Exhibit 99.1

 

 

Antero Resources Reports Third Quarter 2016 Financial and Operational Results

 

Denver, Colorado, October 26, 2016—Antero Resources Corporation (NYSE: AR) (“Antero” or the “Company”) today released its third quarter 2016 financial and operational results. The relevant condensed consolidated financial statements are included in Antero’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which has been filed with the Securities and Exchange Commission.

 

Third Quarter Highlights Include:

 

·                  Average net daily gas equivalent production was a record 1,875 MMcfe/d (26% liquids), a 25% increase over the prior year quarter and a 6% increase sequentially

 

·                  Includes a record 81,460 Bbl/d of liquids production, a 56% increase over the prior year quarter and a 9% increase sequentially

 

·                  Realized $0.05 per Mcf premium to Nymex natural gas price, or $2.86 per Mcf, before hedging

 

·                  Realized C3+ NGL price of $17.56 per barrel, 39% of Nymex WTI price before hedging

 

·                  Realized natural gas equivalent price of $3.96 per Mcfe including NGLs, oil and hedges, a 3% increase over the prior year quarter

 

·                  Net marketing expense decreased to $0.10 per Mcfe

 

·                  Net income of $238 million, or $0.78 per share, compared to net income of $534 million, or $1.93 per share, in the prior year quarter

 

·                  Adjusted net income of $55 million, or $0.18 per share, a 293% increase compared to the prior year quarter

 

·                  Record adjusted EBITDAX of $373 million, a 28% increase compared to the prior year quarter

 

·                  Signed a definitive agreement to sell approximately 17,000 net acres in Pennsylvania for $170 million

 

·                  Borrowing base under the Company’s credit facility was increased by $250 million to $4.75 billion

 

Recent Developments

 

On October 25th, 2016, Antero signed a definitive agreement for the sale of approximately 17,000 net acres primarily located in Washington and Westmoreland Counties, Pennsylvania for $170 million.  The transaction monetizes acreage that is outside of Antero’s infrastructure build-out and beyond its five year drilling plan.  It is expected to close in the fourth quarter of 2016. Tudor, Pickering, Holt & Co. acted as financial advisor to Antero in connection with the transaction.

 

On October 24th, 2016, Antero’s borrowing base under its credit facility was increased to $4.75 billion, a $250 million increase over the Company’s previous borrowing base of $4.5 billion.  Lender commitments under the facility remain at $4.0 billion.  The bank syndicate, which is co-led by JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., is currently comprised of 29 banks.

 

On October 7th, 2016, Antero completed a private placement of 6,730,769 shares of common stock at a price of $26.00 per share, resulting in $175 million of net proceeds.  Pro forma for the proceeds from the Pennsylvania divestiture and the private placement, Antero’s September 30, 2016 consolidated net debt to trailing twelve months EBITDAX was 3.2 times and consolidated liquidity was $4.0 billion.

 

Commenting on recent activity, Paul Rady, Chairman of the Board and CEO said, “We are pleased to be in a position to continue to organically grow production at 20% to 25% annually, while de-leveraging the balance sheet.  Since year-end 2015, we have reduced our trailing twelve months leverage by a half a turn to 3.2 times today, while growing production by over 350 MMcfe/d and adding 65,000 net acres in the high-graded core of the Marcellus for long-term development. Virtually all of this acreage has now been dedicated to Antero Midstream for infrastructure build-out.  We are an industry leader in the Marcellus and Utica Shale plays due to our differentiated strategy and that is evident today in our results.”

 

1



 

Third Quarter 2016 Financial Results

 

As of September 30, 2016, Antero owned a 62% limited partner interest in Antero Midstream Partners LP (“Antero Midstream”).  Antero Midstream’s results are consolidated with Antero’s results.

 

For the three months ended September 30, 2016, the Company reported GAAP net income of $238 million, or $0.78 per basic share and $0.77 per diluted share, compared to GAAP net income of $534 million, or $1.93 per basic and diluted share, in the third quarter of 2015.  The GAAP net income for the third quarter of 2016 included the following items:

 

·                  Non-cash gain on unsettled hedges of $334 million due to decreasing commodity prices during the quarter

 

·                  Non-cash equity-based compensation expense of $26 million

 

·                  Impairment of unproved properties of $12 million

 

·                  Income tax effect of these reconciling items of $112 million

 

The Company’s results for the third quarter of 2016 were as follows:

 

·                  Adjusted net income of $55 million, or $0.18 per basic and diluted share, a 293% increase compared to the third quarter of 2015

 

·                  Adjusted EBITDAX of $373 million, a 28% increase compared to the third quarter of 2015

 

For a description of adjusted net income and adjusted EBITDAX and reconciliations to their nearest comparable GAAP measures, please read “Non-GAAP Financial Measures.”

 

Antero’s net daily production for the third quarter of 2016 averaged 1,875 MMcfe/d, including 81,460 Bbl/d of liquids (26% liquids).  Third quarter 2016 production represents an organic production growth rate of 25% from the third quarter of 2015 and a 6% increase compared to the second quarter of 2016.  Third quarter 2016 C3+ natural gas liquids (“NGLs”) and oil production averaged 57,286 Bbl/d and 4,603 Bbl/d, respectively, while ethane (C2) production averaged 19,572 Bbl/d. Total liquids production for the third quarter of 2016 represents an organic production growth rate of 56% and 9% from the third quarter of 2015 and second quarter of 2016, respectively.

 

Antero’s average natural gas price before hedging increased 23% from the prior year quarter to $2.86 per Mcf, a $0.05 per Mcf premium to the average Nymex price for the period.  Virtually all of Antero’s third quarter 2016 natural gas revenue was realized at currently favorable price indices, including Columbia Gas Transmission (TCO), Chicago, Tennessee Gulf and Nymex.  Antero’s average realized natural gas price after hedging for the third quarter of 2016 was $4.30 per Mcf, a $1.49 premium to the Nymex average price for the period.  This represents an 8% increase compared to the prior year quarter.  During the quarter, Antero realized a cash settled natural gas hedge gain of $184 million, or $1.44 per Mcf.

 

The Company’s average realized C3+ NGL price before hedging for the third quarter of 2016 was $17.56 per barrel, or 39% of the Nymex WTI oil price, which represents a 45% increase as compared to the prior year quarter.  Antero’s average realized C3+ NGL price including hedges was $19.96 per barrel, a 21% increase compared to the third quarter of 2015.  Antero’s average realized ethane price for the third quarter of 2016 was $0.19 per gallon, or $8.00 per barrel.  The average realized oil price was $34.93 per barrel, a $9.92 differential to Nymex WTI and a 15% increase as compared to the third quarter of 2015.

