Exhibit 99.2
ANTERO RESOURCES CORPORATION
Unaudited Pro Forma Condensed Consolidated Financial Information
The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of Antero Resources Corporation (“the Company”), including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of the Company’s sale on September 23, 2015 of (i) all of the outstanding limited liability company interests of Antero Water LLC, a wholly-owned subsidiary of the Company that owns and operates the Company’s fresh water distribution assets, to Antero Midstream Partners LP, a Delaware limited partnership and an entity consolidated by the Company, and (ii) all of the assets, contracts, rights, permits and properties owned or leased by the Company and used primarily in connection with the construction, ownership, operation, use or maintenance of the Company’s advanced wastewater treatment complex to be constructed in Doddridge County, West Virginia to Antero Treatment LLC, a wholly-owned subsidiary of the Partnership (collectively, (i) and (ii) are referred to herein as the “Contributed Assets”). Pro forma adjustments include the effects of an equity offering by the Partnership, borrowings by the Partnership under its revolving credit facility, the sale of the Company’s Contributed Assets to the Partnership, and the use of sales proceeds by the Company to repay amounts outstanding under the Company’s senior secured revolving credit facility.
The unaudited pro forma condensed consolidated statements of operations and comprehensive income for the six months ended June 30, 2015 and the year ended December 31, 2014 are presented as if the contribution of the Contributed Assets and the related transactions (collectively, the “Transaction”) occurred as of the beginning of the period presented. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2015 is presented as if the Transaction occurred on June 30, 2015.
The unaudited pro forma condensed consolidated financial information has been prepared based upon available information and management estimates; actual amounts may differ from these estimated amounts. The pro forma financial information is not necessarily indicative of the Company’s financial position or results of operations had the disposition occurred as of the respective dates stated above. The pro forma adjustments are described in the notes. Because the Company consolidates the accounts of the Partnership, the primary net effects to the Company’s consolidated financial statements are: (1) to increase the noncontrolling interest in net income and comprehensive income for the pro forma increase in the Partnership’s net income from the Contributed Assets; and (2) to increase the ownership of the Partnership by noncontrolling third-parties.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with the financial statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operation included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, and the Company’s Annual Report on Form 10-K for the annual period ended December 31, 2014.
ANTERO RESOURCES CORPORATION
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited pro forma condensed consolidated financial statements give effect to the pro forma adjustments necessary to reflect the Transaction as if it had occurred as of the beginning of the periods presented in the pro forma statements of operations and comprehensive income for the six months ended June 30, 2015 and the year ended December 31, 2014 and on June 30, 2015 in the pro forma balance sheet. The consideration for the sale of the Contributed Assets to the Partnership consisted of approximately $794 million of cash, less approximately $171 million of debt assumed by the Partnership, 10,988,421 common units representing limited partner interests in the Partnership, and two potential earn-outs of $125.0 million each if certain fresh water volumetric delivery targets are met. The Contributed Assets will be recorded at their historical cost in the financial statements of the Partnership and no gain on the Transaction will be recorded by the Company.
(2) Pro Forma Adjustments
The unaudited pro forma condensed consolidated statements of operations and balance sheet reflect the effect of the following pro forma adjustments:
(a) Assumed offering proceeds to the Partnership of $241 million from the issuance and sale of 12,898,000 common units, net of estimated costs and fees directly related to the Partnership’s equity offering.
(b) Assumed borrowings under the Partnership’s revolving credit facility.
(c) Assumed reduction of the amounts outstanding under the Company’s revolving credit facilities repaid with the cash proceeds received from the Transaction, less the Partnership’s related assumption of indebtedness.
(d) Increase in noncontrolling interest as a result of the pro forma increase in the Partnership’s net income attributable to the Contributed Assets resulting from the issuance if 10,988,421 common units to the Company, as well as the pro forma increase in ownership of the Partnership by noncontrolling third-parties resulting from the issuance of 12,898,000 common units to private purchasers.
(e) The effects on Earnings per common share and Earnings per common share—assuming dilution as a result of adjustment (d).
