Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
 October 28, 2015 - 4:05 PM EDT
Print Email Article Font Down Font Up
Antero Resources Reports Third Quarter 2015 Financial Results

DENVER, Oct. 28, 2015 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today released its third quarter 2015 financial results.  The relevant financial statements are included in Antero's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, which has been filed with the Securities and Exchange Commission ("SEC").

 Antero Resources logo.

Highlights for the Third Quarter of 2015:

  • Net income of $534 million, or $1.93 per share, a 162% increase compared to the prior year quarter
  • Adjusted net income of $14 million, or $0.05 per share, an 80% decrease compared to the prior year quarter
  • Adjusted EBITDAX of $291 million, flat compared to the prior year quarter
  • On a per unit basis, cash production expense declined 18%, or $0.28 per Mcfe, and G&A expense declined 10%, or $0.03 per Mcfe, compared to the prior year quarter
  • Net daily gas equivalent production averaged 1,506 MMcfe/d, a 39% increase compared to the prior year quarter and a 1% increase compared to the prior quarter
  • Net daily liquids production, included in the above, averaged 52,250 Bbl/d, a 109% increase compared to the prior year quarter and a 14% increase compared to the prior quarter
  • Realized natural gas equivalent price including NGLs, oil and settled derivatives averaged $3.83 per Mcfe
  • Increased credit facility borrowing base by 12.5% to $4.5 billion from $4.0 billion
  • Closed drop down of water business and received $794 million of cash proceeds and approximately 11.0 million common units of Antero Midstream Partners

Recent Developments

Antero Resources Borrowing Base Increase

On October 26, 2015, Antero's borrowing base under its upstream credit facility was increased by 12.5% to $4.5 billion, a $500 million increase over Antero's previous borrowing base of $4.0 billion.  Lender commitments under the facility remain at $4.0 billion. As of September 30, 2015, the Company had $500 million drawn under the upstream credit facility and $535 million in letters of credit outstanding, resulting in $3.0 billion in Antero standalone liquidity and $3.5 billion of unused borrowing base capacity, on a pro forma basis giving effect to the borrowing base increase.

Closing of the Water Business Drop Down

As previously announced on September 24th, 2015, Antero successfully completed the water business drop down transaction to Antero Midstream Partners, LP ("Antero Midstream") for $1.05 billion.  In connection with the transaction, Antero received cash consideration of $794 million and 10,988,421 Antero Midstream common units, plus a total of $250 million of potential earn-out payments due at the end of 2019 and 2020 contingent on meeting specific average fresh water delivery volume thresholds.  Transaction proceeds were used by Antero to repay credit facility borrowings.

Third Quarter 2015 Financial Results

As of September 30, 2015, Antero owned a 66.5% limited partner interest in Antero Midstream.  Antero Midstream's results are consolidated with Antero's results.  

For the three months ended September 30, 2015, the Company reported net income attributable to common stockholders of $534 million, or $1.93 per basic and diluted share, compared to net income of $204 million, or $0.78 per basic and diluted share in the third quarter of 2014.  GAAP net income for the third quarter of 2015 included the following items:

  • Non-cash gains on unsettled derivatives of $873 million ($543 million net of tax);
  • Non-cash equity-based stock compensation expense of $24 million ($18 million net of tax); and
  • Impairment of unproved properties of $9 million ($5 million net of tax)

Without the effect of these non-cash items, the Company's results for the third quarter of 2015 were as follows:

  • Adjusted net income attributable to common stockholders of $14 million, or $0.05 per basic and diluted share, an 80% decrease compared to the third quarter of 2014;
  • Adjusted EBITDAX of $291 million, in line with the third quarter of 2014; and
  • Cash flow from operations before changes in working capital of $237 million, a 3% decrease compared to the third quarter of 2014

Commenting on third quarter 2015 EBITDAX and Antero's business model, Paul Rady, Chairman of the Board and CEO, said, "Despite the challenging commodity price environment during the quarter, our results truly show the sustainability of Antero's business model. Antero's better than expected production, combined with the Company's firm transportation portfolio and industry leading hedge position, again allowed Antero to achieve Appalachian leading EBITDAX and cash flow margins during the quarter.  Despite more than a 30% decrease in natural gas prices and 50% decrease in crude oil prices over the last year, Antero generated the same level of EBITDAX as compared to the prior year quarter."

For a description of adjusted net income attributable to common stockholders, Adjusted EBITDAX and cash flow from operations before changes in working capital and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."

Net daily production for the third quarter of 2015 averaged 1,506 MMcfe/d, a 39% increase as compared to the third quarter of 2014 and a 1% increase from the second quarter of 2015.  Net daily production was comprised of 1,192 MMcf/d of natural gas (79%), 45,072 Bbl/d of natural gas liquids ("NGLs") (18%) and 7,178 Bbl/d of crude oil (3%).  Third quarter 2015 net liquids (NGLs and oil) daily production of 52,250 Bbl/d increased 109% as compared to the third quarter of 2014 and 14% from the second quarter of 2015.