 

Antero’s average natural gas-equivalent price including C2+ NGLs and oil, but excluding hedge settlements, increased from the prior year quarter by 21% to $2.82 per Mcfe.  The Company’s average natural gas-equivalent price, including C2+ NGLs, oil and hedge settlements, increased by 3% to $3.96 per Mcfe compared to the prior year quarter.  For the third quarter of 2016, Antero realized a total cash settled hedge gain on all products of $197 million, or $1.14 per Mcfe.

 

Commenting on realized pricing, Glen Warren, President and CFO, said, “For the third quarter, we realized a $0.05 premium to Nymex on natural gas sales, before hedges, which is at the top end of our full year guidance.  Additionally, while many of our peers were forced to shut in production in September due to the widening of Dominion South and TETCO M2 differentials to $1.96 per Mcf back of Nymex, we were able to realize an $0.08 premium to Nymex for the month, or a $2.04 per Mcf premium to these local indices.  This once again highlights the significant value of our firm transport portfolio where we can physically move our gas to more healthy indices.  This demonstrates our ability to mitigate Northeast basis risk, which in turn results in significant visibility for our continued growth plans.”

 

2



 

Total operating revenue for the third quarter of 2016 was $1.1 billion as compared to $1.4 billion for the third quarter of 2015.  Operating revenue for the third quarter of 2016 included a $334 million non-cash gain on unsettled hedges, while the third quarter of 2015 included an $873 million non-cash gain on unsettled hedges.  In both periods, the non-cash gain on unsettled hedges was driven by decreasing natural gas prices during the period.  Adjusted non-GAAP revenue excluding the unrealized hedge gain was $783 million, a 37% increase compared to the third quarter of 2015.  Liquids production contributed 25% of total product revenues before hedges in the third quarter of 2016, as compared to a 22% contribution for the prior year quarter.  For a reconciliation of revenue excluding unrealized hedge gains to operating revenue, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.”

 

Marketing revenue for the third quarter of 2016 was $97 million.  Antero’s marketing revenue was primarily associated with the sale of third party gas purchased to utilize the Company’s excess firm transportation capacity on the Tennessee and Columbia Gas Pipelines.  Marketing expense for the third quarter of 2016 was $115 million, including costs related to excess capacity and the cost of purchasing third party gas.  Net marketing expense was $18 million, or $0.10 per Mcfe, for the third quarter of 2016, representing a 55%, or $0.12 per Mcfe decrease from the second quarter of 2016.  The significant decrease in net marketing expense from the prior quarter is primarily attributable to a third party contractual commitment that commenced on July 1, 2016, in which Antero released certain unutilized firm transportation capacity and the costs associated with the unutilized capacity. Additionally, Antero achieved a higher spread on its marketed volumes due to the widening of local northeast indices relative to the end market indices reached through Antero’s firm transportation capacity.

 

Per unit cash production expense (lease operating, gathering, compression, processing, transportation, and production and ad valorem tax) for the third quarter of 2016 was $1.53 per Mcfe, a 16% increase compared to $1.32 per Mcfe in the prior year quarter.  The increase is primarily due to higher transportation costs incurred on new pipelines that were placed in service in late 2015, which deliver gas to better price indices resulting in higher realized gas prices for the period.  The per unit cash production expense for the quarter included $0.08 per Mcfe for lease operating costs, $1.36 per Mcfe for gathering, compression, processing and transportation costs and $0.09 per Mcfe for production and ad valorem taxes.  Per unit general and administrative expense for the third quarter of 2016, excluding non-cash equity-based compensation expense was $0.18 per Mcfe, a 31% decrease from the third quarter of 2015.  The significant per unit decrease in general and administrative expenses was primarily driven by the increase in production while general and administrative expense remained relatively flat.  Per unit depreciation, depletion and amortization expense decreased 15% from the prior year quarter to $1.16 per Mcfe, primarily driven by lower development costs.

 

Adjusted EBITDAX of $373 million for the third quarter of 2016 represents a record for Antero and a 28% increase compared to the prior year quarter.  Adjusted EBITDAX margin for the quarter was $2.16 per Mcfe, representing a 3% increase from the prior year quarter.  For the third quarter of 2016, cash flow from operations before changes in working capital was $310 million, a 31% increase from the prior year quarter.

 

For a description of adjusted EBITDAX, adjusted EBITDAX margin, as well as cash flow from operations before changes in working capital and reconciliations to their nearest comparable GAAP measures, please read “Non-GAAP Financial Measures.”

 

The following table details the components of average net production and average realized prices for the three months ended September 30, 2016:

 

 

 

Three Months Ended
September 30, 2016

 

 

 

Gas
(MMcf/d)

 

Oil
(Bbl/d)

 

C3+ NGLs
(Bbl/d)

 

Ethane
(Bbl/d)

 

Combined
Gas
 Equivalent
(MMcfe/d)

 

Average Net Production

 

1,386

 

4,603

 

57,286

 

19,572

 

1,875

 

 

 

 

 

Gas
($/Mcf)

 

Oil
($/Bbl)

 

C3+ NGLs
($/Bbl)

 

Ethane
($/Bbl)

 

Combined
Gas
Equivalent
($/Mcfe)

 

Average Realized Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average realized price before settled derivatives

 

$

2.86

 

$

34.93

 

$

17.56

 

$

8.00

 

$

2.82

 

Settled derivatives

 

1.44

 

 

2.40

 

 

1.14

 

Average realized price after settled derivatives

 

$

4.30

 

$

34.93

 

$

19.96

 

$

8.00

 

$

3.96

 

 

 

 

 

 

 

 

 

 

 

 

 

Nymex average price

 

$

2.81

 

$

44.85

 

 

 

 

 

$

2.81

 

Premium / (Differential) to Nymex

 

$

1.49

 

$

(9.92

)

 

 

 

 

$

1.15

 

 

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Marcellus Shale — Antero completed and placed on line 14 horizontal Marcellus wells during the third quarter of 2016 with an average lateral length of 9,033 feet.  During the quarter, Antero drilled on average approximately 4,000 feet per day in its laterals while drilling and casing 28 wells during the quarter.  The Company’s contracted completion crews averaged 4.5 stages per day in the Marcellus, a record for the Company.  The increase in stages per day was a result of the implementation of zipper fracs on select pads during the quarter.  Antero plans to utilize zipper fracs on virtually all newly constructed pads going forward.  Year-to-date in the Marcellus, Antero has completed 69 wells that have at least 90 days of production history.  The 69 wells have an average EUR of 20.6 Bcfe at 1,245 Btu gas and assuming ethane rejection, an average lateral length of 9,000’ and an average all-in development cost of $0.53 per Mcfe.  The Company is currently operating four drilling rigs and five completion crews in the Marcellus Shale play.

