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Antero Resources Fourth Quarter, Full Year 2021 Results

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   |    Thursday,February 17,2022

Antero Resources Corp. announced its fourth quarter 2021 financial and operating results, and year end 2021 estimated proved reserves.

Fourth Quarter 2021 Highlights Include:

  • Net production averaged 3.2 Bcfe/d, including 160 MBbl/d of liquids
  • Realized pre-hedge natural gas equivalent price of $6.48 per Mcfe, a $0.65 per Mcfe premium to NYMEX pricing
    • Realized pre-hedge C3+ NGL price of $58.25 per barrel, or 75% of WTI, a 111% increase from the prior year period
    • Realized pre-hedge natural gas price of $5.89 per Mcf, a $0.06 per Mcf premium to NYMEX Henry Hub pricing
  • Net Income was $901 million, Adjusted Net Income was $157 million (Non-GAAP)
  • Adjusted EBITDAX was $420 million (Non-GAAP); net cash provided by operating activities was $475 million
  • Free Cash Flow was $237 million (Non-GAAP)
  • Total Debt and Net Debt at quarter end was $2.1 billion, an $875 million reduction from year end 2020 (Non-GAAP)
  • Net Debt to trailing last twelve month Adjusted EBITDAX declined to 1.3x (Non-GAAP)
  • Estimated proved reserves were 17.7 Tcfe at year end 2021 and proved developed reserves increased to 12.8 Tcfe (72% Proved Developed)
  • Estimated future development cost for 5.0 Tcfe of proved undeveloped reserves is $0.31 per Mcfe

Paul Rady, Chairman, President and Chief Executive Officer of Antero Resources commented, "This past year proved to be an important inflection point for Antero as we shifted to a maintenance capital program and generated approximately $850 million of Free Cash Flow. This substantial Free Cash Flow was used to reduce debt during the year, driving leverage down to 1.3x as of December 31, 2021. Looking ahead to 2022, our capital budget reflects another year of maintenance capital that is projected to generate $1.5 to $1.7 billion in Free Cash Flow based on current commodity prices. This Free Cash Flow outlook allows us to continue to reduce debt while also returning substantial capital to our shareholders."

Michael Kennedy, Chief Financial Officer of Antero Resources said, "The dramatic reduction in our absolute debt, below $2.0 billion in the first quarter of 2022, enables us to initiate a return of capital program. Going forward we will target returning 25% to 50% of Free Cash Flow annually to our shareholders, beginning with the $1.0 billion share repurchase program that is effective immediately. This plan puts Antero in the unique position of reducing leverage below 1.0x in 2022 while maintaining a peer-leading return of capital profile."

Return of Capital Program

Antero is initially targeting a return of capital of 25% to 50% of Free Cash Flow annually going forward, beginning with the implementation of the share repurchase program. Antero's Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $1.0 billion of outstanding common stock. This represents approximately 16% of Antero's market capitalization based on the current share price. The open market share repurchase program is expected to commence during the first quarter of 2022.

The actual amount, timing and nature of any returns of capital to shareholders is subject to review and approval by Antero's Board of Directors. The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including the market price of the Company's common stock, general market and economic conditions and applicable legal requirements. The exact number of shares to be repurchased by the Company is not guaranteed and the program may be suspended, modified, or discontinued at any time without prior notice.

Debt Reduction

As of December 31, 2021, Antero's total debt was $2.1 billion with no borrowings under the Company's revolving credit facility. Net Debt to trailing twelve month Adjusted EBITDAX was 1.3x. In late January, Antero announced that on March 1, 2022 it will redeem all $585 million of outstanding senior notes due 2025 at 101.25% of par, plus accrued and unpaid interest on March 1, 2022. The redemption is expected to reduce annual interest expense by approximately $30 million. The Company intends to utilize cash on hand and borrowings under its revolving credit facility to fund this senior note redemption. Borrowings utilized to fund the redemption are expected to be paid down in 2022 with Free Cash Flow.

Project Canary Natural Gas Certification

The pilot project to certify environmental performance of multiple pads with Project Canary was completed in early 2022. This rigorous independent assessment and certification process evaluated the engineering, operational and environmental standards that Antero employs in its operations. The certification confirms Antero's strong operational and environmental performance and supports the Company's continuous improvement and ESG goals, which was expanded to include targeting Net Zero Scope 2 emissions by 2025.

Free Cash Flow

Antero generated $237 million and $849 million of Free Cash Flow during the fourth quarter and full year of 2021, respectively.

Fourth Quarter Financial Results

Net income was $901 million, or $2.65 per diluted share, compared to net income of $70 million, or $0.24 per diluted share, in the prior year period. Adjusted Net Income was $157 million, or $0.46 per diluted share, compared to Adjusted Net Loss of $3 million, or $0.01 per diluted share, in the prior year period.

Adjusted EBITDAX was $420 million, a 40% increase compared to the prior year quarter, driven by higher realized natural gas and NGL prices.