Average natural gas price before settled derivatives decreased 36% from the prior year quarter to $2.32 per Mcf, a $0.45 per Mcf negative differential to Nymex, as Nymex natural gas prices decreased 32% from the prior year quarter.  Approximately 68% of Antero's third quarter 2015 natural gas production was realized at favorable price indices, including Columbia Gas Transmission (TCO), Chicago and Nymex.  The remaining 32% of natural gas production was priced at various less favorable index pricing points, primarily Dominion South and Tetco M2.  Antero's average realized natural gas price after settled derivatives for the third quarter of 2015 was $3.99 per Mcf, a $1.22 positive differential to the Nymex average price for the period, and a 7% decrease compared to the prior year quarter.  During the quarter, Antero realized a cash settled natural gas derivative gain of $183 million, or $1.67 per Mcf.

Antero's average realized C3+ NGL price before settled derivatives for the third quarter of 2015 was $12.08 per barrel, or approximately 26% of the WTI oil price average for the period.  This represents a 74% decrease for NGL prices compared to the prior year quarter as WTI oil prices decreased 53% from the prior year quarter.  NGL differentials in the Appalachian Basin have widened significantly in the region due to the need to utilize rail transport to move the product to markets.  Logistics and regional shipping costs are expected to improve once the Mariner East II pipeline goes in service, which is anticipated to occur by the end of 2016.  The Company's average realized NGL price after settled derivatives was $16.47 per barrel, or 35% of the WTI oil price average for the period, which represents a 65% decrease from the prior year quarter.  For the third quarter of 2015, Antero realized a cash settled NGL derivative gain of $18 million, or $4.39 per barrel.  Antero's NGL barrels are comprised of propane, butane and heavier liquids, as ethane is rejected at the gas processing plant and sold in the natural gas stream. 

Antero's average realized oil price before settled derivatives for the third quarter of 2015 was $30.49 per barrel, a $15.92 per barrel negative differential to the average WTI oil price for the period, and a 64% decrease compared to the prior year quarter.  The third quarter 2015 negative differential for condensate was a result of an increase in production of high API gravity condensate in the Utica.  The Company's average realized oil price after settled derivatives decreased 54% from the prior year quarter to $38.18 per barrel, an $8.24 per barrel negative differential to the WTI oil price.  For the third quarter of 2015, Antero realized a cash settled oil derivative gain of $5 million, or $7.69 per barrel.  Including $206 million of total cash settled derivative gains for all products, the average all-in natural gas equivalent price, including NGLs, oil and derivative settlements, was $3.83 per Mcfe for the third quarter of 2015.

Total revenues for the third quarter of 2015 were $1.4 billion as compared to $762 million for the third quarter of 2014.  Revenue for the third quarter of 2015 included an $873 million non-cash gain on unsettled derivatives while the third quarter of 2014 included a $252 million non-cash gain on unsettled derivatives.  Liquids production contributed 22% of combined natural gas, NGLs and oil revenue before derivatives in the third quarter of 2015.  Adjusted net revenue increased 12% to $570 million compared to the third quarter of 2014 (including cash settled derivative gains and losses but excluding non-cash unsettled derivative gains and losses).  For a reconciliation of adjusted net revenue to operating revenue, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."

Net marketing expense was $26 million, or $0.19 per Mcfe, for the third quarter of 2015.  Marketing revenue for the third quarter of 2015 was $36 million.  Antero's marketing revenue was primarily associated with the sale of third-party gas purchased to utilize the Company's excess firm transportation capacity on the Rockies Express Pipeline as well as to capture the positive spread between Tetco M2 pricing and Chicago pricing.  Marketing expense for the third quarter of 2015 was $62 million.  The largest components of marketing expense were the fixed transportation costs related to excess natural gas takeaway capacity, the cost of purchasing third-party gas and the fixed transportation costs associated with the Company's underutilized ATEX ethane pipeline capacity.  The decrease in net marketing expense versus the prior quarter was primarily the result of increased production volumes in the Utica Shale flowing on the Company's Chicago firm transportation portfolio, which includes capacity on Rex, MGT, NGPL and ANR North.

Per unit cash production expense (lease operating, gathering, compression, processing and transportation, and production tax) for the third quarter of 2015 was $1.32 per Mcfe which is an 18% decrease compared to $1.60 per Mcfe in the prior year quarter.  The decrease in cash production expense was driven by lower production taxes due to lower commodity prices, a reduction in the estimated liability for property taxes accrued for in prior periods, as well as reduced fuel costs due to lower commodity prices.  Per unit general and administrative expense for the third quarter of 2015, excluding non-cash equity-based compensation expense, was $0.26 per Mcfe, a 10% decrease from the third quarter of 2014.  The decrease was primarily driven by the significant increase in net production which was somewhat offset by an increase in the Company's workforce.  Per unit depreciation, depletion and amortization expense increased 9% from the prior year quarter to $1.37 per Mcfe due to proved developed reserves increasing at a slower rate than the corresponding cost additions for wells completed during the period.

Adjusted EBITDAX of $291 million for the third quarter of 2015 was in line with the prior year quarter.  Adjusted EBITDAX margin for the quarter was $2.10 per Mcfe, representing a 28% decrease from the prior year quarter due to lower commodity prices and lower hedged prices.  For the third quarter of 2015, cash flow from operations before changes in working capital decreased 3% from the prior year to $237 million.