 

Year-to-date, Antero has completed 33 wells using advanced completions, defined as completions using more than 1,300 pounds per foot of proppant.  The preliminary EURs associated with these 33 wells are currently trending to approximately 2.0 Bcf/1,000 or 17% above Antero’s 1.7 Bcf/1,000 type curve.

 

Current well costs are $0.86 million per 1,000 feet of lateral in the Marcellus, which represents a 27% reduction from 2015 and a 4% reduction from the second quarter of 2016.  The reduction in well costs continues to be driven both by reduced service costs through long-term contracts rolling off, resulting in a greater proportion of rigs and completion crews operating at market prices and continuing operational efficiencies.  In the Marcellus, average drilling days from spud to final rig release declined to 14 days in the third quarter of 2016, a 42% reduction from 2015 and a 7% reduction from the second quarter of 2016.

 

Ohio Utica Shale — Antero completed and placed on line eight horizontal Ohio Utica wells during the third quarter of 2016 with an average lateral length of 8,540 feet.  During the quarter, Antero drilled on average approximately 2,700 feet per day in its laterals while drilling and casing five wells during the quarter.  The Company’s contracted completion crews averaged 5.0 stages per day in the Utica, a record for the Company.  Additionally, the Company has averaged 6.3 stages per day in 2016 when utilizing zipper fracs in the Utica.  Four of the eight wells completed in the third quarter of 2016 have been on line for more than 30 days and had an average restricted 30-day rate of 17.0 MMcfe/d while rejecting ethane (14% liquids).  Antero is currently operating one drilling rig and one completion crew in the Utica Shale play.

 

Current well costs are $1.01 million per 1,000 feet of lateral in the Utica, which represents a 26% reduction from 2015 and a 3% reduction from the second quarter of 2016.  The reduction in well costs is primarily driven by lower service costs and continued operational efficiencies.  Drilling days from spud to final rig release declined to 16 days in the Utica in the third quarter of 2016, a 49% reduction from 2015.

 

Antero Midstream Financial Results

 

Antero Midstream results were released today and are available at www.anteromidstream.com.

 

Low pressure gathering volumes for the third quarter of 2016 averaged 1,431 MMcf/d, a 38% increase from the third quarter of 2015 and a 6% increase sequentially.  High pressure gathering volumes for the third quarter of 2016 averaged 1,351 MMcf/d, an 11% increase from the third quarter of 2015 and an 8% increase sequentially.  Compression volumes for the third quarter of 2016 averaged 777 MMcf/d, a 78% increase from the third quarter of 2015 and an 18% increase sequentially. The increase in gathering and compression volumes was due to production growth from Antero Resources in Antero Midstream’s area of dedication.  Condensate gathering volumes averaged 521 Bbl/d during the quarter, an 82% decrease compared to the prior year quarter and a 74% decrease sequentially. The sequential decrease in condensate gathering volumes was primarily driven by Antero shifting its Ohio Utica Shale development from its Highly-Rich Gas/Condensate area to currently higher rate of return drilling in the Highly-Rich Gas areas.  Fresh water delivery volumes averaged 140,162 Bbl/d during the quarter, a 109% increase compared to the prior year quarter and a 33% increase sequentially.  The increase in volumes was driven by an increase in the average water used per foot in Marcellus completions to  43 barrels per foot, a 35% increase as compared to 2015 and a 5% increase compared to the second quarter of 2016 as Antero piloted higher water and sand concentration completions.

 

For the three months ended September 30, 2016, the Partnership reported revenues of $150 million, comprised of $78 million from the Gathering and Compression segment and $72 million from the Water Handling and Treatment segment. Revenues increased 84% compared to the prior year quarter, primarily driven by growth in throughput volumes and fresh water delivery volumes. Water

 

4



 

Handling and Treatment segment revenues include $25 million from produced water handling and high rate water transfer services.  Direct operating expenses for the Gathering and Compression and Water Handling and Treatment segments were $5 million and $28 million, respectively, for a total of $33 million compared to $2 million in direct operating expenses in the prior year quarter. Water Handling and Treatment direct operating expenses include $24 million from produced water handling and high rate water transfer services. The increase in direct operating expenses was driven primarily by the inclusion of produced water handling and high rate water transfer services, as well as the expansion of the Partnership’s gathering and compression and fresh water delivery systems to support the production growth of Antero Resources.  General and administrative expenses including equity-based compensation was $13 million, a $0.5 million decrease compared to the third quarter of 2015.  General and administrative expenses excluding equity-based compensation were $7 million during the third quarter of 2016, a 22% decrease compared to the third quarter of 2015, which included additional expenses from the integrated water business drop-down transaction. Total operating expenses were $76 million, including $26 million of depreciation, $7 million of equity-based compensation, and $4 million of accretion of contingent acquisition consideration.

 

The Board of Directors of Antero Resources Midstream Management LLC, the general partner of the Partnership, declared a cash distribution of $0.265 per unit ($1.06 per unit annualized) for the third quarter of 2016. The distribution represents a 29% increase compared to the prior year quarter and a 6% increase sequentially.  The distribution is the Partnership’s seventh consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on November 24, 2016 to unitholders of record as of November 10, 2016.

 

Balance Sheet and Liquidity

 

As of September 30, 2016, Antero’s consolidated net debt was $4.7 billion, of which $775 million were borrowings outstanding under the Company’s and Antero Midstream’s revolving credit facilities.  Total borrowing capacity under these two facilities are currently $5.2 billion(1).  Including $709 million in letters of credit outstanding, the company had $3.7 billion in available consolidated liquidity as of September 30, 2016.  Pro forma for the $175 million private placement of common stock and the $170 million of proceeds from the Pennsylvania divestiture expected to close in the fourth quarter of 2016, Antero’s September 30, 2016 consolidated pro forma net debt to trailing twelve months EBITDAX was 3.2 times. For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.” For a description of adjusted EBITDAX to its nearest comparable GAAP measure, please read “Non-GAAP Financial Measures.”

 


(1)         Liquidity calculation assumes Antero Midstream’s borrowings under its credit facility limited to EBITDA covenant of 5.0x LTM EBITDA, less Senior Note Issuances as of September 30, 2016.

