Paul Rady, Chairman, CEO and President of Antero Resources commented: "Our first quarter results highlight the outstanding execution by our employees and the strength of our asset base. Antero's consistent and repeatable operating performance reflects the high quality acreage position that we have built over the past decade. Our development program remains focused on our liquids-rich acreage, which provided an attractive pricing uplift in the quarter through the strength in NGL prices. During the quarter our operations team achieved a number of new company and industry drilling and completion records, including completion stages per day and a world record of lateral feet drilled in a 24-hour period. In addition, we are beginning to see service costs rollover and a decline in costs for raw materials such as tubulars, fuel and sand. This rollover in costs combined with our efficiency gains point to lower overall maintenance capital requirements in 2024."

Mr. Rady continued, "Antero is a uniquely positioned natural gas producer due to our ability to access the growing demand in the LNG Corridor through our firm transportation portfolio. Our balance sheet is strong at just 0.5x leverage. We have a diverse product mix as a top NGL producer in the U.S with more than twenty years of core drilling inventory. These attributes help us reduce volatility in our financial results and provided protection against the pullback in natural gas prices during the quarter."

Michael Kennedy, CFO of Antero Resources said: "Driven by our steadfast commitment to debt reduction in recent years, we entered 2023 in the strongest financial position in company history. During the first quarter we returned 50% of our Free Cash Flow through our share repurchase program. Since the beginning of our share repurchase program in the first quarter of 2022, we have now purchased approximately $1 billion of shares, or 10% of shares outstanding. In addition, we used the pullback in natural gas prices to opportunistically execute an early termination of our 2024 natural gas hedges, which gives us greater exposure to higher strip prices in 2024. We also completed an early buyout of a firm transportation commitment that was unutilized, reducing our cost structure. Looking ahead, we are well positioned with nearly half our projected revenue in 2023 being generated from liquids sales while maintaining significant exposure to U.S. LNG growth."

For a discussion of the non-GAAP financial measures including Adjusted Net Income, Adjusted EBITDAX, Free Cash Flow and Net Debt please see "Non-GAAP Financial Measures."

Free Cash Flow

During the first quarter, Free Cash Flow was $174 million.

Return of Capital Program

Antero purchased 3 million shares for $87 million during the first quarter of 2023. Since the inception of the share repurchase program, Antero has purchased 30.4 million shares for approximately $1 billion, or 10% of common shares outstanding. The Company currently has approximately $1.1 billion of remaining capacity under the share repurchase program.

Early Hedge Settlement

In the first quarter of 2023, Antero executed an early settlement of its 2024 natural gas swaptions that averaged $2.77 per Mcf, for approximately $200 million. The Company unwound the 2024 swaptions to gain full exposure to the higher expected strip prices in 2024. Antero believes that the lower natural gas strip in 2023 will result in reduced industry drilling and completions, which will provide support to higher natural gas prices ahead of the expected LNG export demand growth beginning in 2024.

Firm Transportation Buyout

In the first quarter of 2023, Antero terminated a firm transportation commitment related to an unutilized pipeline to local Appalachian markets for $24 million. The termination of this contract was at a discounted value to commitments through 2025 and reduces net marketing expense by $13 million annually.

Borrowing Base Redetermination

The borrowing base under Antero Resources' credit facility was reaffirmed at $3.5 billion in April of 2023. Lender commitments under the credit facility remained at $1.5 billion.

First Quarter 2023 Financial Results

Net daily natural gas equivalent production in the first quarter averaged 3.3 Bcfe/d, including 187 MBbl/d of liquids. Total production increased 3% from the first quarter of 2022. Compared to the year ago period, natural gas volumes decreased 3%, which was more than offset by a 17% increase in liquids volumes. Due to Antero's development focus on its liquids-rich Marcellus acreage, all liquids components, oil, C3+ NGLs, and ethane increased year over year.

Antero's average realized natural gas price before hedging was $3.45 per Mcf, a $0.03 per Mcf premium to the average first-of-month ("FOM") NYMEX Henry Hub price. Antero typically sells approximately 75% of its natural gas at first-of-month pricing and the remaining 25% at gas daily pricing. Gas daily prices averaged approximately 26% below FOM prices during the first quarter, resulting in the compressed natural gas price premium relative to Henry Hub. For full year 2023, the Company expects natural gas realizations to be at a premium to NYMEX in the range of $0.05 to $0.15 per Mcf compared to $0.10 to $0.20 per Mcf in prior guidance. The decrease is driven by an expected lower BTU uplift due to lower 2023 natural gas strip prices.

