Antero Resources Announces Third Quarter 2024 Financial and Operating Results
DENVER, Oct. 30, 2024 /PRNewswire/ -- Antero Resources Corporation (NYSE:AR) ("Antero Resources," "Antero," or the "Company") today announced its third quarter 2024 financial and operating results. The relevant unaudited condensed consolidated financial statements are included in Antero Resources' Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Third Quarter 2024 Highlights:
Net production averaged 3.4 Bcfe/d, a 2% decrease from the year ago period
Natural gas production averaged 2.2 Bcf/d, a 4% decrease from the year ago period
Liquids production averaged 206 MBbl/d, a 2% increase from the year ago period and represents 36% of total production
Realized a pre-hedge natural gas equivalent price of $3.14 per Mcfe, a $0.98 per Mcfe premium to NYMEX
Realized the highest C3+ NGL price premium to Mont Belvieu in company history at a $2.29 per barrel premium
Net loss was $20 million and Adjusted Net Loss was $37 million (Non-GAAP)
Adjusted EBITDAX was $187 million (Non-GAAP); net cash provided by operating activities was $166 million
Averaged a quarterly record 12.1 completion stages per day, including a monthly record of 13.3 stages per day during the month of August
Achieved a record for the most footage drilled per rig in a month during September, a 17% increase compared to the 2023 average
Announced the addition of Jeffrey Muñoz to the Board of Directors
2024 Full-Year Guidance Updates:
Decreased drilling and completion capital budget for 2024 to a range of $640 to $660 million driven by capital efficiency gains and the deferral of the completion of one pad
Paul Rady, Chairman, CEO and President of Antero Resources commented, "During the third quarter we continued to improve our capital efficiency. Over the last two years, we have reduced the average number of days to drill a well by 20% to just 11 days versus 14 days previously. These meaningful gains result in an efficient maintenance production program that requires just two rigs to maintain 3.3 to 3.4 Bcfe/d of production going forward. We continue to defer the turn-in-line date of one drilled but uncompleted pad that was scheduled for 2024. Looking ahead to 2025, we are now also deferring a second drilled but uncompleted pad scheduled for completion in early 2025 to later in that year due to low natural gas prices. These efficiency gains combined with the activity deferral, allow us to reduce our capital expenditure budget, while maintaining our 2024 production guidance."
Mr. Rady further added, "We are also pleased to announce the appointment of Jeffrey Muñoz to the Board of Directors. Mr. Muñoz brings an extensive background with over 30 years in the energy industry with a focus on legal and accounting expertise. His appointment expands the knowledge and independence of our Board."
Michael Kennedy, CFO of Antero Resources said, "Our third quarter results benefited from our significant exposure to international liquids prices as we realized the highest C3+ NGL price premium in company history. Constrained Gulf Coast export capacity combined with strong international demand increased spot international premiums over Mont Belvieu at Marcus Hook, PA to record levels. Antero's access to international markets via the Marcus Hook liquids terminal, as well as our strategic decision early this year to increase our exposure to spot international prices, allows us to fully capture these premiums. We expect these premiums will remain in place for the next several quarters providing an attractive uplift to our realized prices."
For a discussion of the non-GAAP financial measures including Adjusted Net Income (Loss), Adjusted EBITDAX, Free Cash Flow and Net Debt please see "Non-GAAP Financial Measures."
2024 Guidance Update
Antero is decreasing its drilling and completion capital budget for 2024 to a range of $640 million to $660 million, from $650 million to $700 million previously. The decrease is driven by continued operational efficiency gains and the further deferral of completion activity due to low natural gas prices.
Full Year 2024,
Full Year 2024,
Initial
Revised
Full Year 2024 Guidance
Low
High
Low
High
D&C Capital Expenditures
$650
$700
$640
$660
Note: Any 2024 guidance items not discussed in this release are unchanged from previously stated guidance.
Free Cash Flow
During the third quarter of 2024, the Free Cash Flow deficit was $19 million.
Three Months EndedSeptember 30,
2023
2024
Net cash provided by operating activities
$
183,381
166,177
Less: Net cash used in investing activities
(276,097)
(174,126)
Less: Proceeds from sale of assets, net
(136)
(7,066)
Less: Distributions to non-controlling interests in Martica
(21,161)
(15,736)
Free Cash Flow
$
(114,013)
(30,751)
Changes in Working Capital (1)
90,755
12,222
Free Cash Flow before Changes in Working Capital
$
(23,258)
(18,529)
(1)
Working capital adjustments include changes in current assets and liabilities and the net decrease in accounts payable and accrued liabilities for additions to property and equipment.
Third Quarter 2024 Financial Results
Net daily natural gas equivalent production in the third quarter averaged 3.4 Bcfe/d, including 206 MBbl/d of liquids. Antero's average realized natural gas price before hedging was $2.13 per Mcf, a $0.03 per Mcf discount to the benchmark index price. Antero's average realized C3+ NGL price before hedges was $41.30 per barrel, a $2.29 per barrel premium to the benchmark index price, the highest premium in Company history.
