DENVER, Oct. 28, 2020 /PRNewswire/ -- Antero Resources
Corporation (NYSE: AR) ("Antero Resources", "Antero", or
the "Company") today announced its third quarter 2020
financial and operational results. The relevant unaudited
condensed consolidated financial statements are included in
Antero's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020.
Third Quarter Highlights Include:
- Net production averaged 3,772 MMcfe/d, including 220,000
Bbl/d of liquids (65% natural gas by volume)
- Realized natural gas equivalent price including hedges
averaged $2.92 per Mcfe, a
$0.94 premium to NYMEX
pricing
- Net loss was $536 million, due
to a $749 million unrealized
commodity hedge movement in fair value driven by the impact of a
10% increase in the natural gas strip during the quarter
- Adjusted EBITDAX was $272
million (Non-GAAP); net cash provided by operating
activities was $176 million
- Free Cash Flow before changes in working capital was
$88 million (Non-GAAP)
- Drilling and completion capital expenditures were
$161 million, down 11% sequentially
and 44% from the year ago period
- Well costs were $640 per
lateral foot including roads, pad and facility costs with an
average lateral length of 15,900 feet
- Net marketing expense was $0.11 per Mcfe, the lowest since Antero gained
access to its full firm transportation portfolio
-
- Realized a $38 million benefit
in September by using long-haul firm transportation portfolio
relative to selling gas in-basin, net of utilized transportation
expense and unutilized marketing expense
- Released 300 MMcf/d of firm transportation commitments
effective in 2021, reducing expected 2021 costs by $25 million
-
- A total of 810 MMcf/d of firm transportation is set to
expire by year end 2024, reducing annual net marketing expense by
$100 million
- Repurchased $461 million of
senior notes principal, inclusive of the previously announced
tender offers, at a 13% weighted average discount during the
quarter
-
- Repurchasing at a discount since 4Q 2019 has reduced total
debt by $220 million and annual
interest expense by $34
million
- Borrowing base under the credit facility was reaffirmed at
$2.85 billion, $210 million above the $2.64 billion of lender commitments
- Published annual Corporate Sustainability Report citing
industry-low greenhouse gas intensity, methane leak loss rate, no
gas flaring and set environmental reduction goals for 2025
Paul Rady, Chairman and Chief
Executive Officer of Antero Resources commented, "Our third quarter
results highlight the exceptional operational momentum that
continues at Antero. Our development program and well results
continue to exceed expectations, which drove the quarterly
production outperformance. Antero's long-haul firm
transportation portfolio allowed for no shut-ins or curtailments
and delivered gas sales at just $0.05
per Mcf below NYMEX prices during a period of wide regional basis
differentials. Our operational and strategic advantages
combined with an improving backdrop for natural gas and NGLs
support our expectation of significant free cash flow generation
during the second half of 2020.
Mr. Rady continued "Earlier this month we published our annual
Corporate Sustainability Report, which highlights our outstanding
environmental, social, and governance ("ESG") performance and
unwavering commitment to being an industry leader in ESG
metrics. We believe that natural gas will be key to the
energy transition over the coming decades as it compliments
renewable energy growth. As the third largest natural gas
producer in the U.S., we are well positioned to maintain our
peer-leading ESG position and be a natural gas provider of
choice. Finally, we are committed to improving our already
low greenhouse gas metrics even further as we work to achieve our
2025 environmental goals."
Glen Warren, CFO and President of
Antero Resources said, "We have delivered on our commitment to
reduce debt through a combination of $751
million of asset sales and debt repurchases at a
discount. Our debt repurchase program which we launched in
late 2019, has resulted in a $1.3
billion reduction in near-term maturities and the
elimination of $220 million of total
debt due to the realized discount. During the second half of
2020, we expect to generate $175 to
$200 million in free cash flow, based
on today's strip prices, and to receive the first of two
$51 million contingency payments from
our overriding royalty holder, Sixth Street Partners, providing
additional funds for debt retirement. By year-end 2020 we
estimate that Antero will have reduced total debt by over
$800 million. Longer term, we
are committed to maximizing free cash flow and further reducing
total debt and financial leverage."
For a discussion of the non-GAAP financial measures including
Adjusted EBITDAX and Free Cash Flow please see "Non-GAAP Financial
Measures."
Asset Sale Program Update
Since the announcement of the Company's $750 million to $1
billion asset sale target in December
2019, Antero has closed $751
million of transactions as detailed in the table
below. Proceeds received to date have been used to repurchase
debt at a discount. The Company intends to continue to
evaluate other opportunities for asset monetizations with the
proceeds earmarked for further debt reduction.
|
$M
|
Antero Midstream
Common Stock Sale (December 2019)
|
$100,000
|
ORRI Transaction
(June 2020)(1)
|
$402,000
|
Hedge Monetization
(July 2020)(2)
|
$29,000
|
VPP Transaction
(August 2020)
|
$220,000
|
Total Asset Sale
Proceeds to Date
|
$751,000
|
|
|
(1)
|
Includes $102 million
of contingent payments, $51 million of which was earned based on
volume thresholds met during the third quarter of 2020. The
remainder may be earned based on achieving volume thresholds
through the first quarter of 2021.
|
(2)
|
Includes hedge
monetization related to the ORRI transaction that resulted in
Antero being over-hedged on natural gas.
|
Debt Repurchases
Antero repurchased $461 million
principal amount of senior notes during the third quarter of 2020
at a 13% weighted average discount price. The total includes
the results of the completed tender offer for Antero's senior notes
maturing in 2021, 2022 and 2023. The repurchase discount during the
third quarter reduced total indebtedness by $59 million. Since the commencement of the
debt repurchase program in the fourth quarter of 2019, Antero has
repurchased $1.3 billion of debt
principal at a 17% weighted average discount. This discount
alone reduced total indebtedness by $220
million, while interest expense has been reduced by
$34 million on an annualized
basis.
The table below shows the principal amount of our senior notes
repurchased between September 30,
2019 and 2020.
|
|
Par Value
at September
30,
|
|
Principal
Repurchased
|
|
Repurchase Cost
|
Discount
Realized
|
($M)
|
|
2019
|
|
2020
|
|
|
|
|
|
5.375% Senior Notes
Due 2021
|
$
|
1,000,000
|
$
|
315,279
|
$
|
(684,721)
|
$
|
(596,648)
|
(13%)
|
5.375% Senior Notes
Due 2022
|
|
1,100,000
|
|
660,516
|
|
(439,484)
|
|
(355,437)
|
(19%)
|
5.375% Senior Notes
Due 2023
|
|
750,000
|
|
579,232
|
|
(170,768)
|
|
(127,485)
|
(25%)
|
5.375% Senior Notes
Due 2025
|
|
600,000
|
|
590,000
|
|
(10,000)
|
$
|
(6,364)
|
(36%)
|
Total
|
$
|
3,450,000
|
$
|
2,145,027
|
$
|
(1,304,973)
|
|
(1,085,934)
|
(17%)
|
Borrowing Base Redetermination Completed
As a result of the recently completed October 2020 borrowing base redetermination, the
borrowing base under Antero Resources' credit facility was
reaffirmed at $2.85 billion.
