Antero Resources Corporation · NYSE:AR
Antero Resources — Investor Presentation (June 2014)
43 slides from Antero Resources's investor presentation, June 2014
Slide 1: Company Overview June 2014
Company Overview June 2014
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains 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 statements, other than statements of historical facts, included in this presentation that addre
Slide 3: Antero: A Pure Play on the Marcellus / Utica
ANTERO: A “PURE PLAY” ON THE MARCELLUS / UTICA ● Marcellus is one of the largest gas fields in the world today Critical Mass In Two − Largest gas field in the U.S. currently producing over 14 Bcf/d World Class Shale Plays ● Antero has 35 Tcfe of fully engineered and audited 3P reserves primarily in
Slide 4: Significant Momentum Since IPO
SIGNIFICANT MOMENTUM SINCE IPO Net Production Liquids Production LQA EBITDAX Net Acres (MMcfe/d) (Bbl/d) ($MM) 11% 39% 106% 50% $1,500 1,000 500,000 479k 18,000 16,300 431k 786 $1,097 800 400,000 15,000 $1,000 600 566 12,000 $731 300,000 9,000 7,900 400 $500 200,000 6,000 200 100,000 3,000 0 0 $
Slide 5: Premier Unconventional Resource Platform
PREMIER UNCONVENTIONAL RESOURCE PLATFORM COMBINED TOTAL – 12/31/13 RESERVES In Ethane Rejection Net Proved Reserves 7.6 Tcfe Net 3P Reserves 35.0 Tcfe Pre-Tax 3P PV-10 $20,362 MM Net 3P Liquids 902 MMBbls % Liquids – Net 3P 15% 1Q 2014 Net Production 786 MMcfe/d - 1Q 2014 Net Liquids 16,300 Bbl/d Ne
Slide 6: Large Midstream Footprint
LARGE MIDSTREAM FOOTPRINT Significant investment in infrastructure - estimated cumulative YE 2014 total capital investment in midstream ~$1.5 billion – Includes gathering lines, compressor stations and fresh water distribution infrastructure Proprietary fresh water sourcing and distribution syst
Slide 7: Integrated Portfolio of Firm Gas & NGL Takeaway
INTEGRATED PORTFOLIO OF FIRM GAS & NGL TAKEAWAY Antero Firm Takeaway Position in 2016 Mariner East II Pending Open Season Odebrecht / Braskem Ascent Cracker (Pending Final Investment Decision) 6
Slide 8: Strong Track Record of Growth
STRONG TRACK RECORD OF GROWTH NET PROVED SEC RESERVES (Bcfe) AVERAGE NET DAILY PRODUCTION (MMcfe/d) Woodford Piceance Marcellus Utica Woodford Piceance Marcellus Utica Guidance 10,000 2,400 2,065 8,000 7,632 Sold Woodford 1,800 and Piceance 6,000 1,400 5,017 4,283 1,200 4,000 Sold Woodford 950 3,231
Slide 9: Multi-Year Drilling Inventory Supports Low Risk, High Return Growth
MULTI-YEAR DRILLING INVENTORY SUPPORTS LOW RISK, HIGH RETURN GROWTH PROFILE MARCELLUS SSL WELL ECONOMICS(1) UTICA WELL ECONOMICS(1) 125% 665 858 1000 1,000 200% 250 817 201 211 100% 800 85 180 200 Total 3PLlocations 664 150% 183% Total 3P Locations 105% 75% 600 150 ROR ROR 100% 127% 102 117% 50% 65%
Slide 10: Lowest Finding & Development Cost Among U.S. Producers
LOWEST FINDING & DEVELOPMENT COST AMONG U.S. PRODUCERS Antero ranks as the most efficient finder and developer of reserves, on a per Mcfe basis, based on a recent 2011-2013 average all-in F&D cost analysis prepared by Credit Suisse 3-Year All-In F&D Cost – Excluding Revisions ($/Mcfe) through 2013
Slide 11: Integrated Firm Processing & Gas Takeaway
INTEGRATED FIRM PROCESSING & GAS TAKEAWAY Antero Firm Gas Takeaway by 2016 Infrastructure and commitments in place to handle strong production growth Portfolio of firm gas takeaway and sales and West Virginia and Ohio location minimizes basis risk Growing Firm Processing Capacity Total Capacity