 

Third Quarter 2016 Capital Spending

 

Antero’s drilling and completion costs for the three months ended September 30, 2016 were $300 million.  In addition, the Company invested $48 million for land, excluding acquisitions.  Antero Midstream invested $56 million for gathering and compression systems and $59 million for water infrastructure projects including $52 million on the Antero Clearwater Treatment Facility.

 

Hedge Position

 

Antero currently has hedged 3.5 Tcfe of future natural gas equivalent production using fixed price swaps covering the period from October 1, 2016 through December 31, 2022 at an average index price of $3.65 per MMBtu.  At September 30, 2016, the Company’s estimated fair value of commodity derivative instruments was $2.4 billion.

 

The following table summarizes Antero’s hedge position as of September 30, 2016:

 

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Period

 

Natural Gas
MMBtu/d

 

Average
Index price
($/MMBtu)

 

Liquids
Bbl/d

 

Average
Index price

 

4Q 2016:

 

 

 

 

 

 

 

 

 

Nymex HH

 

1,110,000

 

$

3.57

 

 

 

Dom South

 

272,500

 

$

5.47

 

 

 

CGTLA

 

170,000

 

$

4.20

 

 

 

TCO

 

60,000

 

$

5.01

 

 

 

Propane MB ($/Gallon)

 

 

 

30,000

 

$

0.61

 

4Q 2016 Total

 

1,612,500

 

$

4.01

 

30,000

 

$

0.61

 

 

 

 

 

 

 

 

 

 

 

2017:

 

 

 

 

 

 

 

 

 

Nymex HH

 

1,370,000

 

$

3.39

 

 

 

CGTLA

 

420,000

 

$

4.27

 

 

 

Chicago

 

70,000

 

$

4.57

 

 

 

Propane MB ($/Gallon)

 

 

 

27,500

 

$

0.39

 

Ethane MB ($/Gallon)

 

 

 

20,000

 

$

0.25

 

Nymex WTI ($/Bbl)

 

 

 

1,000

 

$

51.90

 

2017 Total

 

1,860,000

 

$

3.63

 

48,500

 

N/A

 (1)

2018 Nymex HH

 

2,002,500

 

$

3.91

 

2,000

(2)

$

0.65

 

2019 Nymex HH

 

2,330,000

 

$

3.70

 

 

 

2020 Nymex HH

 

1,377,500

 

$

3.66

 

 

 

2021 Nymex HH

 

660,000

 

$

3.35

 

 

 

2022 Nymex HH

 

470,000

 

$

3.26

 

 

 

 


(1)         Average index price is not applicable as 2017 liquids hedges include propane, ethane and oil hedges.

(2)         Represents 2,000 Bbl/d of propane hedged at Mont Belvieu.

 

Conference Call

 

A conference call is scheduled on Thursday, October 27, 2016 at 9:00 am MT to discuss the 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 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference “Antero Resources”. A telephone replay of the call will be available until Friday, November 4, 2016 at 9:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10091479.

 

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 Friday, November 4, 2016 at 9:00 am MT.

 

Presentation

 

An updated presentation will be posted to the Company’s website before the October 27, 2016 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 this press release.

 

Non-GAAP Financial Measures

 

Revenue excluding unrealized hedge gains as set forth in this release represents total operating revenue adjusted for unsettled hedge gains.  Antero believes that revenue excluding unrealized hedge gains is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Revenue excluding unrealized hedge gains is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenue as an indicator of financial performance.  The following table reconciles total operating revenue to revenue excluding unrealized hedge gains (in thousands):

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2015

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

Total operating revenue

 

$

1,443,335

 

$

1,116,503

 

$

3,049,736

 

$

1,588,309

 

Commodity derivative fair value (gains)

 

(1,079,071

)

(530,334

)

(1,836,398

)

(125,624

)

Cash receipts for settled hedges

 

205,919

 

196,712

 

586,639

 

813,559

 

Revenue excluding unrealized hedge gains

 

$

570,183

 

$

782,881

 

$

1,799,977

 

$

2,276,244

 

 

Adjusted net income as set forth in this release represents net income (loss), 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

 

6



 

isolation or as a substitute for net income (loss) as an indicator of financial performance.  The following table reconciles net income (loss) to adjusted net income (in thousands):

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2015

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

533,842

 

$

238,255

 

$

782,900

 

$

(363,044

)

Non-cash commodity derivative (gains) losses on unsettled derivatives

 

(873,152

)

(333,622

)

(1,249,759

)

687,935

 

Impairment of unproved properties

 

8,754

 

11,753

 

43,670

 

47,223

 

Equity-based compensation

 

23,915

 

26,381

 

79,280

 

75,667

 

Contract termination and rig stacking

 

 

 

10,902

 

 

Income tax effect of reconciling items

 

320,711

 

112,490

 

435,033

 

(308,675

)

Adjusted net income

 

$

14,070

 

$

55,257

 

$

102,026

 

$

139,106

 

 

Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operating activities before changes in working capital.  Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt.  Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity.

 

The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release (in thousands):

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2015

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

246,046

 

$

326,991

 

$

841,154

 

$

905,697

 

Net change in working capital

 

(9,119

)

(17,327

)

(103,463

)

(35,939

)

Cash flow from operations before changes in working capital

 

$

236,927

 

$

309,664

 

$

737,691

 

$

869,758

 

 

The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):

 

 

 

December 31,

 

September 30,

 

 

 

2015

 

2016

 

 

 

 

 

 

 

Bank credit facilities

 

$

1,327,000

 

$

775,000

 

6.00% AR senior notes due 2020

 

525,000

 

525,000

 

5.375% AR senior notes due 2021

 

1,000,000

 

1,000,000

 

5.125% AR senior notes due 2022

 

1,100,000

 

1,100,000

 

5.625% AR senior notes due 2023

 

750,000

 

750,000

 

5.375% AM senior notes due 2024

 

 

650,000

 

Net unamortized premium

 

6,513

 

5,698

 

Net unamortized debt issuance costs

 

(39,731

)

(45,794

)

Consolidated total debt

 

$

4,668,782

 

$

4,759,904

 

Cash and cash equivalents

 

23,473

 

18,512

 

Consolidated net debt

 

$

4,645,309

 

$

4,741,392

 

 

Adjusted EBITDAX is a non-GAAP financial measure that the Company defines as net income (loss) from continuing operations including noncontrolling interest after adjusting for those items shown in the table below.  Adjusted EBITDAX, as used and defined

 

7



 

by the Company, 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, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  Adjusted EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and 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, franchise taxes, exploration expenses, and other commitments and obligations.  However, Antero’s management team believes adjusted EBITDAX is useful to an investor in evaluating the Company’s financial performance because this measure:

 

·                  is widely used by investors in the oil and gas industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

 

·                  helps investors to more meaningfully evaluate and compare the results of Antero’s operations from period to period by removing the effect of its capital structure from its operating structure; and

 

·                  is used by the Company’s management team for various purposes, including as a measure of operating performance, in presentations to its board of directors, as a basis for strategic planning and forecasting.  Adjusted EBITDAX is also used by our Board of Directors as a performance measure in determining executive compensation.  Adjusted EBITDAX, as defined by our Credit Facility, is used by our lenders pursuant to covenants under our revolving credit facility and by its lenders pursuant to covenants under its credit facility and the indentures governing the Company’s senior notes.