Lender commitments under the credit facility remained at
$2.64 billion, supported by 24
banks. Antero has $1.1 billion
in available liquidity under its credit facility as of September 30, 2020.
Firm Transportation Commitments
Antero's firm transportation commitments will decline by 810
MMcf/d by year end 2024 at Antero's option. Of that, 300 MMcf/d of
firm transportation commitments will expire during 2021 and notice
has been given to the pipeline counterparties to that effect.
If Antero elects to release the remaining 510 MMcf/d, the annual
reduction in demand fees will total $100
million by 2024. The released commitment volumes are
expected to reduce net marketing expense by approximately
$25 million in 2021 and $60 million in 2022, as compared to 2020 levels,
assuming maintenance level capital spending.
Third quarter net marketing expense of $0.11 per Mcfe was the lowest since Antero's full
firm transportation portfolio was completed in 2018. As basis
differentials widened during the third quarter of 2020, Antero's
firm transportation portfolio allowed for the flow of its
production without any shut-ins or curtailments and shielded it
from the wide regional basis to NYMEX prices. During the
month of September, when the regional basis differential expanded
to over $1.50 per Mcf, Antero's firm
transportation provided a $38 million
benefit relative to selling gas in-basin, net of utilized
transportation expense and unutilized marketing expense. The
wide basis differentials continued during October and Antero
experienced similar benefits from its firm transportation
portfolio.
Third Quarter 2020 Free Cash Flow
Antero generated $88 million in
Free Cash Flow before changes in working capital during the third
quarter. After adjusting for working capital investments of
$80 million during the quarter, Free
Cash Flow was $7 million. Antero
expects working capital adjustments to reverse during the fourth
quarter of 2020 and continues to expect Free Cash Flow of
$175 to $200
million during the second half of 2020, assuming strip
pricing.
|
|
Three Months
Ended
September 30,
|
|
($MM)
|
|
2019
|
|
2020
|
|
Net Cash Provided by
Operating Activities
|
$
|
198,410
|
$
|
175,870
|
|
Less: Capital
Expenditures
|
|
(290,825)
|
|
(151,157)
|
|
Less: Distributions to
Non-Controlling Interests
|
|
—
|
|
(17,249)
|
|
Free Cash
Flow
|
$
|
(92,415)
|
$
|
7,464
|
|
Changes in Working
Capital
|
|
13,653
|
|
80,308
|
|
Free Cash Flow
before changes in working capital
|
$
|
(78,762)
|
$
|
87,772
|
|
Corporate Sustainability Report
Antero published its 2019 Corporate Sustainability Report
("CSR") in October detailing the Company's ongoing commitment to
environmental excellence, strong governance, safe operations and
the communities in which it operates. The report highlights
Antero's leadership in greenhouse gas (GHG) intensity, methane leak
loss rate and safety metrics. Within the report, Antero set
in place year 2025 environmental goals which include a 50%
reduction in its 2019 methane leak loss rate to under 0.025%, a 10%
reduction in GHG intensity, alignment with TCFD and SASB reporting
guidelines and endeavoring to achieve net zero carbon emissions
through operational improvements and carbon offsets.
The Company believes that natural gas will be key to the energy
transition and the ability to address the risks associated with
climate change. As the lightest and least GHG intensive
hydrocarbon, natural gas is as important as wind and solar in the
energy mix that allows the U.S. and the globe to transition to a
lower carbon energy future. The CSR press release and full
report is available at
www.anteroresources.com/sustainability/founders-message.
Information on the Company's website does not constitute a portion
of, and is not incorporated by reference into, this press
release.
COVID-19 Pandemic Developments
As a producer of natural gas, NGLs and oil, Antero Resources is
recognized as an essential business under various federal, state
and local regulations related to the COVID-19 pandemic and the
communities in which it operates. The Company has continued to
operate under these regulations, while taking steps to protect the
health and safety of its workers. Antero has implemented
protocols to reduce the risk of an outbreak within its field
operations, and these protocols have not had an impact on
production or performance. A substantial portion of the
Company's non-field level employees have transitioned to remote
work from home arrangements. Antero has been able to maintain
a consistent level of effectiveness, including maintaining
day-to-day operations and decision making, and financial reporting
systems and internal control over financial reporting. For
more information, please see Antero's Quarterly Report on Form 10-Q
for the quarter ended September 30,
2020.
Third Quarter 2020 Financial Results
For the three months ended September 30,
2020, Antero reported a GAAP net loss of $536 million, or $1.99 per diluted share, compared to a GAAP net
loss of $879 million, or $2.86 per diluted share, in the prior year
period. The loss was driven by a $749
million unrealized commodity derivative fair value loss as a
result of the 10% rise in the natural gas strip pricing during the
quarter. Adjusted Net Income (non-GAAP measure) was
$15 million, or $0.05 per diluted share, compared to Adjusted Net
Loss of $150 million during the three
months ended September 30, 2019, or
$0.49 per diluted share.
Adjusted EBITDAX (non-GAAP measure) was $272 million, a 5% increase compared to the prior
year period driven by lower operating costs and increased
production. Antero's average realized gas equivalent price
after hedges declined by 7% from $3.13 per Mcfe in the third quarter of 2019 to
$2.92 per Mcfe in the third quarter
of 2020, a $0.94 per Mcf premium to
NYMEX pricing.
The following table details the components of average net
production and average realized prices for the three months ended
September 30, 2020:
|
|
Three months ended
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
Natural
|
|
|
|
Natural
Gas
|
|
Oil
|
|
C3+
NGLs
|
|
Ethane
|
|
Gas
Equivalent
|
|
|
|
(MMcf/d)
|
|
(Bbl/d)
|
|
(Bbl/d)
|
|
(Bbl/d)
|
|
(MMcfe/d)
|
|
Average Net
Production
|
|
|
2,453
|
|
|
14,860
|
|
|
145,654
|
|
|
59,345
|
|
|
3,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural
|
|
|
|
Natural
Gas
|
|
Oil
|
|
C3+
NGLs
|
|
Ethane
|
|
Gas
Equivalent
|
|
Average Realized
Prices
|
|
($/Mcf)
|
|
($/Bbl)
|
|
($/Bbl)
|
|
($/Bbl)
|
|
($/Mcfe)
|
|
Average realized
prices before settled derivatives
|
|
$
|
1.93
|
|
$
|
25.07
|
|
$
|
22.01
|
|
$
|
5.94
|
|
$
|
2.30
|
|
Settled commodity
derivatives
|
|
|
0.80
|
|
|
9.89
|
|
|
1.80
|
|
|
(0.27)
|
|
|
0.62
|
|
Average realized
prices after settled derivatives
|
|
$
|
2.73
|
|
$
|
34.96
|
|
$
|
23.81
|
|
$
|
5.67
|
|
$
|
2.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX average
price
|
|
$
|
1.98
|
|
$
|
40.89
|
|
|
|
|
|
|
|
$
|
1.98
|
|
Premium /
(Differential) to NYMEX
|
|
$
|
0.75
|
|
$
|
(5.93)
|
|
|
|
|
|
|
|
$
|
0.94
|
|
Net daily natural gas equivalent production in the third quarter
averaged 3,772 MMcfe/d, including 219,859 Bbl/d of liquids (65%
natural gas by volume), a new company record. Net production
increased 12% from the prior year period. Throughput on
Antero Midstream's low pressure gathering system was in excess of
the third quarter 2020 growth incentive fee threshold of 2,800
MMcf/d, resulting in a $12 million
rebate to Antero Resources.