Slide 12: Firm Transportation Reduces Appalachian Basis Exposure
FIRM TRANSPORTATION REDUCES APPALACHIAN BASIS EXPOSURE Antero’s firm transportation (FT) portfolio increases visibility on production growth and increases exposure to Gulf Coast and Midwest pricing, with little incremental cost per Mcf Reduces weighted average basis by $0.15 per Mcf by 2016(3),
Slide 13: Significant Long-Term Commodity Hedge Position
SIGNIFICANT LONG-TERM COMMODITY HEDGE POSITION NATURAL GAS HEDGE POSITION BBtu/d $/MMBtu Hedged Volume Average Index Hedge Price(1) Current NYMEX Strip 800 $7.00 $6.00 $4.87 600 $4.80 $4.70 $4.60 $4.41 $4.33 $5.00 $4.77 $4.66 $4.00 400 $4.24 $4.23 $4.39 $4.52 $3.00 200 $2.00 $1.00 738 650 643 780 71
Slide 14: 1Q 2014 Realizations
1Q 2014 REALIZATIONS 1Q 2014 NATURAL GAS REALIZATIONS ($/MCF) 1Q 2014 Average Average Average Hedge Average 1Q 2014 Average Region % Sales NYMEX Price Differential(2) BTU Upgrade Effect Realized Gas Price(3) Premium Appalachia 84% $4.94 $(0.23) $0.35 $0.03 $5.14 $0.20 Gulf Coast(1) 16% $4.94 $(0.27)
Slide 15: Biggest Bang for the Buck
BIGGEST “BANG FOR THE BUCK” Antero has the highest price realizations and EBITDAX per Mcfe combined with the lowest all-in F&D cost among its large cap Appalachian peers based on 1Q 2014 results − Driven by liquids-rich production, firm takeaway to favorable pricing indices and low development cos
Slide 16: Positioned for Growth & Profitability
POSITIONED FOR GROWTH & PROFITABILITY Highest Growth & Highest Margin Large Cap E&P Focused On Marcellus & Utica 2014 Projected Growth (%)(1) 1Q 2014 EBITDAX/Mcfe(2) 90% $4.00 $3.82 80% 80% $3.50 70% $3.00 60% $2.50 50% $2.00 40% 3-Year Growth-Adjusted Recycle Ratio(4) 30% $1.50 6.0x $1.00 20% 10% 5
Slide 17: Asset Overview
ASSET OVERVIEW 16
Slide 18: World Class Marcellus Shale Development Project
WORLD CLASS MARCELLUS SHALE DEVELOPMENT PROJECT 100% operated DOTSON UNIT MHR WEESE UNIT BLANCHE UNIT 364,000 net acres in 30-Day Rate 30-Day Rate 30-Day Rate 1H: 12.4 MMcfe/d Southwestern Core 4-well average 1H: 9.7 MMcfe/d 2H: 11.8 MMcfe/d 9.3 MMcfe/d (30% liquids) (26% liquids) – 50% HBP with
Slide 19: Antero's Marcellus Shale Type Curve
ANTERO’S MARCELLUS SHALE TYPE CURVE Antero has over four years of production history to support its 1.5 Bcf/1,000’ Non-SSL type curve Antero’s SSL type curve is 1.7 Bcf/1,000’ with only 10% to 15% higher well costs vs. Non-SSL Lack of faulting and contiguous acreage position allows for drillin
Slide 20: Marcellus ROR% and Gas Price Sensitivity
MARCELLUS ROR% AND GAS PRICE SENSITIVITY Large portfolio of Highly-Rich Gas to Dry Gas locations Focused on drilling highly economic rich gas locations – rig symbols represent current rig location by regime Assumes $90/Bbl WTI oil and $50/Bbl NGL price (55% of WTI) NYMEX Price Sensitivity(1) R
Slide 21: Marcellus Single Well Economics – In Ethane Rejection
MARCELLUS SINGLE WELL ECONOMICS – IN ETHANE REJECTION Assumptions Marcellus SSL Well Economics and Total Gross Locations(1) Natural Gas – Current strip 125% 665 1,000 Oil – Current strip for 2014/2015, $90 817 858 flat thereafter 100% 800 Total 3P Locations 105% 664 NGLs – 55% of Oil Price 75%
Slide 22: Leading Utica Shale Core Position Delivers Condensate and NGLs
LEADING UTICA SHALE CORE POSITION DELIVERS CONDENSATE AND NGLS Utica Shale Industry Activity(1) 100% operated GULFPORT 115,000 net acres in the core rich gas/ 24-Hour IP Wagner 1-28H, condensate window Shugert 1-1H, 1-12H Average 21.0 MMcf/d – 19% HBP with additional 79% not expiring + 2,270 Bbl