For a description of Adjusted EBITDAX and Adjusted EBITDAX margin, cash flow from operations before changes in working capital and adjusted net income attributable to common stockholders and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."

Balance Sheet and Liquidity

As of September 30, 2015 the Company's consolidated net debt was $4.4 billion, of which $500 million were borrowings outstanding under the Company's senior secured revolving credit facility, and $525 million were borrowings under Antero Midstream's $1.5 billion senior secured credit facility.  Pro forma for the increased $4.5 billion borrowing base and including the $535 million in letters of credit outstanding, the Company had approximately $4.0 billion in available liquidity and $4.5 billion in unused borrowing base capacity on a consolidated basis as of September 30, 2015.  For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."

Third Quarter 2015 Capital Spending

Antero's drilling and completion costs for the three months ended September 30, 2015 were $341 million.  In addition, the Company invested $39 million for land, $20 million for fresh water distribution projects in the Marcellus and Utica Shale plays and $2 million in other capital projects.

Antero Midstream Financial Results

The following reflects results for Antero Midstream for the three and nine months ended September 30, 2015, and predecessor results for the three and nine months ended September 30, 2014. In addition, Antero Midstream's recent acquisition of Antero's integrated water business was accounted for as a transfer of entities under common control.  As a result, the Partnership recast its condensed combined consolidated financial statements to retrospectively reflect the integrated water business as if the assets and liabilities were owned for all past periods presented.  Beginning in the third quarter of 2015, and as a result of the acquisition, Antero Midstream will report its results through two business segments, Gathering and Compression and Water Handling.  To facilitate comparison and discussion for third quarter 2015, operating results below are only for the Gathering and Compression segment operations.  For operating results associated with the Water Handling segment and its contribution to the recast condensed combined consolidated financial statements contained in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, please read "Non-GAAP Financial Measures."

Antero Midstream's low pressure gathering volumes for the third quarter of 2015 averaged 1,038 MMcf/d, a 95% increase from the third quarter of 2014 and an 8% increase from the second quarter of 2015.  High pressure gathering volumes for the third quarter of 2015 averaged 1,216 MMcf/d, a 129% increase from the third quarter of 2014 and a 2% increase from the second quarter of 2015.  Compression volumes for the third quarter of 2015 averaged 435 MMcf/d, a 275% increase from the third quarter of 2014 and a 4% decrease from the second quarter of 2015.  Condensate gathering volumes averaged 2,856 Bbl/d during the quarter, a 145% increase compared to the prior year quarter.  Volumetric growth was driven by production growth from Antero Resources.

Antero Midstream's revenue for the third quarter of 2015 was $59.3 million as compared to $26.3 million for the prior year quarter, driven primarily by increased throughput volumes across Antero Midstream's systems.  Direct operating expenses were a $3.2 million credit, driven by an $8.4 million reduction in the estimated liability for property taxes accrued for in prior periods and a slight decrease in other operating expenses during the quarter. Allocated general and administrative expenses totaled $11.3 million, including $4.2 million of non-cash equity-based compensation.  Total cash and non-cash operating expenses were $23.2 million including $15.1 million of depreciation.

Capital expenditures associated with gathering and compression totaled $83 million, including $55 million invested in the Marcellus and $28 million invested in the Utica.  Gathering and compression capital expenditures were primarily related to the build-out of midstream infrastructure to support Antero Resources' development program.  Additionally, Antero Midstream invested $29 million in water handling assets during the quarter.

On October 13, 2015, the Board of Directors of Antero Resources Midstream Management LLC, the general partner of Antero Midstream, declared a cash distribution of $0.205 per unit ($0.82 per unit annualized) for the third quarter of 2015.  The distribution represents an 8% increase quarter over quarter and Antero Midstream's third consecutive quarterly distribution increase since its initial public offering in November 2014.  The distribution will be payable on November 30, 2015 to unitholders of record as of November 11, 2015.

Antero Midstream results were released today and are available at www.anteromidstream.com.

Conference Call

A conference call is scheduled on Thursday, October 29, 2015 at 9:00 am MT to discuss the results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in at 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Resources." A telephone replay of the call will be available until Friday, November 6, 2015 at 9:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10072161.

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 on the Company's website until November 6, 2015 at 9:00 am MT.

Presentation

An updated presentation will be posted to the Company's website before the October 29, 2015 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 this press release.

