Antero Resources (pending ticker: AR) is an independent oil and gas company based in Denver engaged in the exploitation, development, and acquisition of natural gas, NGLs and oil properties located in the Appalachia Basin. AR holds over 325,000 net acres in the southwestern core of the Marcellus Shale and over 100,000 net acres in the core of the Utica Shale.
The company recently announced its initial public offering is expected to be priced between $38 and $42 per share. AR is offering 30 million shares not including the underwriters’ 30-day option to purchase up to an additional 750,000 shares to cover over-allotments. Based on the company’s S1 filing, they expect to raise $1.14 billion after deducting underwriting discounts and commissions and estimated offering expenses payable.
Using the midpoint of $40 per share, Antero could have a market cap of $10.2 billion. They intend to use the net proceeds from this offering, including any proceeds received pursuant to any exercise by the underwriters of their option to purchase additional shares of common stock, to repay outstanding borrowings under our credit facility.
At June 30, 2013, the company had $2.4 billion in debt.
Pro forma the debt reduction and share issuance, Antero could have an EV close to $11.5 billion.
Using AR’s net daily production in the second quarter of 2013 that averaged 458 MMcfe/d and our estimated enterprise value of $11.5 billion, the company could be trading at $25,109 per flowing Mcfe/d – a higher production valuation than dominate Appalachian players such as Range Resources (ticker: RRC), Cabot Oil & Gas (ticker: COG) and EQT Corp. (ticker: EQT).
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