Current AR Stock Info

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

Antero Resources

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 expenditures for Q4 2017 was $335 million. The company invested $22 million for land, $92 million for gathering and compression systems and $51 million for water infrastructure projects, including $25 million for the Antero Clearwater Treatment Facility.

Production and income

  • For 2017, Antero’s net daily production averaged 2,253 MMcfe/d, including 105,470 Bbl/d of liquids (28%). Reported net income was $615 million, or $1.94 per diluted share

Net income for the fourth quarter of 2017 was $64 million, a 13% decrease compared to the prior year quarter. The decrease in net income was driven by a $23 million non-cash impairment expense of the condensate pipelines in the Utica not expected to be utilized in Antero Midstream’s high-graded infrastructure plan.

Net daily production in the fourth quarter averaged 2,347 MMcfe/d, including 107,433 Bbl/d of liquids (27% liquids), representing an organic growth rate of 18% versus Q4 2016. Antero said that production was negatively impacted by the delayed in-service date of the Rover Pipeline, resulting in an approximate 45-day delay in placing 10 newly completed Utica wells to sales until the end of 2017.

In the fourth quarter of 2017, C3+ NGLs, oil and recovered ethane production averaged 69,801 Bbl/d, 6,207 Bbl/d and 31,425 Bbl/d, respectively. Total liquids production represents a growth rate of 24% versus Q4 2016. Liquids revenue represented approximately 41% of total product revenues, increasing from 30% of total product revenues in the prior year period.

Six drilling rigs, six completion crews and extra-long laterals


  • Drilled the longest Marcellus lateral in company history at 14,376′
  • Recorded 16 of the company’s top 20 drilling lateral footage days during the year
  • Over 25% of wells drilled averaged greater than one mile per day of drilling for the entire lateral
  • Recorded the fewest total days to drill an entire well at 8.4 days
  • Record Marcellus lateral footage drilled for one day of 8,178′

In the Marcellus, Antero completed and placed on-line 28 horizontal Marcellus wells during the fourth quarter of 2017. Current average well costs are $0.87 million per 1,000’ of lateral in the Marcellus, assuming a 9,000′ lateral and 2,000 pounds of proppant per foot completion. Antero is operating five drilling rigs and five completion crews in the Marcellus Shale play.

Antero drilled 27 horizontal Marcellus wells during the fourth quarter, including nine wells that had laterals greater than 12,000′. Antero recently drilled its two longest Marcellus laterals, both over 14,000′, on a 12 well pad. This is the company’s largest pad to date, with approximately 120,000′ of drilled lateral planned and approximately 300 Bcfe in anticipated pad reserves, assuming 25% ethane recovery. Antero is in the process of drilling a nine well pad with average lateral lengths of 13,200′ which the company expects to place to sales in the first quarter of 2019.

Antero Resources

Antero Avg. Lateral Length, Drilling Locations, Feb. 2018

Ohio Utica

  • Drilled the longest Utica lateral in company history at 17,445′
  • Recorded 13 of the company’s top 20 lateral footage days during the year
  • Record Utica lateral footage drilled for one day of 5,029′
  • Recently had record production with only one rig running during the year

Antero placed 10 horizontal Utica wells to sales at the end of the fourth quarter of 2017. The 10 wells are currently flowing at a combined (facility) constrained rate of over 200 MMcf/d, with wellhead pressures in excess of 3,000 psi, Antero said. These are the first wells completed by Antero in the Ohio Utica dry gas regime.

Despite running only one rig since 2016, Antero recently had record gross production in the Utica of 632 MMcf/d, with only 22 wells completed during 2017. Current average well costs are $0.98 million per 1,000’ of lateral in the Utica. Antero is operating one drilling rig and one completion crew in the Utica.

Estimated proved reserves up to 17.26 Tcfe

Combined 3P Reserves






Proved(2) 11,098 1,027 17,261 1,297
Probable 28,152 1,164 35,134 3,388
Possible 1,830 70 2,253 318
Total 3P 41,080 2,261 54,648 5,003
% Liquids(1) 25%


1)       Represents liquids volumes as a percentage of total volumes.  Combined liquids comprised of 812 million

barrels of ethane, 1.3 billion barrels of C3+ NGLs and 131 million barrels of oil

2)       427 of the 1,297 proved locations were undeveloped locations


2018 guidance projection

The company’s first quarter 2018 net production is estimated to be flat with the fourth quarter 2017 net production, due to the timing of completions throughout 2018, the impact from severe winter weather on the Sherwood processing plant operations in the early part of January and a shutdown for several days at the Seneca plant due to a third-party downstream pipeline rupture. Both of these processing plant issues have since been rectified.

According to Antero, the extreme cold weather in January resulted in “attractive pricing” on natural gas sales and the ability to generate “significant marketing revenues” during the first quarter of 2018, that more than offset the reduced production.

The company expects to meet its full year 2018 net production guidance of approximately 2.7 Bcfe/d.

“During 2017, Antero reached an inflection point by executing on its long-term strategic plan,” commented Paul Rady, chairman and CEO.  “We are now positioned to generate free cash flow and reduce financial leverage, while maintaining a 20%-plus debt-adjusted production growth profile.”

Tax cut

The company recognized a deferred tax benefit of $428 million in the fourth quarter due to the remeasurement of the company’s net deferred tax liability for the reduction in the U.S. statutory rate from 35% to 21%.

Conference call Q&A

Q: I don’t think we’ve actually seen you have a marketing gain since you’ve been public. So, any specifics here that you can highlight, and maybe more importantly, can you replicate this again?

Chairman and CEO Paul Rady: Well, it certainly was a strong beginning to the year, and of course, it reflects the cold that hit the Northeast, and so we were able to move not only our gas, but a lot of distressed third-party gas that couldn’t get out of the area.

We were able to deliver gas to good, high markets. So we’re talking about Chicago and Michigan, even the Gulf, because of self-storage draw-down had good prices through January. And then along the Eastern seaboard too. So, it was a really good situation. As we fill more and more of our capacity, we will be able to take advantage of good prices. Will we be able to duplicate that at the beginning of the year, time will tell, but as our production grows, it certainly still is a good strategic advantage for us.

Q: I was wondering if you could help us a little bit with how the completion timing will occur now in 2018, given some of the weather-related impacts. I think at Antero’s analyst day, you highlighted something between 140 and 150 completions. Can you give us a little bit of guidance around how that could work out by quarter in 2018?

CEO Rady: The 145 that we referenced on analyst day, is actually pretty evenly split out through the quarters. It just so happens in the first quarter, the majority of the activities are occurring in March.

So you’ll get full impact from first quarter completions starting in the second quarter, and that was as scheduled, a bit delayed because of the weather, but as scheduled.

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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