Non-GAAP Financial Measures

Adjusted net revenue as set forth in this release represents total operating revenue adjusted for certain non-cash items, including unsettled derivative gains and losses.  Antero believes that adjusted net revenue is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net revenue is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenue as an indicator of financial performance.  The following table reconciles total operating revenue to adjusted net revenue:



Three months ended
September 30,


Nine months ended

September 30,



2014


2015


2014


2015










Total operating revenue


$

762,490


$

1,443,335


$

1,242,035


$

3,049,736

Commodity derivative (gains) losses


(308,975)


(1,079,071)


63,720


(1,836,398)

Gains on  settled derivatives


57,451


205,919


57,333


586,639

Adjusted net revenue


$

510,966


$

570,183


$

1,363,088


$

1,799,977

Adjusted net income attributable to common stockholders as set forth in this release represents net income from continuing operations attributable to common stockholders, adjusted for certain items.  Antero believes that adjusted net income attributable to common stockholders 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 attributable to common stockholders is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income from continuing operations attributable to common stockholders as an indicator of financial performance.  The following table reconciles net income from continuing operations attributable to common stockholders to adjusted net income attributable to common stockholders:



Three months ended


Nine months ended

September 30,


September 30,



2014


2015


2014


2015












Net income from continuing operations attributable to common stockholders


$

203,909


$

533,842


$

64,655


$

782,900

Non-cash commodity derivative (gains) losses on unsettled derivatives



(251,524)



(873,152)



121,053



(1,249,759)

Impairment of unproved properties



4,542



8,754



7,895



43,670

     Equity-based compensation



24,285



23,915



85,896



79,280

Loss on early extinguishment of debt







20,386



     Contract termination and rig stacking









10,902

Income tax effect of reconciling items



90,474



320,711



(63,348)



435,033

Adjusted net income attributable to common stockholders


 

$

71,686


 

$

14,070


 

$

236,537


 

$

102,026

Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operating activities before changes in working capital.  Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt.  Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations for companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity.

The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release:



Three months ended
September 30,


Nine months ended

September 30,



2014


2015


2014


2015










Net cash provided by operating activities


$

300,717


$

246,005


$

798,746


$

836,600

Net change in working capital


(55,621)


(9,078)


(96,153)


(98,909)

Cash flow from operations before changes in working capital


$

245,096


$

236,927


$

702,593


$

737,691

The following table reconciles consolidated total debt to consolidated net debt as used in this release:


As of

September 30,


2015




Antero:



     Bank credit facility

$

500,000

     6.00% senior notes due 2020


525,000

     5.375% senior notes due 2021


1,000,000

     5.125% senior notes due 2022


1,100,000

     5.625% senior notes due 2023


750,000

     Net unamortized premium


6,777

Antero Midstream:

     Bank credit facility


525,000

Consolidated total debt


4,406,777

Cash and cash equivalents


27,410

Consolidated net debt

$

4,379,367

Adjusted EBITDAX is a non-GAAP financial measure that Antero defines as net income including noncontrolling interest after adjusting for those items shown in the table below.  Adjusted EBITDAX, as used and defined by the Company, 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, net income (loss), cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  Adjusted EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and 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, franchise taxes, exploration expenses, and other commitments and obligations.  However, Antero's management team believes Adjusted EBITDAX is useful to an investor in evaluating the Company's financial performance because this measure:

  • is widely used by investors in the oil and gas industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and 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 Antero's operations from period to period by removing the effect of its capital structure from its operating structure; and
  • is used by the Company's management team for various purposes, including as a measure of operating performance, in presentations to its board of directors, as a basis for strategic planning and forecasting and by its lenders pursuant to covenants under its bank credit facility and the indentures governing the Company's senior notes.

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDAX reported by different companies.  The following table represents a reconciliation of the Company's net income (loss) including noncontrolling interest to Adjusted EBITDAX, a reconciliation of total Adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before cash receipts for settled derivatives to Adjusted EBITDAX margin:


















Three months ended September 30,


Nine months ended September 30,



(in thousands)


2014


2015


2014


2015


















Net income from continuing operations including noncontrolling interest


$

203,909



544,734



64,655



804,422



Commodity derivative fair value (gains) losses



(308,975)



(1,079,071)



63,720



(1,836,398)



Gains on settled derivative instruments



57,451



205,919



57,333



586,639



Interest expense



42,455



60,921



111,057



173,929



Loss on early extinguishment of debt







20,386





Income tax expense



135,035



335,460



75,919



498,709



Depreciation, depletion, amortization, and accretion



124,944



189,086



321,915



549,240



Impairment of unproved properties



4,542



8,754



7,895



43,670



Exploration expense



7,476



1,087



21,176



3,086



Equity-based compensation expense



24,285



23,915



85,896



79,280



State franchise taxes



450



2



1,738



131



Contract termination and rig stacking









10,902



Consolidated Adjusted EBITDAX



291,572



290,807



831,690



913,610



Income from discontinued operations







2,210





Gain on sale of assets







(3,564)





Income tax expense







1,354





Adjusted EBITDAX from discontinued operations











Total adjusted EBITDAX



291,572



290,807



831,690



913,610



Interest expense



(42,455)



(60,921)



(111,057)



(173,929)



Exploration expense



(7,476)



(1,087)



(21,176)



(3,086)



Changes in current assets and liabilities



55,621



9,078



96,153



98,909



State franchise taxes



(450)



(2)



(1,738)



(131)



Other noncash items



3,905



8,130



4,874



1,227



Net cash provided by operating activities


$

300,717



246,005



798,746



836,600



 



Three months ended


Nine months ended



September 30,


September 30,


Adjusted EBITDAX margin ($ per Mcfe):

2014


2015


2014


2015


Realized price before cash receipts for settled derivatives

$

4.33


$

2.34


$

5.06


$

2.59


Gathering, compression, and water distribution revenues


0.05



0.03



0.05



0.03


Lease operating expense


(0.09)