ANTERO RESOURCES CORPORATION
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2015
(in thousands)
|
|
|
Historical |
|
Pro Forma |
|
Unaudited Pro |
| |
|
Assets |
|
|
|
|
|
|
| |
|
Current assets: |
|
|
|
|
|
|
| |
|
Cash and cash equivalents |
|
$ |
143,286 |
|
241,176 |
(a) |
30,419 |
|
|
|
|
|
|
439,583 |
(b) |
|
| |
|
|
|
|
|
(793,626 |
)(c) |
|
| |
|
Accounts receivable, net |
|
79,190 |
|
— |
|
79,190 |
| |
|
Accrued revenue |
|
125,467 |
|
— |
|
125,467 |
| |
|
Derivative instruments |
|
664,417 |
|
— |
|
664,417 |
| |
|
Other current assets |
|
4,819 |
|
— |
|
4,819 |
| |
|
Total current assets |
|
1,017,179 |
|
(112,867 |
) |
904,312 |
| |
|
Property and equipment: |
|
|
|
|
|
|
| |
|
Natural gas properties, at cost (successful efforts method): |
|
|
|
|
|
|
| |
|
Unproved properties |
|
2,080,491 |
|
— |
|
2,080,491 |
| |
|
Proved properties |
|
7,462,080 |
|
— |
|
7,462,080 |
| |
|
Fresh water distribution systems |
|
441,692 |
|
— |
|
441,692 |
| |
|
Gathering systems and facilities |
|
1,341,661 |
|
— |
|
1,341,661 |
| |
|
Other property and equipment |
|
42,842 |
|
— |
|
42,842 |
| |
|
|
|
11,368,766 |
|
— |
|
11,368,766 |
| |
|
Less accumulated depletion, depreciation, and amortization |
|
(1,238,989 |
) |
— |
|
(1,238,989 |
) | |
|
Property and equipment, net |
|
10,129,777 |
|
— |
|
10,129,777 |
| |
|
Derivative instruments |
|
1,305,392 |
|
— |
|
1,305,392 |
| |
|
Other assets, net |
|
80,133 |
|
— |
|
80,133 |
| |
|
Total assets |
|
$ |
12,532,481 |
|
(112,867 |
) |
12,419,614 |
|
|
|
|
|
|
|
|
|
| |
|
Liabilities and Equity |
|
|
|
|
|
|
| |
|
Current liabilities: |
|
|
|
|
|
|
| |
|
Accounts payable |
|
$ |
326,638 |
|
— |
|
326,638 |
|
|
Accrued liabilities |
|
183,319 |
|
— |
|
183,319 |
| |
|
Revenue distributions payable |
|
190,881 |
|
— |
|
190,881 |
| |
|
Deferred income tax liability |
|
251,097 |
|
— |
|
251,097 |
| |
|
Other |
|
14,248 |
|
— |
|
14,248 |
| |
|
Total current liabilities |
|
966,183 |
|
— |
|
966,183 |
| |
|
Long-term liabilities: |
|
|
|
|
|
|
| |
|
Long-term debt |
|
4,500,038 |
|
439,583 |
(b) |
4,145,995 |
| |
|
|
|
|
|
(793,626 |
)(c) |
|
| |
|
Deferred income tax liability |
|
706,948 |
|
— |
|
706,948 |
| |
|
Derivative instruments |
|
651 |
|
— |
|
651 |
| |
|
Other long-term liabilities |
|
49,215 |
|
— |
|
49,215 |
| |
|
Total liabilities |
|
6,223,035 |
|
(354,043 |
) |
5,868,992 |
| |
|
Equity: |
|
|
|
|
|
|
| |
|
Stockholders’ equity: |
|
|
|
|
|
|
| |
|
Common stock |
|
2,770 |
|
— |
|
2,770 |
| |
|
Additional paid-in capital |
|
4,099,718 |
|
— |
|
4,099,718 |
| |
|
Accumulated earnings |
|
1,116,505 |
|
— |
|
1,116,505 |
| |
|
Total stockholders’ equity |
|
5,218,993 |
|
— |
|
5,218,993 |
| |
|
Noncontrolling interest in consolidated subsidiary |
|
1,090,453 |
|
241,176 |
(a) |
1,331,629 |
| |
|
Total equity |
|
6,309,446 |
|
241,176 |
|
6,550,622 |
