Antero Resources Corporation · NYSE:AR
Antero Resources — Q1 2018 Earnings Presentation
23 slides from Antero Resources's earnings presentation, Apr 26, 2018
Slide 1: First Quarter 2018 Earnings Call Presentation
First Quarter 2018 Earnings Call Presentation APRIL 26, 2018
Slide 2: Cautionary Statement
Cautionary Statement This presentation includes "forward-looking statements". Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AR’s control. All statements, except for statements of historical fact, made in this release regarding activities
Slide 3: 1Q 2018 Drilling and Completion Execution
1Q 2018 Drilling and Completion Execution Drilling Days Completion Stages per Day 35 11.0 10.0 10.0 30 9.0 Stages per Day 25 8.0 Drilling Days 7.0 20 6.0 5.1 5.1 5.3 15.5 5.0 4.3 15 11.5 10 4.0 10 3.0 2.0 5 1.0 0 0.0 Marcellus Utica Marcellus Utica Average Lateral Length per Well Average Lateral Fee
Slide 4: Top Marcellus Lateral Footage Days
Top Marcellus Lateral Footage Days Antero Top 15 Marcellus Lateral Footage Days 2018 Drilling 2016 – 2017 Drilling 9,000 8,206 8,178 7,987 8,000 7,786 7,573 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Feb. Jan. Jan. Feb. Feb. Jul. Jun. Apr. Jun. Apr. Jan. May. Oct. Jun. Feb. 2018 2018 2018 2018 2018
Slide 5: Operating Evolution Continues
Operating Evolution Continues Achievements Next Steps in 2018 Marcellus Well Cost(1) to Date Efficiency Evolution Facilities, Pad Flowback Water & Road Drilling Rigs/Services 42% 5% Allocation 9% → Fit-for-purpose rigs with dual operation Decline in well costs Tubulars capabilities to improve cycle
Slide 6: Appalachia Peer Pre-Hedge Natural Gas Realizations
Appalachia Peer Pre-Hedge Natural Gas Realizations Annual Pre-Hedge Natural Gas Price Realizations ($/Mcf) 2017 2016 2015 $3.50 $3.00 $3.00 $2.99 $3.00 $2.82 $2.50 $2.75 $2.37 $2.59 $2.50 $2.50 $2.28 $2.30 $2.14 $2.21 $2.17 $2.13 $2.50 $2.01 $1.92 $1.88 $2.00 $1.70 $2.00 $1.81 $2.00 $1.50 $1.50 $1.5
Slide 7: Strong Propane Fundamentals
Strong Propane Fundamentals Current propane days of supply are 8% Material reduction in U.S. propane below last year and 40% inventories relative to the 5-year average below the 5-year average Propane Days of Supply U.S. Propane Inventories 80 120 MB C3 $0.82/gallon remainder of 2018 70 100 60 80 50
Slide 8: C3+ NGLs: Price Improvement
C3+ NGLs: Price Improvement Mont Belvieu C3+ Spot Price $2.00 Balance 2018 (1) $1.80 C3 $0.82 / Gal $1.60 C3+ $1.00 / Gal $1.40 $1.20 $/Gallon $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tightening Inventories and Increasing Exports, Along With an Increase in Glo
Slide 9: Well Hedged at High Prices Relative to Strip
Well Hedged at High Prices Relative to Strip Commodity Hedge Position Hedged Volume Average Index Hedge Price(1) Current NYMEX Strip(2) Mark-to-Market Value(2) ~100% of 2018 and 2019 Target Gas Production Hedged ($/MMBtu) at $3.50/MMBtu 2,400 2,330 2.6 Tcfe hedged through $5.00 2,195 $3.8B of realiz
Slide 10: A Paired Trade – Hedges Support Firm Commitments
A Paired Trade – Hedges Support Firm Commitments Net Marketing Expense (High End) Hedge Portfolio Supports Net Marketing Expense (Low End) Firm Commitments Hedge Gains $585 $0.48/Mcfe $600 $469 $0.45/Mcfe 5-Year Cumulative: $500 Firm Transportation Portfolio Hedge Gains: $1,350 Allows Antero to achi
Slide 11: Stand-Alone EBITDAX Margin Comparison
Stand-Alone EBITDAX Margin Comparison Leadership in Annual Stand-Alone Post-Hedge / Post-Marketing Expense Adjusted EBITDAX Margins(1) AR Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 $4.00 $3.50 $3.36 $2.97 $3.00 $2.50 $2.28 $2.07 $2.05 $2.00 $1.61 $1.50 $1.00 $0.50 $- 2013 2014 2015 2016 2017 1Q 2018 On a St
Slide 12: Cash Flow Growth → Deleveraging Profile