(0.08)



(0.07)



(0.06)


Gathering, compression, processing and transportation costs


(1.29)



(1.16)



(1.26)



(1.20)


Marketing, net


(0.14)



(0.19)



(0.14)



(0.17)


Production taxes


(0.22)



(0.08)



(0.26)



(0.14)


General and administrative(1)


(0.29)



(0.25)



(0.30)



(0.25)


Gains on settled derivatives


0.58



1.49



0.23



1.44


Adjusted EBITDAX margin ($ per Mcfe):

$

2.93


$

2.10


$

3.31


$

2.24




(1)       Excludes franchise taxes and equity-based stock compensation that is included in G&A



The following reconciles the financial results from the gathering and compression business and water handling business to the consolidated total statements of operations and capital expenditures in Antero Midstream's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015:


Gathering and


Water


Consolidated


Compression


Handling


Total

Three months ended September 30, 2014









Revenues:









Revenue - affiliate

$

26,282


$

42,631


$

68,913

Revenue - third-party




2,671



2,671

Total revenues


26,282



45,302



71,584










Operating expenses:









Direct operating


3,525



9,054



12,579

General and administrative (before equity-based compensation)


3,956



1,576



5,532

Equity-based compensation


1,562



549



2,111

Depreciation


10,227



4,390



14,617

Total


19,270



15,569



34,839

Operating income

$

7,012


$

29,733


$

36,745










Three months ended September 30, 2015









Revenues:









Revenue - affiliate

$

59,220


$

21,819


$

81,039

Revenue - third-party


38



627



665

Total revenues


59,258



22,446



81,704










Operating expenses:









Direct operating


(3,164)



4,773



1,609

General and administrative (before equity-based compensation)


7,060



1,498



8,558

Equity-based compensation


4,205



1,079



5,284

Depreciation


15,076



6,485



21,561

Total


23,177



13,835



37,012

Operating income

$

36,081


$

8,611


$

44,692

 


Gathering and


Water


Consolidated


Compression


Handling


Total

Nine months ended September 30, 2014









Revenues:









Revenue - affiliate

$

54,978


$

107,907


$

162,885

Revenue - third-party




2,671



2,671

Total revenues


54,978



110,578



165,556










Operating expenses:









Direct operating


6,661



25,871



32,532

General and administrative (before equity-based compensation)


9,710



4,085



13,795

Equity-based compensation


5,365



2,027



7,392

Depreciation


24,991



10,748



35,739

Total


46,727



42,731



89,458

Operating income

$

8,251


$

67,847


$

76,098










Nine months ended September 30, 2015









Revenues:









Revenue - affiliate

$

168,056


$

86,759


$

254,815

Revenue - third-party


38



778



816

Total revenues


168,094



87,537



255,631










 

Operating expenses:









Direct operating


19,817



19,013



38,830

General and administrative (before equity-based compensation)


16,467



3,793



20,260

Equity-based compensation


14,218



3,445



17,663

Depreciation


44,748



18,767



63,515

Total


95,250



45,018



140,268

Operating income

$

72,844


$

42,519


$

115,363

Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.

Cautionary Statements

This release includes "forward-looking statements".  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements.  All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2014.

 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2014 and September 30, 2015

(Unaudited)

(In thousands, except share amounts)




2014


2015


Assets


Current assets:








Cash and cash equivalents


$

245,979



27,410


Accounts receivable, net of allowance for doubtful accounts of $1,251 in 2014 and 2015



116,203



60,904


Accrued revenue



191,558



115,793


Derivative instruments



692,554



834,482


Other current assets



5,866



1,739


Total current assets



1,252,160



1,040,328


Property and equipment:








Natural gas properties, at cost (successful efforts method):








Unproved properties



2,060,936



2,072,475


Proved properties



6,515,221



7,805,203


Water handling systems



421,012



517,513


Gathering systems and facilities



1,197,239



1,448,404


Other property and equipment



37,687



45,494





10,232,095



11,889,089


Less accumulated depletion, depreciation, and amortization



(879,643)



(1,427,656)


Property and equipment, net



9,352,452



10,461,433


Derivative instruments



899,997



2,007,828


Other assets



68,886



67,485


Total assets


$

11,573,495



13,577,074










Liabilities and Equity


Current liabilities:








Accounts payable


$

531,564



337,493


Accrued liabilities



168,614



202,186


Revenue distributions payable



182,352



161,513


Deferred income tax liability



260,373



315,366


Other current liabilities



12,202



9,211


Total current liabilities



1,155,105



1,025,769


Long-term liabilities:








Long-term debt



4,362,550



4,406,777


Deferred income tax liability



534,423



978,139


Other liabilities



47,587



55,965


Total liabilities



6,099,665



6,466,650


Commitments and contingencies








Equity:








Stockholders' equity:








Preferred stock, $0.01 par value; authorized - 50,000,000 shares; none issued






Common stock, $0.01 par value; authorized - 1,000,000,000 shares; issued and outstanding 262,071,642 shares and 277,029,931 shares, respectively



