PR Newswire
DENVER, July 26, 2023
DENVER, July 26, 2023 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources," "Antero," or the "Company") today announced its second quarter 2023 financial and operating results. The relevant consolidated financial statements are included in Antero Resources' Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
Second Quarter 2023 Highlights:
- Net production averaged 3.4 Bcfe/d
- Liquids production averaged 192 MBbl/d, an increase of 16% from the year ago period
- Natural gas production averaged 2.2 Bcf/d, flat from the year ago period
- Realized a pre-hedge natural gas equivalent price of $2.89 per Mcfe, a $0.79 per Mcfe premium to NYMEX pricing
- Realized a C3+ NGL price of $34.16 per barrel
- Realized a pre-hedge natural gas price of $2.14 per Mcf, a $0.04 per Mcf premium to NYMEX pricing
- Net loss was $83 million, Adjusted Net Loss was $84 million (Non-GAAP)
- Adjusted EBITDAX was $113 million (Non-GAAP); net cash provided by operating activities was $155 million
- Averaged over 11 completion stages per day per completion crew during the second quarter, a 3% increase sequentially and an increase of 40% compared to the 2022 average
- Net Debt to trailing last twelve month Adjusted EBITDAX was 0.8x (Non-GAAP)
2023 Guidance Updates:
- Increasing full year 2023 production guidance by 100 MMcfe/d, or 3%, to a range of 3.35 to 3.4 Bcfe/d
- Decreasing cash production costs by $0.05 per Mcfe to a range of $2.35 to $2.45 per Mcfe
- Decreasing realized natural gas price premium to NYMEX Henry Hub by $0.05 per Mcf to $0.00 to $0.10 per Mcf
Paul Rady, Chairman, CEO and President of Antero Resources commented, "Our second quarter results continue to build on the operational momentum that we achieved in the first quarter. During the quarter, we achieved a number of new company quarterly drilling and completion records, including footage drilled in a 24-hour period and completion stages pumped per day. These operational efficiencies are expected to result in lower maintenance capital expenditures going forward. Further, the continued strength in our well performance allows us to increase our 2023 production guidance by 3%, while maintaining the same capital budget."
Mr. Rady continued, "The industry has responded to lower commodity prices through meaningful reductions in rig and completion activity. Looking ahead, we expect natural gas demand to increase on higher LNG exports and natural gas fired electric power burn, which in turn should further balance the market and support natural gas prices. We are uniquely positioned to benefit from increasing NYMEX prices with 75% of our natural gas being sold at Antero's premium delivery points in the LNG corridor."
Michael Kennedy, CFO of Antero Resources said, "Antero's improved capital efficiency is expected to result in 2024 capital requirements that are 10% below our 2023 capital guidance. This capital program will target maintaining our increased 2023 production guidance. Further, the capital efficiency gains are expected to result in positive Free Cash Flow in 2023, and when combined with a higher natural gas strip, generate substantial Free Cash Flow in 2024. As a reminder, we target returning 50% of our Free Cash Flow to our shareholders."
For a discussion of the non-GAAP financial measures including Adjusted Net Income, Adjusted EBITDAX, Free Cash Flow and Net Debt please see "Non-GAAP Financial Measures."
2023 Guidance Update
Antero is increasing its full year 2023 production guidance to 3.35 to 3.4 Bcfe/d, an increase at the midpoint of 100 MMcfe/d, or 3%. The higher expected volumes are driven by strong well performance and capital efficiency gains, which more than offset lower ethane volumes due to the timing of the Shell ethane cracker.
Antero is decreasing its cash production expense guidance by $0.05 per Mcfe to a range of $2.35 to $2.45 per Mcfe reflecting lower fuel costs and production tax. Antero is also decreasing its natural gas realized price guidance by $0.05 per Mcf, to a range of $0.00 to $0.10 per Mcf due to the lower natural gas strip that reduces the BTU uplift Antero realizes.