| |
|
Total liabilities and equity |
|
$ |
12,532,481 |
|
(112,867 |
) |
12,419,614 |
|
ANTERO RESOURCES CORPORATION
Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income
For the Six Months Ended June 30, 2015
(in thousands, except per share amounts)
|
|
|
Historical |
|
Pro Forma |
|
Unaudited Pro |
| |
|
Revenue: |
|
|
|
|
|
|
| |
|
Natural gas sales |
|
$ |
557,007 |
|
— |
|
557,007 |
|
|
Natural gas liquids sales |
|
138,311 |
|
— |
|
138,311 |
| |
|
Oil sales |
|
35,489 |
|
— |
|
35,489 |
| |
|
Gathering, compression, and water distribution |
|
10,658 |
|
— |
|
10,658 |
| |
|
Marketing |
|
107,609 |
|
— |
|
107,609 |
| |
|
Commodity derivative fair value gains |
|
757,327 |
|
— |
|
757,327 |
| |
|
Total revenue |
|
1,606,401 |
|
— |
|
1,606,401 |
| |
|
Operating expenses: |
|
|
|
|
|
|
| |
|
Lease operating |
|
14,775 |
|
— |
|
14,775 |
| |
|
Gathering, compression, processing, and transportation |
|
330,331 |
|
— |
|
330,331 |
| |
|
Production and ad valorem taxes |
|
46,737 |
|
— |
|
46,737 |
| |
|
Marketing |
|
152,402 |
|
— |
|
152,402 |
| |
|
Exploration |
|
1,999 |
|
— |
|
1,999 |
| |
|
Impairment of unproved properties |
|
34,916 |
|
— |
|
34,916 |
| |
|
Depletion, depreciation, and amortization |
|
359,346 |
|
— |
|
359,346 |
| |
|
Accretion of asset retirement obligations |
|
808 |
|
— |
|
808 |
| |
|
General and administrative |
|
118,240 |
|
— |
|
118,240 |
| |
|
Contract termination and rig stacking |
|
10,902 |
|
— |
|
10,902 |
| |
|
Total operating expenses |
|
1,070,456 |
|
— |
|
1,070,456 |
| |
|
Operating income |
|
535,945 |
|
— |
|
535,945 |
| |
|
Other expenses: |
|
|
|
|
|
|
| |
|
Interest |
|
(113,008 |
) |
— |
|
(113,008 |
) | |
|
Income before income taxes |
|
422,937 |
|
— |
|
422,937 |
| |
|
Provision for income tax expense |
|
(163,249 |
) |
— |
|
(163,249 |
) | |
|
Net income and comprehensive income including noncontrolling interest |
|
259,688 |
|
— |
|
259,688 |
| |
|
Net income and comprehensive income attributable to noncontrolling interest |
|
10,630 |
|
11,972 |
(d) |
22,602 |
| |
|
Net income and comprehensive income attributable to Antero Resources Corporation |
|
$ |
249,058 |
|
(11,972 |
) |
237,086 |
|
|
|
|
|
|
|
|
|
| |
|
Earnings per common share |
|
$ |
0.92 |
|
(0.05 |
)(e) |
0.87 |
|
|
|
|
|
|
|
|
|
| |
|
Earnings per common share—assuming dilution |
|
$ |
0.92 |
|
(0.05 |
)(e) |
0.87 |
|
|
|
|
|
|
|
|
|
| |
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
| |
|
Basic |
|
271,181,132 |
|
|
|
271,181,132 |
| |
|
Diluted |
|
271,192,089 |
|
|
|
271,192,089 |
| |
ANTERO RESOURCES CORPORATION
Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2014
(in thousands, except per share amounts)
|
|
|
Historical |
|
Pro Forma |
|
Unaudited Pro |
| |
|
Revenue: |
|
|
|
|
|
|
| |
|
Natural gas sales |
|
$ |
1,301,349 |
|
— |
|
1,301,349 |
|
|
Natural gas liquids sales |