2,621



2,770


Additional paid-in capital



3,513,725



4,122,747


Accumulated earnings



867,447



1,650,347


Total stockholders' equity



4,383,793



5,775,864


Noncontrolling interest in consolidated subsidiary



1,090,037



1,334,560


Total equity



5,473,830



7,110,424


Total liabilities and equity


$

11,573,495



13,577,074


 


ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended September 30, 2014 and 2015

(Unaudited)

(In thousands, except share and per share amounts)












2014


2015


Revenue:








Natural gas sales


$

310,390


$

253,975


Natural gas liquids sales



91,111



50,092


Oil sales



29,304



20,138


Gathering, compression, and water distribution



4,875



4,426


Marketing



17,835



35,633


Commodity derivative fair value gains



308,975



1,079,071


Total revenue



762,490



1,443,335


Operating expenses:








Lease operating



8,680



10,786


Gathering, compression, processing, and transportation



128,531



160,302


Production and ad valorem taxes



21,726



10,721


Marketing



32,192



61,799


Exploration



7,476



1,087


Impairment of unproved properties



4,542



8,754


Depletion, depreciation, and amortization



124,624



188,667


Accretion of asset retirement obligations



320



419


General and administrative (including equity-based compensation expense of $24,285 and $23,915 in 2014 and 2015, respectively)



53,000



59,685


Total operating expenses



381,091



502,220


Operating loss



381,399



941,115


Other expenses:








Interest



(42,455)



(60,921)


Income from continuing operations before income taxes



338,944



880,194


Provision for income tax expense



(135,035)



(335,460)


Net Income and comprehensive income including noncontrolling interest



203,909



544,734


Net income and comprehensive income attributable to noncontrolling interest





10,892


Net Income and comprehensive income attributable to Antero Resources Corporation


$

203,909


$

533,842


















Earnings per common share


$

0.78


$

1.93










Earnings per common share—assuming dilution


$

0.78


$

1.93










Weighted average number of shares outstanding:








Basic



262,049,948



277,007,427


Diluted



262,069,878



277,014,756




 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Nine Months Ended September 30, 2014 and 2015

(Unaudited)

(In thousands, except share and per share amounts)




2014


2015


Revenue:








Natural gas sales


$

936,877


$

810,982


Natural gas liquids sales



244,807



188,403


Oil sales



89,059



55,627


Gathering, compression, and water distribution



11,964



15,084


Marketing



23,048



143,242


Commodity derivative fair value gains (losses)



(63,720)



1,836,398


Total revenue



1,242,035



3,049,736


Operating expenses:








Lease operating



18,570



25,561


Gathering, compression, processing, and transportation



315,878



490,633


Production and ad valorem taxes



64,123



57,458


Marketing



58,119



214,201


Exploration



21,176



3,086


Impairment of unproved properties



7,895



43,670


Depletion, depreciation, and amortization



320,984



548,013


Accretion of asset retirement obligations



931



1,227


General and administrative (including equity-based compensation expense of $85,896 and $79,280 in 2014 and 2015, respectively)



162,342



177,925


Contract termination and rig stacking





10,902


Total operating expenses



970,018



1,572,676


Operating income



272,017



1,477,060


Other expenses:








Interest



(111,057)



(173,929)


Loss on early extinguishment of debt



(20,386)




Total other expenses



(131,443)



(173,929)


Income from continuing operations before income taxes and discontinued operations



140,574



1,303,131


Provision for income tax expense



(75,919)



(498,709)


Income from continuing operations



64,655



804,422


Discontinued operations:








Income from sale of discontinued operations, net of income tax expense of $1,354



2,210




Net income and comprehensive income including noncontrolling interest



66,865



804,422


Net income and comprehensive income attributable to noncontrolling interest





21,522


Net income and comprehensive income attributable to Antero Resources Corporation


$

66,865


$

782,900










Earnings per common share:








Continuing operations


$

0.25


$

2.87


Discontinued operations



0.01




Total


$

0.26


$

2.87










Earnings per common share—assuming dilution








Continuing operations


$

0.25


$

2.87


Discontinued operations



0.01




Total


$

0.26


$

2.87










Weighted average number of shares outstanding:








Basic



262,049,756



273,144,573


Diluted



262,066,632



273,153,965





 


ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2014 and 2015

(Unaudited)

(In thousands)













2014


2015


Cash flows from operating activities:








Net income including noncontrolling interest


$

66,865


$

804,422


Adjustment to reconcile net income to net cash provided by operating activities:








Depletion, depreciation, amortization, and accretion



321,915



549,240


Impairment of unproved properties



7,895



43,670


Derivative fair value (gains) losses



63,720



(1,836,398)


Gains on settled derivatives



57,333



586,639


Deferred income tax expense



75,919



498,709


Equity-based compensation expense



85,896



79,280


Loss on early extinguishment of debt



20,386




Gain on sale of discontinued operations



(3,564)




Deferred income tax expense—discontinued operations



1,354




Other



4,874



12,129


Changes in current assets and liabilities:








Accounts receivable



(36,145)



15,299


Accrued revenue



(47,189)



75,765


Other current assets



975



4,127


Accounts payable



530



(1,302)


Accrued liabilities



105,278



29,537


Revenue distributions payable



72,857



(20,839)


Other current liabilities



(153)