Antero's average realized natural gas price before hedging was
$1.93 per Mcf, representing a
23% decrease versus the prior year period. Despite a sharp widening
in the regional basis differential during the quarter, Antero
realized a $0.05 per Mcf discount to
the average NYMEX Henry Hub price through the use of its premium
firm transportation to NYMEX-based markets. Antero expects
its pre-hedge natural gas differentials to return to a $0.00 to $0.10
premium to NYMEX in the fourth quarter of 2020. Including
hedges, Antero's average realized natural gas price was
$2.73 per Mcf, a $0.75 premium to the average NYMEX
price.
Antero's average realized C3+ NGL price before hedging was
$22.01 per barrel, a 47% sequential
improvement and a 2% decrease versus the prior year period.
Antero shipped 49% of its total C3+ NGL net production on Mariner
East 2 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 51% of C3+ NGL net production at a $0.10 per gallon discount to Mont Belvieu pricing
at Hopedale, OH. The resulting blended price on 145,654 Bbl/d
of net C3+ NGL production was $22.01
per barrel, which was a $0.02 per
gallon discount to Mont Belvieu pricing. Antero expects to
sell at least 50% of its C3+ NGL production in 2020 at Marcus Hook
for export at a premium to Mont
Belvieu.
|
|
Three months ended
September 30, 2020
|
|
|
Pricing
Point
|
|
Net C3+
NGL
Production
(Bbl/d)
|
|
% by
Destination
|
|
Premium
(Discount)
To Mont
Belvieu
($/Gal)
|
Propane / Butane
exported on ME2
|
Marcus Hook,
PA
|
|
71,426
|
|
49%
|
|
$0.06
|
Remaining C3+ NGL
volume
|
Hopedale,
OH
|
|
74,228
|
|
51%
|
|
($0.10)
|
Total C3+
NGLs/Blended Premium
|
|
|
|
145,654
|
|
100%
|
|
($0.02)
|
All-in cash expense, which includes lease operating, gathering,
compression, processing and transportation, production and ad
valorem taxes, net marketing, and general and administrative
expense (excluding equity-based compensation) was $2.21 per Mcfe in the third quarter, a 10%
decrease compared to $2.46 per Mcfe
average during the third quarter of 2019. Lease operating
expense was $0.06 per Mcfe in the
third quarter, a 50% decline from $0.12 per Mcfe in the year ago period driven by a
decrease in water handling costs as Antero increased water blending
and reuse in completion operations. G&A expense was
$0.07 per Mcfe, a 30% decrease from
the third quarter of 2019 primarily due to a lower employee
headcount and a 12% increase in production.
Per unit net marketing expense declined to $0.11 per Mcfe in the third quarter, compared to
$0.20 per Mcfe reported in the prior
year period. The decline was driven primarily by higher
production volumes during the quarter and wide regional basis
differentials resulting in less unutilized transportation
capacity.
Third Quarter 2020 Operating Update
Marcellus Shale —
Antero placed 27 horizontal Marcellus wells to sales during the
third quarter with an average lateral length of 11,937 feet.
Fifteen of the 27 new wells have been on-line for at least 60 days
and the average 60-day rate per well was 24.5 MMcfe/d, including
approximately 1,169 Bbl/d of liquids assuming 25% ethane
recovery. Year-to-date, Antero has averaged over 6,000 feet
per day drilling the lateral section of its wells.
Additionally, Antero's ongoing emphasis on completion efficiencies
resulted in an improvement during the third quarter to 8.5 stages
completed per day.
These efficiency gains led to average all-in well costs of
$675 per lateral foot, normalized to
a 12,000 foot lateral. This represents a 30% reduction in
all-in well cost per lateral foot since the beginning of
2019. The vast majority of the improvement in well costs has
been driven by operational efficiency and process changes.
Actual well costs averaged $640 per
lateral foot during the third quarter as the average lateral length
drilled was 15,900 feet. All-in well costs are expected to
average $675 per lateral during the
fourth quarter for a 12,000 foot lateral. Antero currently
has one drilling rig and one completion crew running.
Third Quarter 2020 Capital Investment
Antero's drilling and completion capital expenditures for the
three months ended September 30,
2020, were $161 million.
Through the first nine months of 2020, Antero has turned in line 96
of the projected 105 well completions planned for the year.
Antero anticipates a decline in capital spending during the fourth
quarter of 2020, reflecting reduced drilling and completion
activity with full year drilling and capital spend of $750 million, unchanged from prior
guidance. In addition to capital invested in drilling and
completion costs, the Company invested $10
million in land during the third quarter. For a
reconciliation of accrued capital expenditures to cash capital
expenditures see the table on page 11.
Balance Sheet and Liquidity
As of September 30, 2020, Antero's
total debt was $3.2 billion, of which
$827 million were borrowings
outstanding under the Company's revolving credit facility.
Antero has a borrowing base of $2.85
billion with lender commitments that total $2.64 billion. After deducting letters of
credit outstanding of $730 million,
the Company had $1.1 billion in
available liquidity at September 30,
2020. Net debt to trailing twelve month Adjusted EBITDA ratio
was 3.2x as of September 30, 2020,
down from the prior quarter's ratio of 3.6x.
Commodity Derivative Positions
Antero had realized hedge gains of $234
million during the third quarter and $759 million during the first nine months of
2020. The Company has hedged 1.3 Tcf of natural gas at a
weighted average index price of $2.68
per MMBtu through 2023 with fixed price swap positions.
Antero also has oil, NGL and ethane fixed price swap positions,
including oil positions that total 26,000 Bbl/d, NGL positions that
total 10,315 Bbl/d and ethane positions that total 24,500 Bbl/d
during the fourth quarter of 2020.
Please see Antero's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2020, for
more information on all commodity derivative positions, including
basis swaps and natural gas calls.