 

There are significant limitations to using adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero’s net income, the lack of comparability of results of operations of different companies and the different methods of calculating adjusted EBITDAX reported by different companies.  The following tables represent a reconciliation of the Company’s net income (loss) from continuing operations including noncontrolling interest to adjusted EBITDAX, a reconciliation of adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before cash receipts for settled hedges to adjusted EBITDAX margin (in thousands except adjusted EBITDAX margin).

 

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2015

 

2016

 

2015

 

2016

 

Net income (loss) from continuing operations including noncontrolling interest

 

$

544,734

 

$

268,196

 

$

804,422

 

$

(296,644

)

Commodity derivative fair value (gains)

 

(1,079,071

)

(530,334

)

(1,836,398

)

(125,624

)

Gains on settled derivative instruments

 

205,919

 

196,712

 

586,639

 

813,559

 

Interest expense

 

60,921

 

59,755

 

173,929

 

185,634

 

Income tax expense (benefit)

 

335,460

 

140,924

 

498,709

 

(230,755

)

Depreciation, depletion, amortization, and accretion

 

189,086

 

199,741

 

549,240

 

589,903

 

Impairment of unproved properties

 

8,754

 

11,753

 

43,670

 

47,223

 

Exploration expense

 

1,087

 

1,166

 

3,086

 

3,289

 

Equity-based compensation expense

 

23,915

 

26,381

 

79,280

 

75,667

 

Equity in earnings of unconsolidated affiliate

 

 

(1,543

)

 

(2,027

)

State franchise taxes

 

2

 

 

131

 

39

 

Contract termination and rig stacking

 

 

 

10,902

 

 

Total Adjusted EBITDAX

 

290,807

 

372,751

 

913,610

 

1,060,264

 

Interest expense

 

(60,921

)

(59,755

)

(173,929

)

(185,634

)

Exploration expense

 

(1,087

)

(1,166

)

(3,086

)

(3,289

)

Changes in current assets and liabilities

 

9,119

 

17,327

 

103,463

 

35,939

 

State franchise taxes

 

(2

)

 

(131

)

(39

)

Other non-cash items

 

8,130

 

(2,166

)

1,227

 

(1,544

)

Net cash provided by operating activities

 

$

246,046

 

$

326,991

 

$

841,154

 

$

905,697

 

 

8



 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2015

 

2016

 

2015

 

2016

 

Adjusted EBITDAX margin ($ per Mcfe):

 

 

 

 

 

 

 

 

 

Realized price before cash receipts for settled hedges

 

$

2.34

 

$

2.82

 

$

2.59

 

$

2.36

 

Gathering, compression, and water handling and treatment revenues

 

0.04

 

0.01

 

0.02

 

0.03

 

Lease operating expense

 

(0.08

)

(0.08

)

(0.06

)

(0.08

)

Gathering, compression, processing and transportation costs

 

(1.16

)

(1.36

)

(1.20

)

(1.32

)

Marketing, net

 

(0.19

)

(0.10

)

(0.17

)

(0.19

)

Production and ad valorem taxes

 

(0.08

)

(0.09

)

(0.14

)

(0.11

)

General and administrative(1)

 

(0.26

)

(0.18

)

(0.24

)

(0.20

)

Adjusted EBITDAX margin before settled hedges

 

0.61

 

1.02

 

0.80

 

0.49

 

Cash receipts for settled hedges

 

1.49

 

1.14

 

1.44

 

1.66

 

Adjusted EBITDAX margin ($ per Mcfe):

 

$

2.10

 

$

2.16

 

$

2.24

 

$

2.15

 

 


(1) Excludes equity-based stock compensation that is included in G&A

 

Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company’s website is located at www.anteroresources.com.

 

This release includes “forward-looking statements”.  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero’s control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, maximized realized natural gas and natural gas liquids prices, acreage quality, access to multiple gas markets, expected drilling and development plans, future financial position, future technical improvements and future marketing opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

 

Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading “Item 1A. Risk Factors” in Antero’s Annual Report on Form 10-K for the year ended December 31, 2015.

 

For more information, contact Michael Kennedy — SVP — Finance, at (303) 357-6782 or mkennedy@anteroresources.com.

 

9



 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2015 and September 30, 2016

(unaudited)

(In thousands, except per share amounts)

 

 

 

December 31, 2015

 

September 30, 2016

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

23,473

 

18,512

 

Accounts receivable, net of allowance for doubtful accounts of $1,195 in 2015 and 2016

 

79,404

 

59,462

 

Accrued revenue

 

128,242

 

196,490

 

Derivative instruments

 

1,009,030

 

417,605

 

Other current assets

 

8,087

 

3,402

 

Total current assets

 

1,248,236

 

695,471

 

Property and equipment:

 

 

 

 

 

Natural gas properties, at cost (successful efforts method):

 

 

 

 

 

Unproved properties

 

1,996,081

 

2,449,995

 

Proved properties

 

8,211,106

 

9,180,705

 

Water handling and treatment systems

 

565,616

 

681,062

 

Gathering systems and facilities

 

1,502,396

 

1,656,676

 

Other property and equipment

 

46,415

 

45,571

 

 

 

12,321,614

 

14,014,009

 

Less accumulated depletion, depreciation, and amortization

 

(1,589,372

)

(2,176,793

)

Property and equipment, net

 

10,732,242

 

11,837,216

 

Derivative instruments

 

2,108,450

 

2,015,090

 

Other assets

 

26,565

 

81,476

 

Total assets

 

$

14,115,493

 

14,629,253

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

364,160

 

172,293

 

Accrued liabilities

 

194,076

 

245,174

 