(3,678)


Net cash provided by operating activities



798,746



836,600


Cash flows used in investing activities:








Additions to unproved properties



(518,247)



(170,291)


Drilling and completion costs



(1,723,657)



(1,350,498)


Additions to water handling systems



(156,467)



(79,227)


Additions to gathering systems and facilities



(406,666)



(282,813)


Additions to other property and equipment



(12,539)



(5,225)


Change in other assets



(6,896)



11,190


Proceeds from asset sales





40,000


Net cash used in investing activities



(2,824,472)



(1,836,864)


Cash flows from financing activities:








Issuance of common stock





537,832


Issuance of common units in Antero Midstream Partners LP





240,972


Issuance of senior notes



1,102,500



750,000


Repayment of senior notes



(260,000)




Borrowings (repayments) on bank credit facility, net



1,217,000



(705,000)


Make-whole premium on debt extinguished



(17,383)




Payments of deferred financing costs



(27,570)



(17,190)


Distributions to noncontrolling interest in consolidated subsidiary





(21,358)


Other





(3,561)


Net cash provided by financing activities



2,014,547



781,695


Net decrease in cash and cash equivalents



(11,179)



(218,569)


Cash and cash equivalents, beginning of period



17,487



245,979


Cash and cash equivalents, end of period


$

6,308


$

27,410










Supplemental disclosure of cash flow information:








Cash paid during the period for interest


$

67,299


$

116,579


Supplemental disclosure of noncash investing activities:








Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment


$

227,368


$

(193,288)


 

The following tables set forth selected operating data for the three months ended September 30, 2014 compared to the three months ended September 30, 2015:




Three Months Ended September 30,


Amount of
Increase


Percent


(in thousands)


2014


2015


(Decrease)


Change


Operating revenues:













Natural gas sales


$

310,390


$

253,975


$

(56,415)


(18)

%

NGLs sales



91,111



50,092



(41,019)


(45)

%

Oil sales



29,304



20,138



(9,166)


(31)

%

Gathering, compression, and water distribution



4,875



4,426



(449)


(9)

%

Marketing



17,835



35,633



17,798


100

%

Commodity derivative fair value gains



308,975



1,079,071



770,096


249

%

Total operating revenues



762,490



1,443,335



680,845


89

%

Operating expenses:













Lease operating



8,680



10,786



2,106


24

%

Gathering, compression, processing, and transportation



128,531



160,302



31,771


25

%

Production and ad valorem taxes



21,726



10,721



(11,005)


(51)

%

Marketing



32,192



61,799



29,607


92

%

Exploration



7,476



1,087



(6,389)


(85)

%

Impairment of unproved properties



4,542



8,754



4,212


93

%

Depletion, depreciation, and amortization



124,624



188,667



64,043


51

%

Accretion of asset retirement obligations



320



419



99


31

%

General and administrative (before equity-based compensation)



28,715



35,770



7,055


25

%

Equity-based compensation



24,285



23,915



(370)


(2)

%

   Total operating expenses



381,091



502,220



121,129


32

%

Operating income



381,399



941,115



559,716


147

%














Other Expenses:













Interest expense



(42,455)



(60,921)



(18,466)


43

%

Income before income taxes



338,944



880,194



541,250


160

%

Income tax expense



(135,035)



(335,460)



(200,425)


148

%

Net income and comprehensive income including noncontrolling interest



203,909



 

544,734



 

340,825


 

167

%

Net income and comprehensive income attributable to noncontrolling interest





10,892



10,892


 *


Net income and comprehensive income attributable to Antero Resources Corporation


$

203,909


$

533,842


$

329,933


 

162

%














Adjusted EBITDAX


$

291,572


$

290,807


$

(765)


 *


__________________

Not meaningful or applicable



 





Three Months Ended September 30,


Amount of
Increase


Percent




2014


2015


(Decrease)


Change


Production data:













Natural gas (Bcf)



86



110



24


28

%

NGLs (MBbl)



1,953



4,147



2,194


112

%

Oil (MBbl)



348



660



312


90

%

Combined (Bcfe)



99



139



40


39

%

Daily combined production (MMcfe/d)



1,080



1,506



426


39

%

Average prices before effects of derivative settlements:













Natural gas (per Mcf)


$

3.63


$

2.32


$

(1.31)


(36)

%

NGLs (per Bbl)


$

46.66


$

12.08


$

(34.58)


(74)

%

Oil (per Bbl)


$

84.17


$

30.49


$

(53.68)


(64)

%

Combined (per Mcfe)


$

4.33


$

2.34


$

(1.99)


(46)

%

Average realized prices after effects of derivative settlements:













Natural gas (per Mcf)


$

4.31


$

3.99


$

(0.32)


(7)

%

NGLs (per Bbl)


$

46.66


$

16.47


$

(30.19)


(65)

%

Oil (per Bbl)


$

82.47


$

38.18


$

(44.29)


(54)

%

Combined (per Mcfe)


$

4.91


$

3.83


$

(1.08)


(22)

%

Average Costs (per Mcfe):













Lease operating


$

0.09


$

0.08


$

(0.01)


(11)

%

Gathering, compression, processing, and transportation


$

1.29


$

1.16


$

(0.13)