The following tables summarize Antero's hedge position as of
September 30, 2020:
Fixed price natural gas positions from October 1, 2020 through December 31, 2023 were as follows:
|
|
|
|
|
|
|
|
|
Natural gas
MMBtu/day
|
|
Weighted
average index
price
|
|
Year ending
December 31, 2020:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
2,067,500
|
|
|
$2.84
|
|
Year ending
December 31, 2021:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
2,160,000
|
|
|
$2.77
|
|
Year ending
December 31, 2022:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
905,897
|
|
|
$2.43
|
|
Year ending
December 31, 2023:
|
|
|
|
|
|
|
NYMEX
($/MMBtu)
|
|
43,000
|
|
|
$2.37
|
|
C3+ NGL, ethane and oil derivative contract positions from
October 1, 2020 through December 31, 2020 were as follows:
|
Derivative
Contract
Type
|
Liquids
Hedges (Bbl/d)
|
|
Weighted
average
index price
($/Gal)
|
Weighted
average basis
differential
$/Gal
|
Weighted
average
index price
($/Bbl)
|
Year ending
December 31, 2020:
|
|
|
|
|
|
|
Total Propane (C3)
– ARA (Europe) (1)
|
Fixed
swap
|
10,315
|
|
$0.55
|
|
$23.10
|
|
|
|
|
|
|
|
Total OPIS Ethane
Mt Belvieu
|
Fixed
swap
|
24,500
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
Total NYMEX Crude
Oil (2)
|
|
26,000
|
|
|
|
$55.63
|
|
(1)
|
Net of shipping.
Assumes $0.10/gal shipping to ARA.
|
(2)
|
Hedged 20,000 Bbl/d
of pentane (C5) at 80% of WTI and hedged the resulting 26,000 Bbl/d
of oil-equivalent volumes at $55.63/Bbl WTI on average (80% x
$55.63 = $44.52/Bbl pentane).
|
Guidance
All guidance not discussed in this release is unchanged from
previously stated guidance.
2020 Asset Sales Program Accounting Treatment
For the three months and nine months ended September 30, 2020, Martica Holdings, LLC
("Martica"), the entity associated with the previously announced
ORRI transaction, is consolidated in the Company's consolidated
financial statements. All significant intercompany accounts
and transactions have been eliminated in the Company's unaudited
condensed consolidated financial statements. The
noncontrolling interest in the Company's unaudited condensed
consolidated financial statements for the three and nine months
ended September 30, 2020 represents
the interest in Martica, which is the entity established with the
overriding royalty sale, not owned by Antero.
Under the VPP transaction entered into during the third quarter
of 2020, all production volumes and reserves are treated as a
divestiture and not included in the results. Net proceeds are
recognized as deferred revenue as of September 30, 2020. Deferred revenue is
recognized as volumes are delivered using the unit-of-production
method over the term of the VPP.
For more information, please see Antero's Quarterly Report on
Form 10-Q for the quarter ended September
30, 2020.
Conference Call
A conference call is scheduled on Thursday, October 29, 2020 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 for
the quarter. 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 5,
2020 at 9:00 am MT at
877-660-6853 (U.S.) or 201-612-7415 (International) using the
conference ID: 13703919.
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, November 5, 2020 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.
Non-GAAP Financial Measures
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) as set forth in this release
represents net income (loss), 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 (loss) as an indicator of financial performance. The
following tables reconcile net income (loss) to Adjusted Net
Income (Loss) (in thousands):
|
|
Three months ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Net loss attributable
to Antero Resources Corp
|
|
$
|
(878,864)
|
|
$
|
(535,613)
|
|
Unrealized commodity
derivative gains (losses)
|
|
|
(100,785)
|
|
|
748,791
|
|
Amortization of
deferred revenue, VPP
|
|
|
—
|
|
|
(5,175)
|
|
Impairment of oil and
gas properties
|
|
|
1,041,469
|
|
|
29,392
|
|
Impairment of
midstream assets
|
|
|
7,800
|
|
|
—
|
|
Equity-based
compensation
|
|
|
3,875
|
|
|
5,699
|
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
(55,633)
|
|
(Gain) loss on sale of
assets
|
|
|
—
|
|
|
—
|
|
Contract termination
and rig stacking
|
|
|
62
|
|
|
1,246
|
|
Tax effect of
reconciling items (1)
|
|
|
(223,342)
|
|
|
(174,008)
|
|
Adjusted Net Income
(Loss)
|
|
$
|
(149,785)
|
|
$
|
14,699
|
|
|
|
|
|
|
|
|
|
Fully Diluted Shares
Outstanding
|
|
|
307,781
|
|
|
268,511
|
|
(1) Deferred taxes
were approximately 23% for 2019 and 24% for 2020.
Per Share Amounts
|
|
Three months ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Net loss attributable
to Antero Resources Corp
|
|
$
|
(2.86)
|
|
|
(1.99)
|
|
Unrealized commodity
derivative gains (losses)
|
|
|
(0.33)
|
|
|
2.79
|
|
Amortization of
deferred revenue
|
|
|
—
|
|
|
(0.02)
|
|
Impairment of oil and
gas properties
|
|
|
3.38
|
|
|
0.11
|
|
Impairment of
midstream assets
|
|
|
0.03
|
|
|
—
|
|
Equity-based
compensation
|
|
|
0.02
|
|
|
0.02
|
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
(0.21)
|
|
(Gain) loss on sale of
assets
|
|
|
—
|
|
|
—
|
|
Contract termination
and rig stacking
|
|
|
—
|
|
|
—
|
|
Tax effect of
reconciling items (1)
|
|
|
(0.73)
|
|
|
(0.65)
|
|
Adjusted Net Income
(Loss)
|
|
$
|
(0.49)
|
|
|
0.05
|
|
(1) Deferred taxes
were approximately 23% for 2019 and 24% for 2020.
Net Debt
Net Debt is calculated as total 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 debt to Net
Debt as used in this release (in thousands):
|
|
December
31,
|
|
September 30,
|
|
|
|
2019
|
|
2020
|
|
AR bank credit
facility
|
|
$
|
552,000
|
|
|
827,000
|
|
5.375% AR senior
notes due 2021
|
|
|
952,500
|
|
|
315,279
|
|
5.125% AR senior
notes due 2022
|
|
|
923,041
|
|
|
660,516
|
|
5.625% AR senior
notes due 2023
|
|
|
750,000
|
|
|
579,232
|
|
5.000% AR senior
notes due 2025
|
|
|
600,000
|
|
|
590,000
|
|
4.250% AR convertible
senior notes due 2026
|
|
|
—
|
|
|
287,500
|
|
Net unamortized
premium
|
|
|
791
|
|
|
(83,658)
|
|
Net unamortized debt
issuance costs
|
|
|
(19,464)
|
|
|
(17,644)
|
|
Consolidated total
debt
|
|
$
|
3,758,868
|
|
|
3,158,225
|
|
Less: AR cash and cash
equivalents
|
|
|
—
|
|
|
—
|
|
Net Debt
|
|
$
|
3,758,868
|
|
|
3,158,225
|
|
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 drilling and completion
capital and leasehold capital, 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 and to service or incur additional
debt. 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.
Through March 12, 2019, the
financial results of Antero Midstream Partners were included in our
consolidated results. Effective March
13, 2019, we no longer consolidate Antero Midstream Partners
and account for our interest in Antero Midstream using the equity
method of accounting. Adjusted EBITDAX includes distributions
received with respect to limited partner interests in Antero
Midstream Partners common units through March 12, 2019.
