Current AR Stock Info

Antero spent $1.28 billion on drilling and completions in 2017, producing an average of 2,253 MMcfe/d

Full-year and Q4 2017 spending
Antero Resources (ticker: AR) spent $1.282 billion on drilling and completions in 2017. The company invested $204 million for land, excluding $176 million for proved property acquisitions, $346 million for gathering and compression systems and $195 million for water infrastructure projects, including $123 million for the Antero Clearwater Treatment Facility.

Antero's drilling and completion capital expendit...

Analyst Commentary

KLR Group, John Gerdes:

Antero Resources (AR)

Liquids-Rich Marcellus Concentration

Price Target: $29.00

Price: $17.40

Investment thesis

Our $29 per share AR target price is unchanged as higher NGL price realizations are offset by higher transportation expense. Our composite cost-of-capital values the midstream business at ~9.5x this year’s cash generation.

Our ’18 production expectation of ~2.72 Bcfepd is slightly above the high end of company guidance (2.7 Bcfepd).

Antero’s gas production is 100% hedged through ’19 at an average NYMEX gas price of ~$3.50.
Highly competitive gas producer capital yield (cash recycle ratio)

Antero’s mid-cycle capital yield is almost 170%. Excluding Cabot (COG, $23.73, B, $32, Gerdes), the gas-dominate peers average cash recycle ratio is ~150%.

More extreme horizontal development (~12,000’ laterals) and a higher liquids composition (~30% liquids) underpin the company’s differential asset return.

Further, capital spending this year is allocated preponderantly to the Marcellus (~80%) versus the lesser yielding Utica (~20%).

Marcellus returns markedly superior to the Utica
Marcellus: The company is conducting a five-rig and five completion crew Marcellus program.

Antero plans to drill ~100 Marcellus wells and complete ~120 wells (~12,000’ laterals, ~200’ frac stage length, 2,000-2,500 lbs./ft. proppant) this year.

Marcellus completions comprise approximately 106 highly rich gas and ~14 highly rich gas/condensate wells. Marcellus wells should recover 30-32 Bcfe (2.5-2.7 Bcfe/1,000’ lateral, ~30% liquids) for a cost ~$10.4 million (~$875/ft.).

Utica: Antero is conducting a one-rig and one completion crew Utica program. The company plans to drill ~20 and complete ~25 Utica wells (10,000’+ laterals, ~200’ frac stage length, 2,000-2,500 lbs./ft. proppant).

Utica wells should recover 20+ Bcfe (~2 Bcfe/1,000’ lateral) for a cost of $10+ million (~$1,000/ft.).

Antero’s ten initial Ohio dry gas Utica wells recently commenced production at over 200 Mmcfpd.  

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