(10)

%

Production and ad valorem taxes


$

0.22


$

0.08


$

(0.14)


(64)

%

Marketing, net


$

0.14


$

0.19


$

0.05


36

%

Depletion, depreciation, amortization, and accretion


$

1.26


$

1.37


$

0.11


9

%

General and administrative (before equity-based compensation)


$

0.29


$

0.26


$

(0.03)


(10)

%

 

The following tables set forth selected operating data for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2015:




Nine Months Ended September 30,


Amount of
Increase


Percent


(in thousands)


2014


2015


(Decrease)


Change


Operating revenues:













Natural gas sales


$

936,877


$

810,982


$

(125,895)


(13)

%

NGLs sales



244,807



188,403



(56,404)


(23)

%

Oil sales



89,059



55,627



(33,432)


(38)

%

Gathering, compression, and water handling



11,964



15,084



3,120


26

%

Marketing



23,048



143,242



120,194


521

%

Commodity derivative fair value gains (losses)



(63,720)



1,836,398



1,900,118


*


Total operating revenues



1,242,035



3,049,736



1,807,701


146

%

Operating expenses:













Lease operating



18,570



25,561



6,991


38

%

Gathering, compression, processing, and transportation



315,878



490,633



174,755


55

%

Production and ad valorem taxes



64,123



57,458



(6,665)


(10)

%

Marketing



58,119



214,201



156,082


269

%

Exploration



21,176



3,086



(18,090)


(85)

%

Impairment of unproved properties



7,895



43,670



35,775


453

%

Depletion, depreciation, and amortization



320,984



548,013



227,029


71

%

Accretion of asset retirement obligations



931



1,227



296


32

%

General and administrative (before equity-based compensation)



76,446



98,645



22,199


29

%

Equity-based compensation



85,896



79,280



(6,616)


(8)

%

Contract termination and rig stacking





10,902



10,902


*


Total operating expenses



970,018



1,572,676



602,658


62

%

Operating income



272,017



1,477,060



1,205,043


443

%














Other Expenses:













Interest expense



(111,057)



(173,929)



(62,872)


57

%

Loss on early extinguishment of debt



(20,386)





20,386


*


Total other expenses



(131,443)



(173,929)



(42,486)


32

%

Income from continuing operations before income taxes and discontinued operations



140,574



1,303,131



1,162,557


827

%

Income tax expense



(75,919)



(498,709)



(422,790)


557

%

Income from continuing operations



64,655



804,422



739,767


1,144

%

Income from discontinued operations



2,210





(2,210)


*


Net income and comprehensive income including noncontrolling interest



66,865



804,422



737,557


1,103

%

Net income and comprehensive income attributable to noncontrolling interest





21,522



21,522


*


Net income and comprehensive income attributable to Antero Resources Corporation


$

66,865


$

782,900


$

716,035


1,071

%














Adjusted EBITDAX


$

831,690


$

913,610


$

81,920


10

%

















Nine Months Ended September 30,


Amount of
Increase


Percent




2014


2015


(Decrease)


Change


Production data:













Natural gas (Bcf)



217



332



115


53

%


NGLs (MBbl)



4,602



11,042



6,440


140

%


Oil (MBbl)



1,010



1,549



539


53

%


Combined (Bcfe)



251



407



156


62

%


Daily combined production (MMcfe/d)



920



1,492



572


62

%


Average prices before effects of derivative settlements:














Natural gas (per Mcf)


$

4.31


$

2.45


$

(1.86)


(43)

%


NGLs (per Bbl)


$

53.20


$

17.06


$

(36.14)


(68)

%


Oil (per Bbl)


$

88.15


$

35.91


$

(52.24)


(59)

%


Combined (per Mcfe)


$

5.06


$

2.59


$

(2.47)


(49)

%


Average realized prices after effects of derivative settlements:














Natural gas (per Mcf)


$

4.58


$

4.07


$

(0.51)


(11)

%


NGLs (per Bbl)


$

53.20


$

20.34


$

(32.86)


(62)

%


Oil (per Bbl)


$

86.57


$

42.90


$

(43.67)


(50)

%


Combined (per Mcfe)


$

5.29


$

4.03


$

(1.26)


(24)

%


Average Costs (per Mcfe):














Lease operating


$

0.07


$

0.06


$

(0.01)


(14)

%


Gathering, compression, processing, and transportation


$

1.26


$

1.20


$

(0.06)


(5)

%


Production and ad valorem taxes


$

0.26


$

0.14


$

(0.12)


(46)

%


Marketing, net


$

0.14


$

0.17


$

0.03


21

%


Depletion, depreciation, amortization, and accretion


$

1.28


$

1.35


$

0.07


5

%


General and administrative (before equity-based compensation)


$

0.30


$

0.24


$

(0.06)


(20)

%




Not meaningful or applicable

 

Logo - http://photos.prnewswire.com/prnh/20131101/LA09101LOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/antero-resources-reports-third-quarter-2015-financial-results-300168189.html

SOURCE Antero Resources Corporation


Source: PR Newswire (October 28, 2015 - 4:05 PM EDT)

News by QuoteMedia
www.quotemedia.com