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 following table represents a reconciliation of our net
income (loss), including noncontrolling interest, to Adjusted
EBITDAX and a reconciliation of our Adjusted EBITDAX to net cash
provided by operating activities per our unaudited condensed
consolidated statements of cash flows, in each case, for the three
and nine months ended September 30,
2019 and 2020. Adjusted EBITDAX also excludes the
noncontrolling interests in Martica and these adjustments are
disclosed in the table below as Martica related adjustments.
|
|
Three months
ended
|
|
|
|
September 30,
|
|
(in
thousands)
|
|
2019
|
|
2020
|
|
Reconciliation of
net income (loss) to Adjusted EBITDAX:
|
|
|
|
|
|
|
|
Net income (loss) and
comprehensive income (loss) attributable to Antero Resources
Corporation
|
|
$
|
(878,864)
|
|
|
(535,613)
|
|
Net income (loss) and
comprehensive income (loss) attributable to noncontrolling
interests
|
|
|
—
|
|
|
(18,233)
|
|
Depletion,
depreciation, amortization, and accretion
|
|
|
242,430
|
|
|
239,533
|
|
Impairment of oil and
gas properties
|
|
|
1,041,469
|
|
|
29,392
|
|
Impairment of
midstream assets
|
|
|
7,800
|
|
|
—
|
|
Unrealized commodity
derivative gains (losses)
|
|
|
(100,785)
|
|
|
748,791
|
|
Proceeds from
derivative monetizations
|
|
|
—
|
|
|
(18,073)
|
|
Amortization of
deferred revenue, VPP
|
|
|
—
|
|
|
(5,175)
|
|
Equity-based
compensation expense
|
|
|
3,875
|
|
|
5,699
|
|
Provision for income
tax expense (benefit)
|
|
|
(272,627)
|
|
|
(168,778)
|
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
(55,633)
|
|
Equity in (earnings)
loss of unconsolidated affiliates
|
|
|
117,859
|
|
|
(24,419)
|
|
Distributions/dividends from unconsolidated
affiliates
|
|
|
48,714
|
|
|
42,755
|
|
Interest expense,
net
|
|
|
47,754
|
|
|
48,043
|
|
Exploration
expense
|
|
|
208
|
|
|
454
|
|
Contract termination
and rig stacking
|
|
|
62
|
|
|
1,246
|
|
Transaction
expense
|
|
|
—
|
|
|
524
|
|
|
|
|
257,895
|
|
|
290,513
|
|
Antero Midstream
Partners related adjustments (2)
|
|
|
—
|
|
|
—
|
|
Martica related
adjustments (2)
|
|
|
—
|
|
|
(18,072)
|
|
Adjusted
EBITDAX
|
|
$
|
257,895
|
|
|
272,441
|
|
|
|
|
|
|
|
|
|
Reconciliation of
our Adjusted EBITDAX to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Adjusted
EBITDAX
|
|
$
|
257,895
|
|
|
272,441
|
|
Martica related
adjustments (2)
|
|
|
—
|
|
|
18,072
|
|
Interest expense,
net
|
|
|
(47,754)
|
|
|
(48,043)
|
|
Exploration
expense
|
|
|
(208)
|
|
|
(454)
|
|
Changes in current
assets and liabilities
|
|
|
(13,653)
|
|
|
(86,618)
|
|
Transaction
expense
|
|
|
—
|
|
|
(524)
|
|
Proceeds from
derivative monetizations
|
|
|
—
|
|
|
18,073
|
|
Other items
|
|
|
2,130
|
|
|
2,923
|
|
Net cash provided by
operating activities
|
|
$
|
198,410
|
|
|
175,870
|
|
|
|
(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 for Adjusted
EBITDAX only reflect derivatives that settled during the
period. Adjusted EBITDAX does not include proceeds from
derivatives monetizations.
|
(2)
|
Adjustments
reflect noncontrolling interests in Martica not otherwise adjusted
in amounts above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended
|
|
(in
thousands)
|
|
|
September 30,
2020
|
|
Reconciliation of
net loss to Adjusted EBITDAX:
|
|
|
|
|
Net loss and
comprehensive loss attributable to Antero Resources
Corporation
|
|
$
|
(1,819,923)
|
|
Net loss and
comprehensive loss attributable to noncontrolling
interests
|
|
|
(17,997)
|
|
Depletion,
depreciation, amortization, and accretion
|
|
|
847,262
|
|
Impairment of oil and
gas properties
|
|
|
202,694
|
|
Unrealized commodity
derivative gains (losses)
|
|
|
946,982
|
|
Proceeds from
derivative monetizations
|
|
|
(18,073)
|
|
Amortization of
deferred revenue, VPP
|
|
|
(5,175)
|
|
Equity-based
compensation expense
|
|
|
21,233
|
|
Provision for income
tax benefit
|
|
|
(528,609)
|
|
Gain on early
extinguishment of debt
|
|
|
(211,784)
|
|
Equity in loss of
unconsolidated affiliates
|
|
|
136,431
|
|
Impairment of equity
investment
|
|
|
1,078,222
|
|
Distributions/dividends from unconsolidated
affiliates
|
|
|
176,982
|
|
Loss on sale of equity
investments
|
|
|
108,745
|
|
Water
earnout
|
|
|
(125,000)
|
|
Interest expense,
net
|
|
|
207,199
|
|
Exploration
expense
|
|
|
1,131
|
|
Contract termination
and rig stacking
|
|
|
12,317
|
|
Transaction
fees
|
|
|
6,662
|
|
Martica Holdings, LLC
related adjustments
|
|
|
(21,172)
|
|
Adjusted
EBITDAX
|
|
$
|
998,127
|
|
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,
|
|
|
|
|
2019
|
|
2020
|
|
Drilling and
completion capital expenditures (as reported; cash
basis)
|
|
|
$
|
277,843
|
|
|
141,693
|
|
Change in accrued
capital costs
|
|
|
|
12,102
|
|
|
19,373
|
|
Accrued drilling and
completion capital expenditures (accrual basis)
|
|
|
$
|
289,945
|
|
|
161,066
|
|
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 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, asset monetization
opportunities and pricing, 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 amount and
timing of any litigation settlements or awards, future marketing
opportunities and Antero Resources' environmental goals 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, 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, impacts of world
health event, including the COVID-19 pandemic, potential shut-ins
of production due to lack of downstream demand or storage capacity
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, 2019 and in
its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020.