Slide 23: Utica Shale Type Curves
UTICA SHALE TYPE CURVES Antero has 28 core area wells online and up to 9 months of production history to support EUR regime type curves More recent wells with shorter stage length (SSL) completions (<240’ stages) are producing at or above the type curves – Expect to utilize SSL completions for a
Slide 24: Utica ROR% and Gas Price Sensitivity
UTICA ROR% AND GAS PRICE SENSITIVITY Large portfolio of Highly-Rich Gas to Dry Gas locations Focused on drilling highly economic rich gas locations – rig symbols represent current rig location by regime Assumes $90/Bbl WTI oil and $50/Bbl NGL price (55% of WTI) NYMEX Price Sensitivity(1) ROR%
Slide 25: Utica Single Well Economics – In Ethane Rejection
UTICA SINGLE WELL ECONOMICS – IN ETHANE REJECTION Assumptions Utica Well Economics and Gross Locations(1) Natural Gas - Current strip 200% 250 201 211 Oil – Current strip for 2014/2015, $90 Total 3P Locations 150% 85 180 200 flat thereafter 183% NGLs – 55% of Oil Price 150 ROR 100% 127% 102 11
Slide 26: Large Utica Shale Dry Gas Position
LARGE UTICA SHALE DRY GAS POSITION Utica Shale Dry Gas Acreage in OH/WV/PA(1) 28,000 net acres in Ohio with YE 2013 3P reserves of 1.7 Tcf Chesapeake Hess Range Hubbard BRK #3H 139,000 net acres in West Virginia and Pennsylvania Porterfield 1H-17 Utica Well 3,550’ Lateral 5,000’ Lateral Drilling
Slide 27: Health, Safety, Environment & Community
HEALTH, SAFETY, ENVIRONMENT & COMMUNITY Antero Core Values: Protect Our People, Communities And The Environment Strong West Virginia Keys to Execution Presence Antero has more than 4,500 contract personnel working full-time for Antero in 79% of Antero Marcellus West Virginia. 79% of these contra
Slide 28: Antero Key Attributes
ANTERO KEY ATTRIBUTES 479,000 Net Acres in the Core Marcellus and Utica Shales “Triple Digit” Historical Production and Reserve Growth Low Cost Leader / High Return Projects Significant Processing and Takeaway Capacity Already in Place Clean Balance Sheet Supports High Growth Story “Forward Thinking
Slide 29: Appendix
APPENDIX 28
Slide 30: Pro Forma Capitalization
PRO FORMA CAPITALIZATION CAPITALIZATION PF $600 MM Senior Notes ($ in millions) 3/31/2014 3/31/2014 (2),(3) Cash $13 $13 Senior Secured Revolving Credit Facility 745 431 7.25% Senior Notes Due 2019 260 0 6.00% Senior Notes Due 2020 525 525 5.375% Senior Notes Due 2021 1,000 1,000 5.125% Senior Notes
Slide 31: Antero – 2014 Guidance
ANTERO – 2014 GUIDANCE Key 2014 Operating & Financial Assumptions(1) Key Variable 2014 Guidance Range Natural Gas Realized Price Premium to NYMEX ($/Mcf)(2) $0.00 - $0.10 NGL Realized Price (% of WTI) 53% - 57% Oil Realized Price Differential to NYMEX ($/Bbl) $(10.00) - $(12.00) Net Production (MMcf
Slide 32: Outstanding Reserve Growth
OUTSTANDING RESERVE GROWTH PROVED RESERVE GROWTH(1) 2013 RESERVE UPDATE • Proved PV-10 increased 133% to $7.0 billion (including (Tcfe) hedges) 10 Key Drivers • Successful • 3P PV-10 increased 82% to $21.4 billion (including hedges) 7.6 8 drilling • Replaced 1,857% of 2013 production 0.4 6 • SSL res
Slide 33: Firm Transportation and Firm Sales Portfolio
FIRM TRANSPORTATION AND FIRM SALES PORTFOLIO Columbia Tennessee Momentum III EQT 7/26/2009 – 9/30/2025 11/1/2015– 9/30/2030 9/1/2012 – 12/31/2023 8/1/2012 – 6/30/2025 REX/MGT/ANR Firm Sales #1 Firm Sales #2 Firm Sales #3 7/1/2014 – 12/31/2034 10/1/2011– 10/31/2019 10/1/2011 – 5/31/2017 1/1/2013 – 5/