|
328,323 |
|
— |
|
328,323 |
| |
|
Oil sales |
|
107,080 |
|
— |
|
107,080 |
| |
|
Gathering, compression, and water distribution |
|
22,075 |
|
— |
|
22,075 |
| |
|
Marketing |
|
53,604 |
|
— |
|
53,604 |
| |
|
Commodity derivative fair value gains |
|
868,201 |
|
— |
|
868,201 |
| |
|
Gain on sale of gathering system |
|
40,000 |
|
— |
|
40,000 |
| |
|
Total revenue |
|
2,720,632 |
|
— |
|
2,720,632 |
| |
|
Operating expenses: |
|
|
|
|
|
|
| |
|
Lease operating |
|
29,341 |
|
— |
|
29,341 |
| |
|
Gathering, compression, processing, and transportation |
|
461,413 |
|
— |
|
461,413 |
| |
|
Production and ad valorem taxes |
|
87,918 |
|
— |
|
87,918 |
| |
|
Marketing |
|
103,435 |
|
— |
|
103,435 |
| |
|
Exploration |
|
27,893 |
|
— |
|
27,893 |
| |
|
Impairment of unproved properties |
|
15,198 |
|
— |
|
15,198 |
| |
|
Depletion, depreciation, and amortization |
|
477,896 |
|
— |
|
477,896 |
| |
|
Accretion of asset retirement obligations |
|
1,271 |
|
— |
|
1,271 |
| |
|
General and administrative |
|
216,533 |
|
— |
|
216,533 |
| |
|
Total operating expenses |
|
1,420,898 |
|
— |
|
1,420,898 |
| |
|
Operating income |
|
1,299,734 |
|
— |
|
1,299,734 |
| |
|
Other expenses: |
|
|
|
|
|
|
| |
|
Interest |
|
(160,051 |
) |
— |
|
(160,051 |
) | |
|
Loss on early extinguishment of debt |
|
(20,386 |
) |
— |
|
(20,386 |
) | |
|
Total other expenses |
|
(180,437 |
) |
— |
|
(180,437 |
) | |
|
Income from continuing operations before income taxes and discontinued operations |
|
1,119,297 |
|
— |
|
1,119,297 |
| |
|
Provision for income tax expense |
|
(445,672 |
) |
— |
|
(445,672 |
) | |
|
Income from continuing operations |
|
673,625 |
|
— |
|
673,625 |
| |
|
Discontinued operations: |
|
|
|
|
|
|
| |
|
Income from sale of discontinued operations, net of income tax expense |
|
2,210 |
|
— |
|
2,210 |
| |
|
Net income and comprehensive income including noncontrolling interest |
|
675,835 |
|
— |
|
675,835 |
| |
|
Net income and comprehensive income attributable to noncontrolling interest |
|
2,248 |
|
37,448 |
(d) |
39,696 |
| |
|
Net income and comprehensive income attributable to Antero Resources Corporation |
|
$ |
673,587 |
|
(37,448 |
) |
636,139 |
|
|
|
|
|
|
|
|
|
| |
|
Earnings per common share: |
|
|
|
|
|
|
| |
|
Continuing operations |
|
$ |
2.56 |
|
(0.14 |
)(e) |
2.42 |
|
|
Discontinued operations |
|
0.01 |
|
— |
|
0.01 |
| |
|
Total |
|
$ |
2.57 |
|
(0.14 |
) |
2.43 |
|
|
|
|
|
|
|
|
|
| |
|
Earnings per common share—assuming dilution |
|
|
|
|
|
|
| |
|
Continuing operations |
|
$ |
2.56 |
|
(0.14 |
)(e) |
2.42 |
|
|
Discontinued operations |
|
0.01 |
|
— |
|
0.01 |
| |
|
Total |
|
$ |
2.57 |
|
(0.14 |
) |
2.43 |
|
|
|
|
|
|
|
|
|
| |
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
| |
|
Basic |
|
262,053,868 |
|
|
|
262,053,868 |
| |
|
Diluted |
|
262,068,106 |
|
|
|
262,068,106 |
| |