ANTERO RESOURCES
CORPORATION
|
Consolidated Balance
Sheets
|
December 31,
2019 and September 30, 2020
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
December
31,
|
|
September
30,
|
|
|
|
2019
|
|
2020
|
|
Assets
|
|
Current
assets:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$
|
46,419
|
|
|
88,062
|
|
Accounts receivable,
related parties
|
|
|
125,000
|
|
|
—
|
|
Accrued
revenue
|
|
|
317,886
|
|
|
338,729
|
|
Derivative
instruments
|
|
|
422,849
|
|
|
83,057
|
|
Other current
assets
|
|
|
10,731
|
|
|
11,934
|
|
Total current
assets
|
|
|
922,885
|
|
|
521,782
|
|
Property and
equipment:
|
|
|
|
|
|
|
|
Oil and gas
properties, at cost (successful efforts method):
|
|
|
|
|
|
|
|
Unproved
properties
|
|
|
1,368,854
|
|
|
1,265,255
|
|
Proved
properties
|
|
|
11,859,817
|
|
|
12,149,941
|
|
Gathering systems and
facilities
|
|
|
5,802
|
|
|
5,802
|
|
Other property and
equipment
|
|
|
71,895
|
|
|
72,936
|
|
|
|
|
13,306,368
|
|
|
13,493,934
|
|
Less accumulated
depletion, depreciation, and amortization
|
|
|
(3,327,629)
|
|
|
(3,659,376)
|
|
Property and
equipment, net
|
|
|
9,978,739
|
|
|
9,834,558
|
|
Operating leases
right-of-use assets
|
|
|
2,886,500
|
|
|
2,660,188
|
|
Derivative
instruments
|
|
|
333,174
|
|
|
44,070
|
|
Investment in
unconsolidated affiliate
|
|
|
1,055,177
|
|
|
272,926
|
|
Other
assets
|
|
|
21,094
|
|
|
16,215
|
|
Total
assets
|
|
$
|
15,197,569
|
|
|
13,349,739
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
14,498
|
|
|
55,173
|
|
Accounts payable,
related parties
|
|
|
97,883
|
|
|
81,519
|
|
Accrued
liabilities
|
|
|
400,850
|
|
|
344,606
|
|
Revenue distributions
payable
|
|
|
207,988
|
|
|
148,917
|
|
Derivative
instruments
|
|
|
6,721
|
|
|
107,933
|
|
Short-term lease
liabilities
|
|
|
305,320
|
|
|
251,568
|
|
Deferred revenue,
VPP
|
|
|
—
|
|
|
43,192
|
|
Other current
liabilities
|
|
|
6,879
|
|
|
2,467
|
|
Total current
liabilities
|
|
|
1,040,139
|
|
|
1,035,375
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
3,758,868
|
|
|
3,158,225
|
|
Deferred income tax
liability
|
|
|
781,987
|
|
|
381,233
|
|
Derivative
instruments
|
|
|
3,519
|
|
|
149,222
|
|
Long-term lease
liabilities
|
|
|
2,583,678
|
|
|
2,410,114
|
|
Deferred revenue,
VPP
|
|
|
—
|
|
|
167,466
|
|
Other
liabilities
|
|
|
58,635
|
|
|
64,223
|
|
Total
liabilities
|
|
|
8,226,826
|
|
|
7,365,858
|
|
Commitments and
contingencies (Notes 14 and 15)
|
|
|
|
|
|
|
|
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; 295,941 shares and
268,549 shares issued and
outstanding at December 31, 2019 and September
30, 2020, respectively
|
|
|
2,959
|
|
|
2,685
|
|
Additional paid-in
capital
|
|
|
6,130,365
|
|
|
6,165,750
|
|
Accumulated earnings
(deficit)
|
|
|
837,419
|
|
|
(500,308)
|
|
Total stockholders'
equity
|
|
|
6,970,743
|
|
|
5,668,127
|
|
Noncontrolling
interests
|
|
|
—
|
|
|
315,754
|
|
Total
equity
|
|
|
6,970,743
|
|
|
5,983,881
|
|
Total liabilities and
equity
|
|
$
|
15,197,569
|
|
|
13,349,739
|
|
ANTERO RESOURCES
CORPORATION
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
Three Months Ended
September 30, 2019 and 2020
|
(Unaudited)
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Revenue and
other:
|
|
|
|
|
|
|
|
Natural gas
sales
|
|
$
|
524,448
|
|
|
436,304
|
|
Natural gas liquids
sales
|
|
|
284,958
|
|
|
327,426
|
|
Oil sales
|
|
|
40,561
|
|
|
34,265
|
|
Commodity derivative
fair value gains (losses)
|
|
|
220,788
|
|
|
(514,751)
|
|
Marketing
|
|
|
46,645
|
|
|
91,497
|
|
Amortization of
deferred revenue, VPP
|
|
|
—
|
|
|
5,175
|
|
Other
income
|
|
|
1,481
|
|
|
675
|
|
Total
revenue
|
|
|
1,118,881
|
|
|
380,591
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Lease
operating
|
|
|
35,928
|
|
|
21,450
|
|
Gathering,
compression, processing, and transportation
|
|
|
603,860
|
|
|
656,615
|
|
Production and ad
valorem taxes
|
|
|
28,863
|
|
|
25,790
|
|
Marketing
|
|
|
108,216
|
|
|
128,580
|
|
Exploration
|
|
|
208
|
|
|
454
|
|
Impairment of oil and
gas properties
|
|
|
1,041,469
|
|
|
29,392
|
|
Impairment of
midstream assets
|
|
|
7,800
|
|
|
—
|
|
Depletion,
depreciation, and amortization
|
|
|
241,503
|
|
|
238,418
|
|
Accretion of asset
retirement obligations
|
|
|
927
|
|
|
1,115
|
|
General and
administrative (including equity-based compensation expense of
$3,875 and
$5,699 in 2019 and 2020, respectively)
|
|
|
35,923
|
|
|
31,640
|
|
Contract termination
and rig stacking
|
|
|
62
|
|
|
1,246
|
|
Total operating
expenses
|
|
|
2,104,759
|
|
|
1,134,700
|
|
Operating
loss
|
|
|
(985,878)
|
|
|
(754,109)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Equity in earnings
(loss) of unconsolidated affiliates
|
|
|
(117,859)
|
|
|
24,419
|
|
Transaction
expense
|
|
|
—
|
|
|
(524)
|
|
Interest expense,
net
|
|
|
(47,754)
|
|
|
(48,043)
|
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
55,633
|
|
Total other income
(expense)
|
|
|
(165,613)
|
|
|
31,485
|
|
Loss before income
taxes
|
|
|
(1,151,491)
|
|
|
(722,624)
|
|
Provision for income
tax benefit
|
|
|
272,627
|
|
|
168,778
|
|
Net loss and
comprehensive income loss including noncontrolling
interests
|
|
|
(878,864)
|
|
|
(553,846)
|
|
Less: net loss and
comprehensive loss attributable to noncontrolling