Slide 34: Low Development Cost Drives Best in Class Recycle Ratios
LOW DEVELOPMENT COST DRIVES BEST IN CLASS RECYCLE RATIOS 3-Year Proved Development Costs ($/Mcfe) through 2013 $/Mcfe $6.00 Antero Appalachia-Focused Peers Other Peers $5.00 $4.00 $3.00 $2.00 $1.60 $1.15 $1.18 $1.21 $1.00 $0.00 Source: Proved developed F&D industry data based on company presentation
Slide 35: Antero Utica Shale Wells – 30-Day Rates
ANTERO UTICA SHALE WELLS – 30-DAY RATES Antero’s wells produced against 1,100 psi line pressure until late January 2014 due to lack of compression facilities − First 120 MMcf/d compressor station started up in late January 2014 with a second 120 MMcf/d station placed online in late March 2014 30‐D
Slide 36: Antero Utica Shale Wells – 30-Day Rates
ANTERO UTICA SHALE WELLS – 30-DAY RATES Outstanding 30-day average rates with high liquids content − Antero’s wells produced against 1,100 psi line pressure until late January 2014 due to lack of compression facilities − First 120 MMcf/d compressor station started up in late January 2014 with a se
Slide 37: Considerable Reserve Base with Ethane Optionality
CONSIDERABLE RESERVE BASE WITH ETHANE OPTIONALITY 40 year proved reserve life based on 2013 production Reserve base provides significant exposure to liquids-rich projects – 3P reserves of over 2.2 BBbl of NGLs and condensate in ethane recovery mode; 33% liquids ETHANE REJECTION(1) ETHANE RECOVER
Slide 38: Marcellus Shale Rich Gas – Liquids and Processing Upgrade
MARCELLUS SHALE RICH GAS – LIQUIDS AND PROCESSING UPGRADE Marcellus Shale rich gas and highly-rich gas acreage provides a significant advantage in well economics – assuming $4.25/MMBtu NYMEX, $90.00/Bbl WTI and current spot NGL pricing(1) $/Wellhead Mcf(1)(2) +$3.18 ($/Mcf) Upgrade +$2.05 $9.00 Up
Slide 39: Antero 2014 Capital Budget
ANTERO 2014 CAPITAL BUDGET 2014E 2014E $300 27% $750 $1,800 $2.85 Billion 73% Drilling & Completion Midstream Land Marcellus Utica 2013 2013 18% $450 $2.65 Billion $650 $1,550 82% Drilling & Completion Midstream Land Marcellus Utica 38
Slide 40: Positive Ratings Momentum
POSITIVE RATINGS MOMENTUM Moody’s / S&P Historical Credit Ratings Moody’s Upgrade Criteria S&P Upgrade Criteria “An upgrade could be considered if debt / average daily production is “”The positive outlook reflects the potential for a positive rating action if sustained below $20,000 per boe and debt
Slide 41: Balance Sheet Positioned for Long-Term Growth
BALANCE SHEET POSITIONED FOR LONG-TERM GROWTH The recent bond offerings, at progressively lower coupons, have allowed Antero to reduce its cost of debt to approximately 5.0% and enhance liquidity while extending the average debt maturity to June 2021 Cost of debt below 5%, average debt maturity
Slide 42: Marcellus & Utica – Advantaged Economics
MARCELLUS & UTICA – ADVANTAGED ECONOMICS Low cost, liquids-rich Utica and Marcellus Shales will remain attractive in most commodity price environments U.S. INCREMENTAL GAS SUPPLY BREAK-EVEN PRICE CURVE(1) Over 2,700 Antero Drilling Locations Needed to make up NE (Dry) for base declines in Marcellu
Slide 43: Cautionary Note Regarding Hydrocarbon Quantities
CAUTIONARY NOTE Regarding Hydrocarbon Quantities The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserve estimates (collectively, “3P”). Antero has provided internally generated estimates for proved, probable and possible reserves