The following table details average net production and average realized prices for the three months ended September 30, 2024:
Three Months Ended September 30, 2024
Natural Gas
(MMcf/d)
Oil
(Bbl/d)
C3+ NGLs
(Bbl/d)
Ethane
(Bbl/d)
Natural GasEquivalent
(MMcfe/d)
Average Net Production
2,170
9,304
117,315
79,370
3,406
Three Months Ended September 30, 2024
Natural Gas
Oil
C3+ NGLs
Ethane
CombinedNatural GasEquivalent
Average Realized Prices
($/Mcf)
($/Bbl)
($/Bbl)
($/Bbl)
($/Mcfe)
Average realized prices before settled derivatives
$
2.13
61.59
41.30
8.01
3.14
Index price
$
2.16
75.09
39.01
6.61
2.16
Premium / (Discount) to Index price
$
(0.03)
(13.50)
2.29
1.40
0.98
Settled commodity derivatives
$
0.01
(0.13)
0.26
—
0.01
Average realized prices after settled derivatives
$
2.14
61.46
41.56
8.01
3.15
Premium / (Discount) to Index price
$
(0.02)
(13.63)
2.55
1.40
0.99
Note: Please see Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, for more information on these index and average realized prices.
All-in cash expense, which includes lease operating, gathering, compression, processing and transportation and production and ad valorem taxes was $2.42 per Mcfe in the third quarter, as compared to $2.31 per Mcfe during the third quarter of 2023. The increase was due primarily to higher gathering, compression and processing costs related to CPI-based adjustments in 2024 and an increase in ad valorem tax that is based on higher commodity prices in 2022. Net marketing expense was $0.05 per Mcfe in the third quarter, unchanged from the $0.05 per Mcfe during the third quarter of 2023.
Third Quarter 2024 Operating Results
Antero placed 23 horizontal Marcellus wells to sales during the third quarter with an average lateral length of 14,800 feet
Twelve of these wells have been on line for approximately 60 days with an average rate per well of 29 MMcfe/d, including 1,292 Bbl/d of liquids per well assuming 25% ethane recovery and an average lateral length of 13,300 feet
The remaining 11 wells were completed in September with an average lateral length of 16,500 feet
A recent six well pad had a 60-day rate averaging 35 MMcfe/d per well with approximately 1,728 Bbl/d of liquids assuming 25% ethane recovery. These wells have an average lateral length of 18,200 feet.
Third Quarter 2024 Capital Investment
Antero's drilling and completion capital expenditures for the three months ended September 30, 2024, were $148 million. In addition to capital invested in drilling and completion activities, the Company invested $23 million in land during the third quarter. During the quarter, Antero added approximately 4,200 net acres, representing 12 incremental drilling locations at an average cost of approximately $850,000 per location. Year to date, Antero has added 44 locations, which approximately offsets the wells Antero turned to sales during that time.
Commodity Derivative Positions
Antero did not enter into any new natural gas or liquids hedges during the third quarter of 2024.
Appointment of Jeffrey Muñoz to the Board of Directors
On October 29, 2024, the Company appointed Jeffrey Muñoz to its Board as a Class II director. Mr. Muñoz has over 30 years of experience in the energy industry with a legal and accounting background. Mr. Muñoz spent ten years as a partner with Latham and Watkins LLP, where he served as a member of the firm's Diversity Committee. Prior to that he spent 20 years with Vinson and Elkins, LLP, the last 11 years there as a partner. After receiving his undergraduate degree Mr. Muñoz spent several years at Arthur Andersen LLP in the oil and gas audit division. He received his Juris Doctorate from Stanford University and Bachelor of Business Administration from the University of Texas. Mr. Muñoz will serve on the Audit and Nominating and Governance committees. The appointment increases the size of the Board to nine directors, eight of whom are independent directors.
Conference Call
A conference call is scheduled on Thursday, October 31, 2024 at 9:00 am MT to discuss the financial and operational results. A brief Q&A session for security analysts will immediately follow the discussion of the results. To participate in the call, dial in at 877-407-9079 (U.S.), or 201-493-6746 (International) and reference "Antero Resources." A telephone replay of the call will be available until Thursday, November 7, 2024 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13743805. To access the live webcast and view the related earnings conference call presentation, visit Antero's website at www.anteroresources.com. The webcast will be archived for replay until Thursday, November 7, 2024 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 (Loss)
Adjusted Net Income (Loss) as set forth in this release represents net income (loss), adjusted for certain items. Antero believes that Adjusted Net Income (Loss) is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted Net Income (Loss) is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance. The GAAP measure most directly comparable to Adjusted Net Income (Loss) is net income (loss). The following table reconciles net loss to Adjusted Net Loss (in thousands):
Three Months Ended September 30,
2023
2024
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation
$
17,808
(20,444)
Net income and comprehensive income attributable to noncontrolling interests
14,834
10,157
Unrealized commodity derivative gains
(9,172)
(14,100)
Amortization of deferred revenue, VPP
(7,701)
(6,812)
Gain on sale of assets
(136)
(1,297)
Impairment of property and equipment
13,476
13,455
Equity-based compensation
18,458
16,065
Loss on early extinguishment of debt
—
528
Equity in earnings of unconsolidated affiliate
(22,207)
(25,634)
Contract termination, loss contingency and settlements
13,659
(1,517)
Tax effect of reconciling items (1)
(1,371)
4,199
37,648
(25,400)
Martica adjustments (2)
(12,161)
(11,467)
Adjusted Net Income (Loss)
$
25,487
(36,867)
Diluted Weighted Average Common Shares Outstanding (3)
311,534
311,025
(1)
Deferred taxes were approximately 21% and 22% for 2023 and 2024, respectively.