interests
|
|
|
—
|
|
|
(18,233)
|
|
Net loss and
comprehensive loss attributable to Antero Resources
Corporation
|
|
$
|
(878,864)
|
|
|
(535,613)
|
|
|
|
|
|
|
|
|
|
Loss per
share—basic
|
|
$
|
(2.86)
|
|
|
(1.99)
|
|
Loss per
share—diluted
|
|
$
|
(2.86)
|
|
|
(1.99)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
307,781
|
|
|
268,511
|
|
Diluted
|
|
|
307,781
|
|
|
268,511
|
|
ANTERO RESOURCES
CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
Nine Months Ended
September 30, 2019 and 2020
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
|
$
|
189,060
|
|
|
(1,355,724)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depletion,
depreciation, amortization, and accretion
|
|
|
726,827
|
|
|
655,460
|
|
Impairment of oil and
gas properties
|
|
|
1,253,712
|
|
|
155,962
|
|
Impairment of
midstream assets
|
|
|
14,782
|
|
|
—
|
|
Commodity derivative
fair value (gains) losses
|
|
|
(471,847)
|
|
|
116,933
|
|
Gains on settled
commodity derivatives
|
|
|
261,794
|
|
|
740,805
|
|
Proceeds from
derivative monetizations
|
|
|
—
|
|
|
18,073
|
|
Loss on sale of
assets
|
|
|
951
|
|
|
—
|
|
Equity-based
compensation expense
|
|
|
19,327
|
|
|
17,001
|
|
Deferred income tax
expense (benefit)
|
|
|
32,019
|
|
|
(426,267)
|
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
(175,365)
|
|
Equity in loss of
unconsolidated affiliates
|
|
|
90,193
|
|
|
83,408
|
|
Impairment of equity
investment
|
|
|
—
|
|
|
610,632
|
|
Gain on
deconsolidation of Antero Midstream Partners LP
|
|
|
(1,406,042)
|
|
|
—
|
|
Distributions/dividends of earnings from
unconsolidated affiliates
|
|
|
109,241
|
|
|
128,267
|
|
Amortization of
deferred revenue
|
|
|
—
|
|
|
(5,175)
|
|
Amortization of debt
issuance costs, debt discount debt premium and other
|
|
|
8,179
|
|
|
7,391
|
|
Changes in current
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
14,236
|
|
|
(15,454)
|
|
Accrued
revenue
|
|
|
193,650
|
|
|
(20,843)
|
|
Other current
assets
|
|
|
2,365
|
|
|
(1,455)
|
|
Accounts payable
including related parties
|
|
|
(971)
|
|
|
(2,198)
|
|
Accrued
liabilities
|
|
|
(11,169)
|
|
|
15,522
|
|
Revenue distributions
payable
|
|
|
(72,176)
|
|
|
(54,403)
|
|
Other current
liabilities
|
|
|
1,387
|
|
|
(60)
|
|
Net cash provided by
operating activities
|
|
|
955,518
|
|
|
492,510
|
|
Cash flows provided
by (used in) investing activities:
|
|
|
|
|
|
|
|
Additions to unproved
properties
|
|
|
(69,796)
|
|
|
(31,136)
|
|
Drilling and
completion costs
|
|
|
(957,931)
|
|
|
(693,920)
|
|
Additions to water
handling and treatment systems
|
|
|
(24,416)
|
|
|
—
|
|
Additions to gathering
systems and facilities
|
|
|
(48,239)
|
|
|
—
|
|
Additions to other
property and equipment
|
|
|
(5,980)
|
|
|
(1,346)
|
|
Settlement of water
earnout
|
|
|
—
|
|
|
125,000
|
|
Investments in
unconsolidated affiliates
|
|
|
(25,020)
|
|
|
—
|
|
Proceeds from the
Antero Midstream Partners LP Transactions
|
|
|
296,611
|
|
|
—
|
|
Proceeds from asset
sales
|
|
|
7,461
|
|
|
—
|
|
Proceeds from VPP
sale, net
|
|
|
—
|
|
|
215,833
|
|
Change in other
assets
|
|
|
1,983
|
|
|
1,506
|
|
Net cash used in
investing activities
|
|
|
(825,327)
|
|
|
(384,063)
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
|
(17,924)
|
|
|
(43,443)
|
|
Issuance of senior
notes
|
|
|
650,000
|
|
|
—
|
|
Issuance of
convertible notes
|
|
|
—
|
|
|
287,500
|
|
Repayment of senior
notes
|
|
|
—
|
|
|
(899,971)
|
|
Borrowings
(repayments) on bank credit facilities, net
|
|
|
(45,000)
|
|
|
275,000
|
|
Payments of deferred
financing costs
|
|
|
(8,259)
|
|
|
(8,907)
|
|
Sale of noncontrolling
interest
|
|
|
—
|
|
|
300,000
|
|
Distributions to
noncontrolling interests in Antero Midstream Partners LP
|
|
|
(85,076)
|
|
|
—
|
|
Distributions to
noncontrolling interests in Martica Holdings LLC
|
|
|
—
|
|
|
(17,249)
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(2,379)
|
|
|
(373)
|
|
Other
|
|
|
(2,021)
|
|
|
(1,004)
|
|
Net cash provided by
(used in) financing activities
|
|
|
489,341
|
|
|
(108,447)
|
|
Effect of
deconsolidation of Antero Midstream Partners LP
|
|
|
(619,532)
|
|
|
—
|
|
Net decrease 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
|
|
$
|
142,288
|
|
|
135,494
|
|
Decrease in accounts
payable and accrued liabilities for additions to property and
equipment
|
|
$
|
22,103
|
|
|
44,302
|
|
The following table set forth selected operating data for the
three months ended September 30, 2019
and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Amount of
|
|
|
|
|
|
September
30,
|
|
Increase
|
|
Percent
|
|
(in thousands)
|
|
2019
|
|
2020
|
|
(Decrease)
|
|
Change
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
sales
|
|
$
|
524,448
|
|
$
|
436,304
|
|
$
|
(88,144)
|
|
(17)
|
%
|
Natural gas liquids
sales
|
|
|
284,958
|
|
|
327,426
|
|
|
42,468
|
|
15
|
%
|
Oil sales
|
|
|
40,561
|
|
|
34,265
|
|
|
(6,296)
|
|
(16)
|
%
|
Commodity derivative
fair value gains (losses)
|
|
|
220,788
|
|
|
(514,751)
|
|
|
(735,539)
|
|
(333)
|
%
|
Marketing
|
|
|
46,645
|
|
|
91,497
|
|
|
44,852
|
|
96
|
%
|
Amortization of
deferred revenue, VPP
|
|
|
—
|
|
|
5,175
|
|
|
5,175
|
|
*
|
|
Other
income
|
|
|
1,481
|
|
|
675
|
|
|
(806)
|
|
(54)
|
%
|
Total
revenue
|
|
|
1,118,881
