months Ended   Amount of     
   September 30,   Increase   Percent 
   2022   2023   (Decrease)   Change 
Revenue:                    
Natural gas sales  $1,736,039    516,214    (1,219,825)   (70)%
Natural gas liquids sales   620,816    482,570    (138,246)   (22)%
Oil sales   67,025    62,629    (4,396)   (7)%
Commodity derivative fair value gains (losses)   (530,523)   3,448    533,971    * 
Marketing   159,985    53,068    (106,917)   (67)%
Amortization of deferred revenue, VPP   9,478    7,701    (1,777)   (19)%
Other revenue and income   1,804    546    (1,258)   (70)%
Total revenue   2,064,624    1,126,176    (938,448)   (45)%
Operating expenses:                    
Lease operating   27,453    33,484    6,031    22%
Gathering and compression   239,868    216,435    (23,433)   (10)%
Processing   241,347    264,391    23,044    10%
Transportation   235,173    191,060    (44,113)   (19)%
Production and ad valorem taxes   92,998    32,258    (60,740)   (65)%
Marketing   185,377    69,542    (115,835)   (62)%
Exploration and mine expenses   2,975    591    (2,384)   (80)%
General and administrative (excluding equity-based compensation)   32,501    39,967    7,466    23%
Equity-based compensation   10,402    18,458    8,056    77%
Depletion, depreciation and amortization   169,607    176,259    6,652    4%
Impairment of property and equipment   33,924    13,476    (20,448)   (60)%
Accretion of asset retirement obligations   630    889    259    41%
Contract termination and loss contingency   17,995    13,659    (4,336)   (24)%
Loss (gain) on sale of assets   214    (136)   (350)   * 
Other operating expense       111    111    * 
Total operating expenses   1,290,464    1,070,444    (220,020)   (17)%
Operating income   774,160    55,732    (718,428)   (93)%
Other earnings (expenses):                    
Interest expense, net   (28,326)   (31,634)   (3,308)   12%
Equity in earnings of unconsolidated affiliate   14,972    22,207    7,235    48%
Loss on early extinguishment of debt   (30,307)       30,307    * 
Loss on convertible note inducement   (169)       169    * 
Total other expense   (43,830)   (9,427)   34,403    (78)%
Income before income taxes   730,330    46,305    (684,025)   (94)%
Income tax expense   (135,823)   (13,663)   122,160    (90)%
Net income and comprehensive income including noncontrolling interests   594,507    32,642    (561,865)   (95)%
Less: net income and comprehensive income attributable to noncontrolling interests   34,748    14,834    (19,914)   (57)%
Net income and comprehensive income attributable to Antero Resources Corporation  $559,759    17,808    (541,951)   (97)%
                     
Adjusted EBITDAX  $878,100    271,203    (606,897)   (69)%

 

* Not meaningful

 

12

 

The following table sets forth selected financial data for the three months ended September 30, 2022 and 2023:

 

   Three Months Ended   Amount of     
   September 30,   Increase   Percent 
   2022   2023   (Decrease)   Change 
Production data (1) (2):                    
Natural gas (Bcf)   200    208    8    4%
C2 Ethane (MBbl)   5,010    6,696    1,686    34%
C3+ NGLs (MBbl)   9,950    10,977    1,027    10%
Oil (MBbl)   804    918    114    14%
Combined (Bcfe)   294    320    26    9%
Daily combined production (MMcfe/d)   3,200    3,474    274    9%
Average prices before effects of derivative settlements (3):                    
Natural gas (per Mcf)  $8.69    2.48    (6.21)   (71)%
C2 Ethane (per Bbl) (4)  $23.40    11.73    (11.67)   (50)%
C3+ NGLs (per Bbl)  $50.61    36.81    (13.80)   (27)%
Oil (per Bbl)  $83.41    68.22    (15.19)   (18)%
Weighted Average Combined (per Mcfe)  $8.23    3.32    (4.91)   (60)%
Average realized prices after effects of derivative settlements (3):                    
Natural gas (per Mcf)  $5.51    2.46    (3.05)   (55)%
C2 Ethane (per Bbl) (4)  $23.40    11.73    (11.67)   (50)%
C3+ NGLs (per Bbl)  $50.27    36.76    (13.51)   (27)%
Oil (per Bbl)  $82.76    67.91    (14.85)   (18)%
Weighted Average Combined (per Mcfe)  $6.06    3.30    (2.76)   (46)%
Average costs (per Mcfe):                    
Lease operating  $0.09    0.10    0.01    11%
Gathering and compression  $0.81    0.68    (0.13)   (16)%
Processing  $0.82    0.83    0.01    1%
Transportation  $0.80    0.60    (0.20)   (25)%
Production and ad valorem taxes  $0.32    0.10    (0.22)   (69)%
Marketing expense, net  $0.09    0.05    (0.04)   (44)%
General and administrative (excluding equity-based compensation)  $0.11    0.13    0.02    18%
Depletion, depreciation, amortization and accretion  $0.58    0.55    (0.03)   (5)%

 

(1)Production data excludes volumes related to the VPP.

(2)Oil and NGLs production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. This ratio is an estimate of the equivalent energy content of the products and may not reflect their relative economic value.

(3)Average prices reflect the before and after effects of our settled commodity derivatives. Our calculation of such after effects includes gains on settlements of commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes.

(4)The average realized price for the three months ended September 30, 2023 includes $6 million of proceeds related to a take-or-pay contract. Excluding the effect of these proceeds, the average realized price for ethane before and after the effects of derivatives would have been $10.88 per Bbl.

 

13

 

v3.23.3
Cover
Oct. 25, 2023
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Oct. 25, 2023
Entity File Number 001-36120
Entity Registrant Name ANTERO RESOURCES CORPORATION
Entity Central Index Key 0001433270
Entity Tax Identification Number 80-0162034
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 1615 Wynkoop Street
Entity Address, City or Town Denver
Entity Address, State or Province CO
Entity Address, Postal Zip Code 80202
City Area Code 303
Local Phone Number 357-7310
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 Per Share
Trading Symbol AR
Security Exchange Name NYSE
Entity Emerging Growth Company false

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