Revenue distributions payable

 

129,949

 

172,202

 

Derivative instruments

 

 

3,110

 

Other current liabilities

 

19,085

 

19,125

 

Total current liabilities

 

707,270

 

611,904

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

4,668,782

 

4,759,904

 

Deferred income tax liability

 

1,370,686

 

1,215,240

 

Derivative instruments

 

 

40

 

Other liabilities

 

82,077

 

61,883

 

Total liabilities

 

6,828,815

 

6,648,971

 

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; issued and outstanding 277,036 shares and 307,188 shares, respectively

 

2,770

 

3,072

 

Additional paid-in capital

 

4,122,811

 

5,131,909

 

Accumulated earnings

 

1,808,811

 

1,445,767

 

Total stockholders’ equity

 

5,934,392

 

6,580,748

 

Noncontrolling interest in consolidated subsidiary

 

1,352,286

 

1,399,534

 

Total equity

 

7,286,678

 

7,980,282

 

Total liabilities and equity

 

$

14,115,493

 

14,629,253

 

 

10



 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended September 30, 2015 and 2016

(unaudited)
 (In thousands, except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

 

2015

 

2016

 

Revenue:

 

 

 

 

 

Natural gas sales

 

$

253,975

 

364,373

 

Natural gas liquids sales

 

50,092

 

106,958

 

Oil sales

 

20,138

 

14,793

 

Gathering, compression, and water handling and treatment

 

4,426

 

2,969

 

Marketing

 

35,633

 

97,076

 

Commodity derivative fair value gains

 

1,079,071

 

530,334

 

Total revenue

 

1,443,335

 

1,116,503

 

Operating expenses:

 

 

 

 

 

Lease operating

 

10,786

 

13,854

 

Gathering, compression, processing, and transportation

 

160,302

 

234,915

 

Production and ad valorem taxes

 

10,721

 

15,554

 

Marketing

 

61,799

 

114,611

 

Exploration

 

1,087

 

1,166

 

Impairment of unproved properties

 

8,754

 

11,753

 

Depletion, depreciation, and amortization

 

188,667

 

199,113

 

Accretion of asset retirement obligations

 

419

 

628

 

General and administrative (including equity-based compensation expense of $23,915 and $26,381 in 2015 and 2016, respectively)

 

59,685

 

57,577

 

Total operating expenses

 

502,220

 

649,171

 

Operating income

 

941,115

 

467,332

 

Other income (expenses):

 

 

 

 

 

Equity in earnings of unconsolidated affiliate

 

 

1,543

 

Interest

 

(60,921

)

(59,755

)

Total other expenses

 

(60,921

)

(58,212

)

Income before income taxes

 

880,194

 

409,120

 

Provision for income tax expense

 

(335,460

)

(140,924

)

Net income and comprehensive income including noncontrolling interest

 

544,734

 

268,196

 

Net income and comprehensive income attributable to noncontrolling interest

 

10,892

 

29,941

 

Net income and comprehensive income attributable to Antero Resources Corporation

 

$

533,842

 

238,255

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share—basic

 

$

1.93

 

0.78

 

 

 

 

 

 

 

Earnings per common share—assuming dilution

 

$

1.93

 

0.77

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

Basic

 

277,007

 

306,785

 

Diluted

 

277,015

 

308,657

 

 

11



 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Nine Months Ended September 30, 2015 and 2016

(unaudited)
 (In thousands, except per share amounts)

 

 

 

Nine Months Ended September 30,

 

 

 

2015

 

2016

 

Revenue:

 

 

 

 

 

Natural gas sales

 

$

810,982

 

848,936

 

Natural gas liquids sales

 

188,403

 

274,736

 

Oil sales

 

55,627

 

41,712

 

Gathering, compression, and water handling and treatment

 

15,084

 

10,107

 

Marketing

 

143,242

 

287,194

 

Commodity derivative fair value gains

 

1,836,398

 

125,624

 

Total revenue

 

3,049,736

 

1,588,309

 

Operating expenses:

 

 

 

 

 

Lease operating

 

25,561

 

37,190

 

Gathering, compression, processing, and transportation

 

490,633

 

649,713

 

Production and ad valorem taxes

 

57,458

 

52,296

 

Marketing

 

214,201

 

378,521

 

Exploration

 

3,086

 

3,289

 

Impairment of unproved properties

 

43,670

 

47,223

 

Depletion, depreciation, and amortization

 

548,013

 

588,057

 

Accretion of asset retirement obligations

 

1,227

 

1,846

 

General and administrative (including equity-based compensation expense of $79,280 and $75,667 in 2015 and 2016, respectively)

 

177,925

 

173,966

 

Contract termination and rig stacking

 

10,902

 

 

Total operating expenses

 

1,572,676

 

1,932,101

 

Operating income (loss)

 

1,477,060

 

(343,792

)

Other income (expenses):

 

 

 

 

 

Equity in earnings of unconsolidated affiliate

 

 

2,027

 

Interest

 

(173,929

)

(185,634

)

Total other expenses

 

(173,929

)

(183,607

)

Income (loss) before income taxes

 

1,303,131

 

(527,399

)

Provision for income tax (expense) benefit

 

(498,709

)

230,755

 

Net income (loss) and comprehensive income (loss) including noncontrolling interest

 

804,422

 

(296,644

)

Net income and comprehensive income attributable to noncontrolling interest

 

21,522

 

66,400

 

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

 

$

782,900

 

(363,044

)

 

 

 

 

 

 

Earnings (loss) per common share—basic

 

$

2.87

 

(1.26

)

 

 

 

 

 

 

Earnings (loss) per common share—assuming dilution

 

$

2.87

 

(1.26

)

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

Basic

 

273,145

 

288,607

 

Diluted

 

273,154

 

288,607

 

 

12



 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2015 and 2016

(unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2015

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss) including noncontrolling interest

 

$

804,422

 

(296,644

)

Adjustment to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depletion, depreciation, amortization, and accretion

 

549,240

 

589,903

 

Impairment of unproved properties

 

43,670

 

47,223

 

Derivative fair value gains

 

(1,836,398

)

(125,624

)

Gains on settled derivatives

 

586,639

 

813,559

 

Deferred income tax expense (benefit)

 

498,709

 

(230,755

)

Equity-based compensation expense

 

79,280

 

75,667

 

Equity in earnings of unconsolidated affiliate

 

 

(2,027

)

Other

 

12,129

 

(1,544

)

Changes in current assets and liabilities:

 

 

 

 

 

Accounts receivable

 

15,299

 