Net daily natural gas equivalent production in the fourth quarter averaged 3.2 Bcfe/d, including 160 MBbl/d of liquids, as detailed in the table below. Fourth quarter volumes were down sequentially as just 40% of the Company's 2021 completion activity occurred during the second half of 2021, including less than 20% of annual completion activity in the fourth quarter. Antero chose not to accelerate activity in the second half of 2021 in order to adhere to the capital budget. In addition, liquids volumes were down sequentially in the fourth quarter as four of the 14 completions were dry gas Utica wells.

Antero's average realized natural gas price before hedging was $5.89 per Mcf, representing a 124% increase compared to the prior year period. Antero realized a $0.06 per Mcf premium to the average NYMEX Henry Hub. The premium to NYMEX was lower than expected due to the significant decline in daily pricing during the months of November and December relative to NYMEX first-of-month pricing. Antero sells its gas both on a first-of-month and daily basis, which is an industry standard for operational purposes.

Antero's average realized C3+ NGL price before hedging was $58.25 per barrel, a 111% increase versus the prior year period. Antero shipped 50% of its total C3+ NGL net production on Mariner East 2 for export and realized a $0.03 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 50% of C3+ NGL net production at a $0.04 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 107,304 Bbl/d of net C3+ NGL production was $52.98 per barrel, which was a $0.01 per gallon discount to Mont Belvieu pricing. Antero expects to sell approximately 50% of its C3+ NGL production in 2022 at Marcus Hook for international export at a premium to Mont Belvieu.

All-in cash expense, which includes lease operating, gathering, compression, processing and transportation, production and ad valorem taxes was $2.45 per Mcfe in the fourth quarter, a 16% increase compared to $2.12 per Mcfe average during the fourth quarter of 2020. The increase from a year ago was due primarily to a $0.18 increase in gathering, processing and transportation expense driven by higher fuel costs as a result of higher natural gas prices and a $0.12 per Mcfe increase due to higher production taxes as a result of higher commodity prices.

Net marketing expense was $0.10 per Mcfe in the fourth quarter, an increase from $0.08 during the fourth quarter of 2020 due to lower production volume and lower third party marketing volumes.

Fourth Quarter 2021 Operating Update

Antero placed 10 horizontal Marcellus wells to sales during the fourth quarter with an average lateral length of 15,393 feet. All 10 wells have been online for at least 60 days and the average 60-day rate per well was 28.5 MMcfe/d, including approximately 1,306 Bbl/d of liquids assuming 25% ethane recovery. Wells placed on line in 2021 were ahead of type curve projections, leading to capital efficiency improvements during the year.

Antero also placed four horizontal Utica dry gas wells to sales during the fourth quarter with an average lateral length of 10,046 feet. All four wells have been on line for at least 60 days and the average 60-day rate per well was 25.0 MMcf/d at an average BTU of 1120.

Fourth Quarter 2021 Capital Investment

Antero's accrued drilling and completion capital expenditures for the three months ended December 31, 2021, were $152 million. In addition to capital invested in drilling and completion costs, the Company invested $30 million in land during the fourth quarter. A portion of the land spend was used to acquire 4,000 net acres which hold approximately 20 incremental drilling locations at an average cost of less than $1 million per location. The acreage is located in Antero's core Marcellus liquids-rich window and is expected to be developed within the Company's five-year development program. For a reconciliation of accrued capital expenditures to cash capital expenditures see the table in the Non-GAAP Financial Measures section.

Balance Sheet and Liquidity

As of December 31, 2021, Antero's Net Debt was $2.1 billion with no borrowings under the Company's revolving credit facility. Net Debt to trailing twelve month Adjusted EBITDAX ratio was 1.3x as of December 31, 2021.

Year End Proved Reserves

At December 31, 2021, Antero's estimated proved reserves were 17.7 Tcfe, a 1% increase versus the prior year. Estimated proved reserves were comprised of 58% natural gas, 41% NGLs and 1% oil.

Estimated proved developed reserves were 12.8 Tcfe, a 7% increase over the prior year. The percentage of estimated proved reserves classified as proved developed increased to 72% at year end 2021, compared to 67% at year end 2020. Antero's proved undeveloped locations have an average estimated BTU of 1263, with an average lateral length of approximately 14,143 feet. At year end 2021, Antero's five year development plan included 276 PUD locations.

Antero's 5.0 Tcfe of estimated proved undeveloped reserves will require an estimated $1.5 billion of future development capital over the next five years, resulting in an estimated average future development cost for proved undeveloped reserves of $0.31 per Mcfe.

The following table presents a summary of changes in estimated proved reserves (in Tcfe).


Proved reserves, December 31, 2020 (1)




Extensions, discoveries, and other additions








Sales of reserves in place (2)








Proved reserves, December 31, 2021 (1)





Proved reserves are reported consolidated with Martica Holdings, LLC. Martica Holdings, LLC had 254 Bcfe and 167 Bcfe of proved reserves as of year end 2020 and 2021, respectively.


Sales of reserves were related to the drilling partnership entered into in 2021 which assumes their participation at a 20% working interest in wells spud in 2021 and 15% working interest in expected wells spud in 2022 through 2024.

Commodity Derivative Positions

Antero did not enter into any new natural gas, NGL or oil hedges during the fourth quarter of 2021. As of December 31, 2021, the Company has hedged 438 Bcf of natural gas at a weighted average index price of $2.49 per MMBtu through 2023 with fixed price swap positions.

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