Full Year 2023 – | Full Year 2023 – | |||||||||||||||||||||||||||||||||||
Full Year 2023 Guidance | Low | High | Low | High | ||||||||||||||||||||||||||||||||
Net Production (Bcfe/d) | 3.25 | 3.30 | 3.35 | 3.4 | ||||||||||||||||||||||||||||||||
Net Natural Gas Production (Bcf/d) | 2.10 | 2.15 | 2.2 | 2.225 | ||||||||||||||||||||||||||||||||
Net Liquids Production (Bbl/d) | 184,000 | 195,000 | 188,000 | 199,000 | ||||||||||||||||||||||||||||||||
Net Daily C3+ NGL Production | 105,000 | 110,000 | 110,000 | 115,000 | ||||||||||||||||||||||||||||||||
Net Daily Ethane Production (Bbl/d) | 70,000 | 75,000 | 67,500 | 72,500 | ||||||||||||||||||||||||||||||||
Net Daily Oil Production (Bbl/d) | 9,000 | 10,000 | 10,500 | 11,500 | ||||||||||||||||||||||||||||||||
Cash Production Expense ($/Mcfe) | $2.40 | $2.50 | $2.35 | $2.45 | ||||||||||||||||||||||||||||||||
Natural Gas Realized Price Expected Premium to NYMEX ($/Mcf) | $0.05 | $0.15 | $0.00 | $0.10 | ||||||||||||||||||||||||||||||||
Note: Any 2023 guidance items not discussed in this release are unchanged from previously stated guidance. |
Free Cash Flow
During the second quarter of 2023, Free Cash Flow was ($159) million.
Three Months Ended | |||||||
2022 | 2023 | ||||||
Net cash provided by operating activities | $ | 922,712 | 155,263 | ||||
Less: Net cash used in investing activities | (259,717) | (287,236) | |||||
Plus: Contract termination | 2,096 | 4,441 | |||||
Less: Proceeds from sale of assets, net | — | (220) | |||||
Less: Distributions to non-controlling interests in Martica | (31,541) | (31,745) | |||||
Free Cash Flow | $ | 633,550 | (159,497) | ||||
Changes in Working Capital (1) | 32,279 | (52,709) | |||||
Free Cash Flow before Changes in Working Capital | $ | 665,829 | (212,206) | ||||
(1) | Working capital adjustments in the second quarter of 2022 include a decrease of $43 million in changes in current assets and liabilities and an increase of $11 million in accounts payable and accrued liabilities for additions to property and equipment. Working capital adjustments in the second quarter of 2023 include a $51 million net increase in current assets and liabilities and a $2 million increase in accounts payable and accrued liabilities for additions to property and equipment. |
During the first half of 2023, Free Cash Flow was $14 million.
Six Months Ended June 30, | ||||||
2022 | 2023 | |||||
Net cash provided by operating activities | $ | 1,488,385 | 499,165 | |||
Less: Net cash used in investing activities | (474,834) | (638,040) | ||||
Plus: Payments for derivative monetizations | — | 202,339 | ||||
Plus: Contract termination | 2,104 | 33,991 | ||||
Less: Proceeds from sale of assets, net | (195) | (311) | ||||
Less: Distributions to non-controlling interests in Martica | (67,298) | (83,084) | ||||
Free Cash Flow | $ | 948,162 | 14,060 | |||
Changes in Working Capital (1) | 182,753 | (202,474) | ||||
Free Cash Flow before Changes in Working Capital | $ | 1,130,915 | (188,414) | |||
(1) | Working capital adjustments in the first half of 2022 include decreases of $179 million and $4 million for changes in current assets and liabilities and accounts payable and accrued liabilities for additions to property and equipment. Working capital adjustments in the first half of 2023 include a $211 million net increase in current assets and liabilities and a $9 million decrease in accounts payable and accrued liabilities for additions to property and equipment. |
Return of Capital Program
Antero purchased 0.7 million shares for $16 million during the second quarter of 2023. Shares purchased during the quarter were used to offset tax withholding obligations related to the vesting of equity awards to Antero employees. Since the inception of the share repurchase program in the first quarter of 2022, Antero has purchased 31.1 million shares for approximately $1 billion, or 10% of common shares outstanding. The Company currently has approximately $1 billion of remaining capacity under the announced share repurchase program.