(2)
Adjustments reflect noncontrolling interest in Martica not otherwise adjusted in amounts above.
(3)
Diluted weighted average shares outstanding does not include securities that would have had an anti-dilutive effect on the computation of diluted earnings per share. Anti-dilutive weighted average shares outstanding for the three months ended September 30, 2023 and 2024 were 1.6 million and 5.2 million, respectively.
Net Debt
Net Debt is calculated as total long-term debt less cash and cash equivalents. Management uses Net Debt to evaluate the Company's financial position, including its ability to service its debt obligations.
The following table reconciles consolidated total long-term debt to Net Debt as used in this release (in thousands):
December 31,
September 30,
2023
2024
Credit Facility
$
417,200
526,700
8.375% senior notes due 2026
96,870
96,870
7.625% senior notes due 2029
407,115
407,115
5.375% senior notes due 2030
600,000
600,000
4.250% convertible senior notes due 2026
26,386
—
Unamortized debt issuance costs
(9,975)
(8,369)
Total long-term debt
$
1,537,596
1,622,316
Less: Cash and cash equivalents
—
—
Net Debt
$
1,537,596
1,622,316
Free Cash Flow
Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow or as a measure of liquidity. The Company defines Free Cash Flow as net cash provided by operating activities, less net cash used in investing activities, which includes drilling and completion capital and leasehold capital, less proceeds from asset sales or net derivative monetizations and less distributions to non-controlling interests in Martica.
The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts.
Free Cash Flow is a useful indicator of the Company's ability to internally fund its activities, service or incur additional debt and estimate our ability to return capital to shareholders. There are significant limitations to using Free Cash Flow as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Free Cash Flow reported by different companies. Free Cash Flow does not represent funds available for discretionary use because those funds may be required for debt service, land acquisitions and lease renewals, other capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations.
Adjusted EBITDAX
Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), adjusted for certain items detailed below.
Adjusted EBITDAX as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, working capital movement, or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:
is widely used by investors in the oil and natural gas industry to measure operating performance without regard to items excluded from the calculation of such term, which may vary substantially from company to company depending upon accounting methods and the book value of assets, capital structure and the method by which assets were acquired, among other factors;
helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital and legal structure from our operating structure;
is used by our management team for various purposes, including as a measure of our operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting: and
is used by our Board of Directors as a performance measure in determining executive compensation.
There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.
The GAAP measures most directly comparable to Adjusted EBITDAX are net income (loss) and net cash provided by operating activities. The following table represents a reconciliation of Antero's net income (loss), including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of Antero's Adjusted EBITDAX to net cash provided by operating activities per our condensed consolidated statements of cash flows, in each case, for the three months ended September 30, 2023 and 2024 (in thousands). Adjusted EBITDAX also excludes the noncontrolling interests in Martica, and these adjustments are disclosed in the table below as Martica related adjustments.
Three Months Ended September 30,
2023
2024
Reconciliation of net income (loss) to Adjusted EBITDAX:
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation
$
17,808
(20,444)
Net income and comprehensive income attributable to noncontrolling interests
14,834
10,157
Unrealized commodity derivative gains
(9,172)
(14,100)
Amortization of deferred revenue, VPP
(7,701)
(6,812)
Gain on sale of assets
(136)
(1,297)
Interest expense, net
31,634
28,278
Loss on early extinguishment of debt
—
528
Income tax expense
13,663
1,212
Depletion, depreciation, amortization and accretion
177,148
171,195
Impairment of property and equipment
13,476
13,455
Exploration expense
591
671
Equity-based compensation expense
18,458
16,065
Equity in earnings of unconsolidated affiliate
(22,207)
(25,634)
Dividends from unconsolidated affiliate
31,285
31,314
Contract termination, loss contingency, transaction expense and other
13,649
(1,511)
293,330
203,077
Martica related adjustments (1)
(22,127)
(16,177)
Adjusted EBITDAX
$
271,203
186,900