10,077

 

Accrued revenue

 

75,765

 

(68,248

)

Other current assets

 

4,127

 

4,685

 

Accounts payable

 

(1,302

)

(7,415

)

Accrued liabilities

 

34,091

 

54,484

 

Revenue distributions payable

 

(20,839

)

42,253

 

Other current liabilities

 

(3,678

)

103

 

Net cash provided by operating activities

 

841,154

 

905,697

 

Cash flows used in investing activities:

 

 

 

 

 

Additions to proved properties

 

 

(64,789

)

Additions to unproved properties

 

(170,291

)

(559,572

)

Drilling and completion costs

 

(1,350,498

)

(1,009,851

)

Additions to water handling and treatment systems

 

(79,227

)

(137,355

)

Additions to gathering systems and facilities

 

(282,813

)

(154,136

)

Additions to other property and equipment

 

(5,225

)

(1,747

)

Investment in unconsolidated affiliate

 

 

(45,044

)

Change in other assets

 

11,190

 

(2,173

)

Proceeds from asset sales

 

40,000

 

 

Net cash used in investing activities

 

(1,836,864

)

(1,974,667

)

Cash flows from financing activities:

 

 

 

 

 

Issuance of common stock

 

537,832

 

837,414

 

Issuance of common units by Antero Midstream Partners LP

 

240,972

 

19,605

 

Proceeds from sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation

 

 

178,000

 

Issuance of senior notes

 

750,000

 

650,000

 

Repayments on bank credit facilities, net

 

(705,000

)

(552,000

)

Payments of deferred financing costs

 

(17,190

)

(9,029

)

Distributions to noncontrolling interest in consolidated subsidiary

 

(21,358

)

(51,238

)

Employee tax withholding for settlement of equity compensation awards

 

(4,554

)

(4,876

)

Other

 

(3,561

)

(3,867

)

Net cash provided by financing activities

 

777,141

 

1,064,009

 

Net decrease in cash and cash equivalents

 

(218,569

)

(4,961

)

Cash and cash equivalents, beginning of period

 

245,979

 

23,473

 

Cash and cash equivalents, end of period

 

$

27,410

 

18,512

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for interest

 

$

116,579

 

132,928

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

Decrease in accounts payable and accrued liabilities for additions to property and equipment

 

$

(193,288

)

(189,234

)

 

13



 

ANTERO RESOURCES CORPORATION

 

The following tables set forth selected operating data for the three months ended September 30, 2015 compared to the three months ended September 30, 2016:

 

 

 

 

 

 

 

Amount of

 

 

 

 

 

Three Months Ended September 30,

 

Increase

 

Percent

 

(in thousands)

 

2015

 

2016

 

(Decrease)

 

Change

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

253,975

 

$

364,373

 

$

110,398

 

43

%

NGLs sales

 

50,092

 

106,958

 

56,866

 

114

%

Oil sales

 

20,138

 

14,793

 

(5,345

)

(27

)%

Gathering, compression, and water handling and treatment

 

4,426

 

2,969

 

(1,457

)

(33

)%

Marketing

 

35,633

 

97,076

 

61,443

 

172

%

Commodity derivative fair value gains

 

1,079,071

 

530,334

 

(548,737

)

(51

)%

Total operating revenues

 

1,443,335

 

1,116,503

 

(326,832

)

(23

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating

 

10,786

 

13,854

 

3,068

 

28

%

Gathering, compression, processing, and transportation

 

160,302

 

234,915

 

74,613

 

47

%

Production and ad valorem taxes

 

10,721

 

15,554

 

4,833

 

45

%

Marketing

 

61,799

 

114,611

 

52,812

 

85

%

Exploration

 

1,087

 

1,166

 

79

 

7

%

Impairment of unproved properties

 

8,754

 

11,753

 

2,999

 

34

%

Depletion, depreciation, and amortization

 

188,667

 

199,113

 

10,446

 

6

%

Accretion of asset retirement obligations

 

419

 

628

 

209

 

50

%

General and administrative (before equity-based compensation)

 

35,770

 

31,196

 

(4,574

)

(13

)%

Equity-based compensation

 

23,915

 

26,381

 

2,466

 

10

%

Total operating expenses

 

502,220

 

649,171

 

146,951

 

29

%

Operating income

 

941,115

 

467,332

 

(473,783

)

(50

)%

 

 

 

 

 

 

 

 

 

 

Other earnings (expenses):

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliate

 

 

1,543

 

1,543

 

*

 

Interest expense

 

(60,921

)

(59,755

)

1,166

 

(2

)%

Income before income taxes

 

880,194

 

409,120

 

(471,074

)

(54

)%

Income tax expense

 

(335,460

)

(140,924

)

194,536

 

(58

)%

Net income and comprehensive income including noncontrolling interest

 

544,734

 

268,196

 

(276,538

)

(51

)%

Net income and comprehensive income attributable to noncontrolling interest

 

10,892

 

29,941

 

19,049

 

175

%

Net income and comprehensive income attributable to Antero Resources Corporation

 

$

533,842

 

$

238,255

 

$

(295,587

)

(55

)%

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAX

 

$

290,807

 

$

372,751

 

$

81,944

 

28

%

 

 

 

 

 

 

 

Amount of

 

 

 

 

 

Three Months Ended September 30,

 

Increase

 

Percent

 

 

 

2015

 

2016

 

(Decrease)

 

Change

 

Production data:

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

110

 

128

 

18

 

16

%

C2 Ethane (MBbl)

 

 

1,801

 

1,801

 

*

 

C3+ NGLs (MBbl)

 

4,147

 

5,270

 

1,123

 

27

%

Oil (MBbl)

 

660

 

423

 

(237

)

(36

)%

Combined (Bcfe)

 

139

 

172

 

33

 

25

%

Daily combined production (MMcfe/d)

 

1,506

 

1,875

 

369

 

25

%

Average prices before effects of derivative settlements:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

2.32

 

$

2.86

 

$

0.54

 

23

%

C2 Ethane (per Bbl)

 

$

 

$

8.00

 

$

*

 

*

 

C3+ NGLs (per Bbl)

 

$

12.08

 

$

17.56

 

$

5.48

 

45

%

Oil (per Bbl)

 

$

30.49

 

$

34.93

 

$

4.44

 

15

%

Combined (per Mcfe)

 

$

2.34

 

$

2.82

 

$

0.48

 

21

%

Average realized prices after effects of derivative settlements:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

3.99

 

$

4.30

 

$

0.31

 

8

%

C2 Ethane (per Bbl)