Cash Flow Growth → Deleveraging Profile 12/31/17 Strip Pricing (Base Case) $60 Oil / $2.85 Gas 5.0x $50 Oil / $2.85 Gas S&P Upgrade to BB+ 23% Debt-Adjusted 4.5x Moody’s Ba2 Outlook ―Positive‖ Production CAGR 3.9x BBB- Rating Stand-Alone Financial Leverage 4.0x 3.6x Fitch Recently Rated AR Investmen
Slide 13: Antero Profile Should Drive Multiple Expansion
Antero Profile Should Drive Multiple Expansion Median Debt/ Median EV/ # of Adjusted 2018 Adj. Companies EBITDAX EBITDAX AR 2018E unhedged U.S. Publicly Traded E&Ps EBITDAX 52 2.6x 6.5x Multiple: 5.2x Premium for: Leverage < 3.0x 34 1.7x 7.1x Enterprise Value 18 1.9x 8.0x Scale > $10B Production
Slide 14: Appendix
Appendix 14
Slide 15: 2018 Guidance
2018 Guidance Stand-Alone Consolidated Net Daily Production (Bcfe/d) ~2.7 Net Liquids Production (BBl/d) ~130,000 Natural Gas Realized Price Differential to $0.00 to $0.05 Premium Nymex C3+ NGL Realized Price 62.5% – 67.5% (% of Nymex WTI) Cash Production Expense ($/Mcfe) $2.10 – $2.20 $1.65 – $1.75
Slide 16: Antero Guidance and Long-Term Target Assumptions
Antero Guidance and Long-Term Target Assumptions Stand-Alone Consolidated 20% CAGR through 2020 and 15% Growth in each of Net Daily Production (MMcfe/d) 2021 and 2022 Natural Gas Realized Price Differential to $0.00 to $0.05 Premium (2018) Nymex $0.00 to $0.10 Premium (2019 – 2022) C3+ NGL Realized
Slide 17: D&C Capital Transparency
D&C Capital Transparency D&C Capital Math ($MM) 2018 2019 2020 Total Well Completions (I.e. First Sales) 145 155 160 Average Lateral 9,700 10,500 11,600 Adjusted Well Count (I.e. Based on Capital Timing) 155 157 150 Average Lateral 9,700 10,500 11,600 Total Adjusted Lateral Feet 1,503,500 1,648,500
Slide 18: Antero Non-GAAP Measures
Antero Non-GAAP Measures Consolidated Adjusted EBITDAX, Stand-Alone Adjusted EBITDAX, Consolidated Adjusted Operating Cash Flow, Stand-Alone Adjusted Operating Cash Flow and Free Cash Flow are financial measures that are not calculated in accordance with U.S. generally accepted accounting principles
Slide 19: Antero Non-GAAP Measures
Antero Non-GAAP Measures Antero has not included a reconciliation of Consolidated Adjusted EBITDAX or Stand-Alone Adjusted EBITDAX to their nearest GAAP financial measures for 2018 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise. Antero is a
Slide 20: Antero Non-GAAP Measures
Antero Non-GAAP Measures Consolidated Adjusted Operating Cash Flow, Stand-Alone Adjusted Operating Cash Flow and Free Cash Flow The GAAP financial measure nearest to Consolidated Adjusted Operating Cash Flow is cash flow from operating activities as reported in Antero’s consolidated financial statem
Slide 21: 1Q 2018 Segment EBITDAX and Capital Expenditures
1Q 2018 Segment EBITDAX and Capital Expenditures 1 Gathering and compression fees paid to Antero Midstream are included in Gathering, Processing & Transportation expense on stand-alone basis (eliminated on consolidated basis); Gathering and compression operating expenses borne by AM on stand-alone b
Slide 22: Antero Resources Stand-Alone Adjusted EBITDAX Reconciliation
Antero Resources Stand-Alone Adjusted EBITDAX Reconciliation AR Stand-Alone Adjusted EBITDAX Reconciliation ($ in millions) Three Months Ended LTM Ended 3/31/2018 3/31/2018 Net income including noncontrolling interest $14,833 $361,507 Commodity derivative gains (22,437) (241,945) Gains on settled co
Slide 23: Antero Resources Consolidated Adjusted EBITDAX Reconciliation
Antero Resources Consolidated Adjusted EBITDAX Reconciliation Consolidated Adjusted EBITDAX Reconciliation Three Months ($ in millions) Ended LTM Ended 3/31/2018 3/31/2018 Net income (loss) including noncontrolling interest $80,810 $560,389 Commodity derivative gains (22,437) (241,945) Gains on sett