The following table details average net production and average realized prices for the three months ended March 31, 2023:

 Antero's average realized C3+ NGL price was $42.95 per barrel. Antero shipped 40% of its total C3+ NGL net production on Mariner East 2 for export and realized a $0.07 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 60% of C3+ NGL net production at a $0.03 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 110 MBbl/d of net C3+ NGL production was a $0.01 per gallon premium to Mont Belvieu pricing.

All-in cash expense, which includes lease operating, gathering, compression, processing, and transportation, production and ad valorem taxes was $2.46 per Mcfe in the first quarter, a 6% increase compared to $2.33 per Mcfe average during the first quarter of 2022. The increase was due primarily to higher processing costs related to an annual CPI-based adjustment. Net marketing expense was $0.08 per Mcfe in the first quarter, a decrease from $0.10 per Mcfe during the first quarter of 2022. The decrease in net marketing expense was due to reduced firm transportation commitments between periods.

First Quarter 2023 Capital Investment

Antero's accrued drilling and completion capital expenditures for the three months ended March 31, 2023, were $267 million. During the first quarter, Antero achieved a company record of 16 completion stages for a single completion crew in a 24-hour period and averaged 11 completion stages per day per completion crew for the quarter. The Company completed 1,323 of 4,209 stages, or 31%, of its 2023 budgeted completion stages during the first quarter. The Company continues to forecast drilling and completion capital in 2023 to be in the range of $875 to $925 million.

In addition to capital invested in drilling and completion activities, the Company invested $72 million in land during the first quarter. As previously communicated, Antero's first quarter land spend is expected to be approximately 50% of the 2023 guidance of $150 million. During the quarter, Antero added approximately 12,000 net acres, representing over 50 incremental drilling locations at an average cost of $1 million per location. Antero's organic leasing efforts focus on acreage in close proximity to its current development plan. These incremental locations nearly offset Antero's maintenance capital plan that requires an average of 60 to 65 wells per year. In addition to the incremental locations, Antero also acquired minerals in its Marcellus area of development to increase its net revenue interest in future drilling locations. These efforts allow Antero to increase the average lateral length in its development program, which is expected to average 14,500 feet for wells drilled in 2023, or 7% longer than the 2022 average. The Company believes this organic leasing program is the most cost efficient approach to lengthening its core inventory position.

Note: Any 2023 guidance items not discussed in this release are unchanged from previously stated guidance.

Commodity Derivative Positions

Antero did not enter into any new natural gas, NGL or oil hedges during the first quarter of 2023.

Please see Antero's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, for more information on all commodity derivative positions. For detail on current commodity positions, please see the Hedge Profile presentations at www.anteroresources.com.

Adjusted Net Income

Adjusted Net Income as set forth in this release represents net income, adjusted for certain items. Antero believes that Adjusted Net Income 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 is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as an indicator of financial performance. The GAAP measure most directly comparable to Adjusted Net Income is net income. The following table reconciles net income to Adjusted Net Income (in thousands).

Net Debt

Net Debt is calculated as total long-term debt less cash and cash equivalents. Management uses Net Debt to evaluate the Company's financial position, including its ability to service its debt obligations.

The following table reconciles consolidated total long-term debt to Net Debt as used in this release (in thousands).

Free Cash Flow

Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow or as a measure of liquidity. The Company defines Free Cash Flow as net cash provided by operating activities, less net cash used in investing activities, which includes drilling and completion capital and leasehold capital, plus payments for early contract termination or derivative monetization, less proceeds from asset sales or derivative monetization and less distributions to non-controlling interests in Martica.

The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts.

Free Cash Flow is a useful indicator of the Company's ability to internally fund its activities, service or incur additional debt and estimate return of capital. There are significant limitations to using Free Cash Flow as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Free Cash Flow reported by different companies. Free Cash Flow does not represent funds available for discretionary use because those funds may be required for debt service, land acquisitions and lease renewals, other capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations.

Adjusted EBITDAX

Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), adjusted for certain items detailed below.

Adjusted EBITDAX as used and defined by us, 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 or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, 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, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:

• is widely used by investors in the oil and natural gas industry to measure operating performance without regard to items excluded from the calculation of such term, which may vary substantially from company to company depending upon accounting methods and the 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 our operations from period to period by removing the effect of our capital and legal structure from our operating structure;
• is used by our management team for various purposes, including as a measure of our operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting: and
• is used by our Board of Directors as a performance measure in determining executive compensation.

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.

The GAAP measures most directly comparable to Adjusted EBITDAX are net income (loss) and net cash provided by operating activities. The following table represents a reconciliation of Antero's net income (loss), including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of Antero's Adjusted EBITDAX to net cash provided by operating activities per our consolidated statements of cash flows, in each case, for the three months ended March 31, 2022 and 2023. Adjusted EBITDAX also excludes the noncontrolling interests in Martica, and these adjustments are disclosed in the table below as Martica related adjustments.