Program to Date 1Q22 – 2Q23 | Second Quarter 2023 | ||||||||
Total shares purchased (MM) (1) | 31.1 | 0.7 | |||||||
Share purchases ($MM) | 1,043 | 16 | |||||||
% of common shares outstanding (2) | 10 % | NM | |||||||
(1) | The total shares purchased during the period ended January 1, 2022 through June 30, 2023 and three months ended June 30, 2023 includes 3.2 million and 0.7 million shares of our common stock, respectively, related to satisfying tax withholding obligations incurred upon the vesting of equity awards held by our employees. |
(2) | Shares outstanding as of June 30, 2023. |
Second Quarter 2023 Financial Results
Net daily natural gas equivalent production in the second quarter averaged 3.4 Bcfe/d, including 192 MBbl/d of liquids, an increase of 5% from the second quarter of 2022. As a result of Antero's focus on its liquids-rich Marcellus acreage, liquids volumes increased by 16%, while natural gas volumes were flat, each compared to the year ago period.
Antero's average realized natural gas price before hedging was $2.14 per Mcf, a $0.04 per Mcf premium to the average first-of-month ("FOM") NYMEX Henry Hub price.
The following table details average net production and average realized prices for the three months ended June 30, 2023:
Three Months Ended June 30, 2023 | ||||||||||||||||
Natural | ||||||||||||||||
Natural Gas | Oil (Bbl/d) | C3+ NGLs (Bbl/d) | Ethane (Bbl/d) | Gas Equivalent (MMcfe/d) | ||||||||||||
Average Net Production | 2,242 | 10,670 | 111,813 | 70,484 | 3,400 | |||||||||||
Combined | ||||||||||||||||
Natural | ||||||||||||||||
Natural Gas | Oil | C3+ NGLs | Ethane | Gas Equivalent | ||||||||||||
Average Realized Prices | ($/Mcf) | ($/Bbl) | ($/Bbl) | ($/Bbl) | ($/Mcfe) | |||||||||||
Average realized prices before settled derivatives | $ | 2.14 | $ | 59.69 | $ | 34.16 | $ | 7.82 | $ | 2.89 | ||||||
NYMEX average price (1) | $ | 2.10 | $ | 73.78 | $ | 2.10 | ||||||||||
Premium / (Discount) to NYMEX | $ | 0.04 | $ | (14.09) | $ | 0.79 | ||||||||||
Settled commodity derivatives (2) | $ | 0.02 | $ | (0.29) | $ | (0.05) | $ | — | $ | 0.01 | ||||||
Average realized prices after settled derivatives | $ | 2.16 | $ | 59.40 | $ | 34.11 | $ | 7.82 | $ | 2.90 | ||||||
Premium / (Discount) to NYMEX | $ | 0.06 | $ | (14.38) | $ | 0.80 | ||||||||||
(1) | The average index prices for natural gas and oil represent the New York Mercantile Exchange average first-of-month price and the Energy Information Administration calendar month average West Texas Intermediate future price, respectively. |
(2) | These commodity derivative instruments include contracts attributable to Martica Holdings LLC ("Martica"), Antero's consolidated variable interest entity. All gains or losses from Martica's derivative instruments are fully attributable to the noncontrolling interests in Martica, which includes portions of the natural gas and all oil and C3+ NGL derivative instruments during the three months ended June 30, 2023. |
Antero's average realized C3+ NGL price was $34.16 per barrel. Antero shipped 54% of its total C3+ NGL net production on Mariner East 2 ("ME2") for export and realized a $0.07 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 46% of C3+ NGL net production at a $0.10 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 112 MBbl/d of net C3+ NGL production was a $0.01 per gallon discount to Mont Belvieu pricing.
Three Months Ended June 30, 2023 | ||||||||
Pricing Point | Net C3+ NGL Production | % by | Premium (Discount) To Mont Belvieu | |||||
Propane / Butane exported on ME2 | Marcus Hook, PA | 60,469 | 54 % | $0.07 | ||||
Remaining C3+ NGL volume | Hopedale, OH | 51,344 | 46 % | ($0.10) | ||||
Total C3+ NGLs/Blended Premium | 111,813 | 100 % | $(0.01) | |||||
All-in cash expense, which includes lease operating, gathering, compression, processing, and transportation, production and ad valorem taxes was $2.35 per Mcfe in the second quarter, a 10% decrease compared to $2.61 per Mcfe average during the second quarter of 2022. The decrease was due primarily to lower production tax and lower fuel costs as a result of lower commodity prices. Net marketing expense was $0.07 per Mcfe in the second quarter, a decrease from $0.09 per Mcfe during the second quarter of 2022. The decrease in net marketing expense was due to reduced firm transportation commitments between periods.