|
|
|
380,591
|
|
|
(738,290)
|
|
(66)
|
%
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating
|
|
|
35,928
|
|
|
21,450
|
|
|
(14,478)
|
|
(40)
|
%
|
Gathering and
compression
|
|
|
209,751
|
|
|
221,004
|
|
|
11,253
|
|
5
|
%
|
Processing
|
|
|
230,377
|
|
|
244,888
|
|
|
14,511
|
|
6
|
%
|
Transportation
|
|
|
163,732
|
|
|
190,723
|
|
|
26,991
|
|
16
|
%
|
Production and ad
valorem taxes
|
|
|
28,863
|
|
|
25,790
|
|
|
(3,073)
|
|
(11)
|
%
|
Marketing
|
|
|
108,216
|
|
|
128,580
|
|
|
20,364
|
|
19
|
%
|
Exploration
|
|
|
208
|
|
|
454
|
|
|
246
|
|
118
|
%
|
Impairment of oil and
gas properties
|
|
|
1,041,469
|
|
|
29,392
|
|
|
(1,012,077)
|
|
(97)
|
%
|
Impairment of
midstream assets
|
|
|
7,800
|
|
|
—
|
|
|
(7,800)
|
|
*
|
|
Depletion,
depreciation, and amortization
|
|
|
241,503
|
|
|
238,418
|
|
|
(3,085)
|
|
(1)
|
%
|
Accretion of asset
retirement obligations
|
|
|
927
|
|
|
1,115
|
|
|
188
|
|
20
|
%
|
General and
administrative (excluding equity-based compensation)
|
|
|
32,048
|
|
|
25,941
|
|
|
(6,107)
|
|
(19)
|
%
|
Equity-based
compensation
|
|
|
3,875
|
|
|
5,699
|
|
|
1,824
|
|
47
|
%
|
Contract termination
and rig stacking
|
|
|
62
|
|
|
1,246
|
|
|
1,184
|
|
*
|
|
Total operating
expenses
|
|
|
2,104,759
|
|
|
1,134,700
|
|
|
(970,059)
|
|
(46)
|
%
|
Operating
loss
|
|
|
(985,878)
|
|
|
(754,109)
|
|
|
231,769
|
|
(24)
|
%
|
Other earnings
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings
(loss) of unconsolidated affiliates
|
|
|
(117,859)
|
|
|
24,419
|
|
|
142,278
|
|
(121)
|
%
|
Transaction
expense
|
|
|
—
|
|
|
(524)
|
|
|
(524)
|
|
*
|
|
Interest expense,
net
|
|
|
(47,754)
|
|
|
(48,043)
|
|
|
(289)
|
|
1
|
%
|
Gain on early
extinguishment of debt
|
|
|
—
|
|
|
55,633
|
|
|
55,633
|
|
*
|
|
Total other income
(expense)
|
|
|
(165,613)
|
|
|
31,485
|
|
|
197,098
|
|
(119)
|
%
|
Loss before income
taxes
|
|
|
(1,151,491)
|
|
|
(722,624)
|
|
|
428,867
|
|
(37)
|
%
|
Provision for income
tax benefit
|
|
|
272,627
|
|
|
168,778
|
|
|
(103,849)
|
|
(38)
|
%
|
Net loss and
comprehensive loss including noncontrolling interests
|
|
|
(878,864)
|
|
|
(553,846)
|
|
|
325,018
|
|
(37)
|
%
|
Less: net loss and
comprehensive loss attributable to noncontrolling
interests
|
|
|
—
|
|
|
(18,233)
|
|
|
(18,233)
|
|
*
|
|
Net loss and
comprehensive loss attributable to Antero Resources
Corporation
|
|
|
(878,864)
|
|
|
(535,613)
|
|
|
343,251
|
|
(39)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAX
|
|
$
|
257,895
|
|
$
|
272,441
|
|
$
|
14,578
|
|
6
|
%
|
|
|
|
* Not
meaningful
|
|
|
|
|
Three months ended
September 30,
|
|
Amount of
Increase
|
|
Percent
|
|
|
|
2019
|
|
2020
|
|
(Decrease)
|
|
Change
|
|
Production data
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
|
|
210
|
|
|
226
|
|
|
16
|
|
8
|
%
|
C2 Ethane
(MBbl)
|
|
|
4,307
|
|
|
5,459
|
|
|
1,152
|
|
27
|
%
|
C3+ NGLs
(MBbl)
|
|
|
11,472
|
|
|
13,400
|
|
|
1,928
|
|
17
|
%
|
Oil (MBbl)
|
|
|
865
|
|
|
1,367
|
|
|
502
|
|
58
|
%
|
Combined
(Bcfe)
|
|
|
310
|
|
|
347
|
|
|
37
|
|
12
|
%
|
Daily combined
production (MMcfe/d)
|
|
|
3,367
|
|
|
3,772
|
|
|
405
|
|
12
|
%
|
Average prices
before effects of derivative settlements
(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (per
Mcf)
|
|
$
|
2.50
|
|
$
|
1.93
|
|
$
|
(0.57)
|
|
(23)
|
%
|
C2 Ethane (per
Bbl)
|
|
$
|
6.15
|
|
$
|
5.94
|
|
$
|
(0.21)
|
|
(3)
|
%
|
C3+ NGLs (per
Bbl)
|
|
$
|
22.53
|
|
$
|
22.01
|
|
$
|
(0.52)
|
|
(2)
|
%
|
Oil (per
Bbl)
|
|
$
|
46.86
|
|
$
|
25.07
|
|
$
|
(21.79)
|
|
(47)
|
%
|
Weighted Average
Combined (per Mcfe)
|
|
$
|
2.74
|
|
$
|
2.30
|
|
$
|
(0.44)
|
|
(16)
|
%
|
Average realized
prices after effects of derivative settlements
(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (per
Mcf)
|
|
$
|
3.05
|
|
$
|
2.73
|
|
$
|
(0.32)
|
|
(10)
|
%
|
C2 Ethane (per
Bbl)
|
|
$
|
6.15
|
|
$
|
5.67
|
|
$
|
(0.48)
|
|
(8)
|
%
|
C3+ NGLs (per
Bbl)
|
|
$
|
22.67
|
|
$
|
23.81
|
|
$
|
1.14
|
|
5
|
%
|
Oil (per
Bbl)
|
|
$
|
50.00
|
|
$
|
34.96
|
|
$
|
(15.04)
|
|
(30)
|
%
|
Weighted Average
Combined (per Mcfe)
|
|
$
|
3.13
|
|
$
|
2.92
|
|
$
|
(0.21)
|
|
(7)
|
%
|
Average costs (per
Mcfe):
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating
|
|
$
|
0.12
|
|
$
|
0.06
|
|
$
|
(0.06)
|
|
(50)
|
%
|
Gathering and
compression
|
|
$
|
0.68
|
|
$
|
0.64
|
|
$
|
(0.04)
|
|
(6)
|
%
|
Processing
|
|
$
|
0.74
|
|
$
|
0.71
|
|
$
|
(0.03)
|
|
(4)
|
%
|
Transportation
|
|
$
|
0.53
|
|
$
|
0.55
|
|
$
|
0.02
|
|
4
|
%
|
Production
taxes
|
|
$
|
0.09
|
|
$
|
0.07
|
|
$
|
(0.02)
|
|
(22)
|
%
|
Marketing,
net
|
|
$
|
0.20
|
|
$
|
0.11
|
|
$
|
(0.09)
|
|
(45)
|
%
|
Depletion,
depreciation, amortization and accretion
|
|
$
|
0.78
|
|
$
|
0.69
|
|
$
|
(0.09)
|
|
(12)
|
%
|
General and
administrative (excluding equity-based compensation)
|
|
$
|
0.10
|
|
$
|
0.07
|
|
$
|
(0.03)
|
|
(30)
|
%
|
|
|
(1)
|
Production volumes
exclude volumes related to VPP transaction.
|
(2)
|
Average sales
prices shown in the table reflect both 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. 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 does not necessarily reflect their relative economic
value.
|
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SOURCE Antero Resources Corporation