 

$

 

$

8.00

 

$

*

 

*

 

C3+ NGLs (per Bbl)

 

$

16.47

 

$

19.96

 

$

3.49

 

21

%

Oil (per Bbl)

 

$

38.18

 

$

34.93

 

$

(3.25

)

(9

)%

Combined (per Mcfe)

 

$

3.83

 

$

3.96

 

$

0.13

 

3

%

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

Lease operating

 

$

0.08

 

$

0.08

 

$

 

*

 

Gathering, compression, processing, and transportation

 

$

1.16

 

$

1.36

 

$

0.20

 

17

%

Production and ad valorem taxes

 

$

0.08

 

$

0.09

 

$

0.01

 

13

%

Marketing, net

 

$

0.19

 

$

0.10

 

$

(0.09

)

(47

)%

Depletion, depreciation, amortization, and accretion

 

$

1.37

 

$

1.16

 

$

(0.21

)

(15

)%

General and administrative (before equity-based compensation)

 

$

0.26

 

$

0.18

 

$

(0.08

)

(31

)%

 


*Not meaningful or applicable

 

14



 

ANTERO RESOURCES CORPORATION

 

The following tables set forth selected operating data for the Nine months ended September 30, 2015 compared to the Nine months ended September 30, 2016:

 

 

 

Nine Months Ended September 30,

 

Amount of
Increase

 

Percent

 

(in thousands)

 

2015

 

2016

 

(Decrease)

 

Change

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

810,982

 

$

848,936

 

$

37,954

 

5

%

NGLs sales

 

188,403

 

274,736

 

86,333

 

46

%

Oil sales

 

55,627

 

41,712

 

(13,915

)

(25

)%

Gathering, compression, and water handling and treatment

 

15,084

 

10,107

 

(4,977

)

(33

)%

Marketing

 

143,242

 

287,194

 

143,952

 

100

%

Commodity derivative fair value gains

 

1,836,398

 

125,624

 

(1,710,774

)

(93

)%

Total operating revenues

 

3,049,736

 

1,588,309

 

(1,461,427

)

(48

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating

 

25,561

 

37,190

 

11,629

 

45

%

Gathering, compression, processing, and transportation

 

490,633

 

649,713

 

159,080

 

32

%

Production and ad valorem taxes

 

57,458

 

52,296

 

(5,162

)

(9

)%

Marketing

 

214,201

 

378,521

 

164,320

 

77

%

Exploration

 

3,086

 

3,289

 

203

 

7

%

Impairment of unproved properties

 

43,670

 

47,223

 

3,553

 

8

%

Depletion, depreciation, and amortization

 

548,013

 

588,057

 

40,044

 

7

%

Accretion of asset retirement obligations

 

1,227

 

1,846

 

619

 

50

%

General and administrative (before equity-based compensation)

 

98,645

 

98,299

 

(346

)

*

 

Equity-based compensation

 

79,280

 

75,667

 

(3,613

)

(5

)%

Contract termination and rig stacking

 

10,902

 

 

(10,902

)

*

 

Total operating expenses

 

1,572,676

 

1,932,101

 

359,425

 

23

%

Operating income (loss)

 

1,477,060

 

(343,792

)

(1,820,852

)

*

 

 

 

 

 

 

 

 

 

 

 

Other earnings (expenses):

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliate

 

 

2,027

 

2,027

 

*

 

Interest expense

 

(173,929

)

(185,634

)

(11,705

)

7

%

Income (loss) before income taxes

 

1,303,131

 

(527,399

)

(1,830,530

)

*

 

Income tax (expense) benefit

 

(498,709

)

230,755

 

729,464

 

*

 

Net income (loss) and comprehensive income (loss) including noncontrolling interest

 

804,422

 

(296,644

)

(1,101,066

)

*

 

Net income and comprehensive income attributable to noncontrolling interest

 

21,522

 

66,400

 

44,878

 

209

%

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

 

$

782,900

 

$

(363,044

)

$

(1,145,944

)

*

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAX

 

$

913,610

 

$

1,060,264

 

$

146,654

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of

 

 

 

 

 

Nine Months Ended September 30,

 

Increase

 

Percent

 

 

 

2015

 

2016

 

(Decrease)

 

Change

 

Production data:

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

332

 

369

 

37

 

11

%

C2 Ethane (MBbl)

 

 

4,463

 

4,463

 

*

 

C3+ NGLs (MBbl)

 

11,042

 

14,722

 

3,680

 

33

%

Oil (MBbl)

 

1,549

 

1,373

 

(176

)

(11

)%

Combined (Bcfe)

 

407

 

493

 

86

 

21

%

Daily combined production (MMcfe/d)

 

1,492

 

1,799

 

307

 

21

%

Average prices before effects of derivative settlements:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

2.45

 

$

2.30

 

$

(0.15

)

(6

)%

C2 Ethane (per Bbl)

 

$

 

$

7.81

 

$

*

 

*

 

C3+ NGLs (per Bbl)

 

$

17.06

 

$

16.29

 

$

(0.77

)

(5

)%

Oil (per Bbl)

 

$

35.91

 

$

30.38

 

$

(5.53

)

(15

)%

Combined (per Mcfe)

 

$

2.59

 

$

2.36

 

$

(0.23

)

(9

)%

Average realized prices after effects of derivative settlements:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

4.07

 

$

4.38

 

$

0.31

 

8

%

C2 Ethane (per Bbl)

 

$

 

$

7.81

 

$

*

 

*

 

C3+ NGLs (per Bbl)

 

$

20.34

 

$

19.30

 

$

(1.04

)

(5

)%

Oil (per Bbl)

 

$

42.90

 

$

30.38

 

$

(12.52

)

(29

)%

Combined (per Mcfe)

 

$

4.03

 

$

4.02

 

$

(0.01

)

*

 

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

Lease operating

 

$

0.06

 

$

0.08

 

$

0.02

 

33

%

Gathering, compression, processing, and transportation

 

$

1.20

 

$

1.32

 

$

0.12

 

10

%

Production and ad valorem taxes

 

$

0.14

 

$

0.11

 

$

(0.03

)

(21

)%

Marketing, net

 

$

0.17

 

$

0.19

 

$

0.02

 

12

%

Depletion, depreciation, amortization, and accretion

 

$

1.35

 

$

1.20

 

$

(0.15

)

(11

)%

General and administrative (before equity-based compensation)

 

$

0.24

 

$

0.20

 

$

(0.04

)

(17

)%

 


*Not meaningful or applicable

 

15