Second Quarter 2023 Operating Results
Antero placed 26 horizontal Marcellus wells to sales during the second quarter with an average lateral length of 12,800 feet. Of the wells placed to sales, 20 of these wells have been on line for at least 60 days. The average 60-day rate per well was 26.5 MMcfe/d with approximately 1,236 Bbl/d of liquids per well assuming 25% ethane recovery. The remaining six wells were completed in early June. Pad highlights include:
- A six well pad with an average lateral length of 15,900 feet had an average 60-day rate per well of 29.0 MMcfe/d, including approximately 1,744 Bbl/d of liquids per well assuming 25% ethane recovery
- A seven well pad with an average lateral length of 12,700 feet had an average 60-day rate per well of 27.2 MMcfe/d, including approximately 1,436 Bbl/d of liquids per well assuming 25% ethane recovery
Drilling and completion activity during the second quarter of 2023 set numerous company records. These records include average stages per day for the quarter at 11.2 stages per day, average stages per day of an entire pad of 12.1 stages per day and a one-day record of 16 stages per day achieved in June. Drilling performance also improved during the quarter, averaging 6,055 lateral feet per day in the second quarter, up 8% from the first quarter 2023 average. Antero has achieved seven of its top 12 lateral feet per day records in 2023, including a high of 12,340 lateral feet per day.
Second Quarter 2023 Capital Investment
Antero's accrued drilling and completion capital expenditures for the three months ended June 30, 2023, were $247 million. Through the first half of 2023, the Company has completed 2,467 of 4,209 stages, or 59%, of its 2023 budgeted completion stages.
In addition to capital invested in drilling and completion activities, the Company invested $36 million in land during the second quarter. During the quarter, Antero added approximately 8,000 net acres, representing over 27 incremental drilling locations at an average cost of $1 million per location. Through the first half of 2023, Antero has added approximately 20,000 net acres representing over 75 incremental drilling locations at an average cost of less than $1 million per location. Antero's organic leasing efforts focus on acreage in close proximity to its current development plan. These incremental locations more than offset Antero's maintenance capital plan that requires an average of 60 to 65 wells per year. In addition, these efforts allow Antero to increase the average lateral length in its development program, which is expected to average 14,500 feet for wells drilled in 2023, or 7% longer than the 2022 average of 13,600 feet. The Company believes this organic leasing program is the most cost effective approach to lengthening its core inventory position.
Commodity Derivative Positions
Antero did not enter into any new natural gas, NGL or oil hedges during the second quarter of 2023.
Please see Antero's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, for more information on all commodity derivative positions. For detail on current commodity positions, please see the Hedge Profile presentations at www.anteroresources.com.
Conference Call
A conference call is scheduled on Thursday, July 27, 2023 at 9:00 am MT to discuss the financial and operational results. A brief Q&A session for security analysts will immediately follow the discussion of the results. To participate in the call, dial in at 877-407-9079 (U.S.), or 201-493-6746 (International) and reference "Antero Resources." A telephone replay of the call will be available until Thursday, August 3, 2023 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13740094. To access the live webcast and view the related earnings conference call presentation, visit Antero's website at www.anteroresources.com. The webcast will be archived for replay until Thursday, August 3, 2023 at 9:00 am MT.
Presentation
An updated presentation will be posted to the Company's website before the conference call. The presentation can be found at www.anteroresources.com on the homepage. Information on the Company's website does not constitute a portion of, and is not incorporated by reference into this press release.
Non-GAAP Financial Measures
Adjusted Net Income
Adjusted Net Income as set forth in this release represents net income, adjusted for certain items. Antero believes that Adjusted Net Income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted Net Income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance. The GAAP measure most directly comparable to Adjusted Net Income is net income. The following table reconciles net income to Adjusted Net Income (in thousands):
Three Months Ended June 30, | |||||||
2022 | 2023 | ||||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation | $ | ||||||
