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Antero Resources Third Quarter 2021 Results

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   |    Friday,October 29,2021

Antero Resources Corp. announced its third quarter 2021 financial and operational results.

Third Quarter 2021 Highlights Include:

  • Net production averaged 3.25 Bcfe/d, including 169 MBbl/d of liquids
  • Realized pre-hedge natural gas equivalent price of $5.15 per Mcfe, a $1.14 per Mcfe premium to NYMEX pricing
    • Realized pre-hedge C3+ NGL price of $52.68 per barrel, or 75% of WTI, a 139% increase from the prior year period
    • Realized pre-hedge natural gas price of $4.31 per Mcf, a $0.30 per Mcf premium to NYMEX Henry Hub pricing
  • Net loss was $549 million, Adjusted Net Income was $61 million (Non-GAAP)
  • Adjusted EBITDAX was $358 million (Non-GAAP); net cash provided by operating activities was $313 million
  • Free Cash Flow was $91 million (Non-GAAP)
  • Net Debt at quarter end was $2.3 billion, a $660 million reduction from year end 2020 (Non-GAAP)
  • Net Debt to last twelve months Adjusted EBITDAX declined to 1.6x (Non-GAAP)

Subsequent Events Include:

  • Released 200 MMcf/d of firm transportation commitments on October 1, 2021
    • Year-to-date released 400 MMcf/d of firm transportation commitments including the above, reducing annual transportation demand fees by $60 million
  • Received corporate ratings upgrades from Moody's and S&P Global to Ba2 and BB, respectively
  • Extended credit facility to 2026, borrowing base increased 23% to $3.5 billion and elected to reduce commitments to $1.5 billion
  • Published annual ESG report citing industry-low greenhouse gas intensity and methane leak loss rate, with no routine gas flaring, and reiterated environmental reduction goals for 2025

Paul Rady, Chairman, President and Chief Executive Officer of Antero Resources commented, "Antero's third quarter financial results benefited from our significant C3+ NGL exposure. We produced over 110,000 Bbls/d of C3+ NGLs with a realized pre-hedge price of over $52 per barrel, a 139% increase from the prior year period. Antero's unique business strategy has positioned us as the second largest NGL producer in the U.S. with a firm transportation portfolio that delivered peer-leading EBITDAX margins during the quarter. Based on today's strip prices, we are targeting over $900 million of Free Cash Flow in 2021, including over $300 million during the fourth quarter, despite being over 90% hedged on natural gas. This 90% hedged position on natural gas is reduced to 50% beginning in January of 2022, increasing our natural gas exposure to rising prices. In addition, we do not have any liquids hedges in 2022."

Mr. Rady continued, "This year's ESG report highlights the foundation of Antero Resources' success - a focus on People, Performance, and Purpose. Our relentless focus on these principals has allowed us to successfully navigate the ever-changing global economy, while continuing to deliver stakeholder value. As a substantial LPG producer and exporter, we are uniquely positioned to positively impact global energy poverty. For the last several years, approximately one-third of our LPG exports have gone to developing nations, including the nations of Nigeria, Peru and India, improving people's health, safety and livelihood through the displacement of more expensive and more carbon-intensive sources of energy."

Michael Kennedy, Chief Financial Officer and Senior Vice President of Finance of Antero Resources said, "During the third quarter we continued to make progress toward our absolute debt target of $2.0 billion. Since the beginning of the year, we have reduced debt by nearly $700 million, driving our leverage down to 1.6x. Based on today's strip prices, we anticipate achieving our debt target in early 2022, with leverage falling below 1.0x during the first quarter of 2022. Looking ahead and using today's backwardated commodity strips, we anticipate Free Cash flow in 2022 to be well in excess of 2021, which we intend to use for additional debt reduction and return of capital to our shareholders."

Credit Update

New Credit Facility Agreement

On October 26, 2021, Antero entered into a new credit facility with a borrowing base of $3.5 billion and lender commitments of $1.5 billion. The $3.5 billion borrowing base under the credit facility represents a $650 million increase from the Company's previous borrowing base of $2.85 billion. Antero elected to reduce lender commitments by $1.1 billion from the previous commitments of $2.64 billion. The decision to materially reduce lender commitments reflects Antero's current balance sheet strength, with an essentially undrawn balance on its facility, and with its Free Cash Flow expectations under its maintenance capital drilling program. The new credit facility matures in October 2026 and includes fall away covenants that are triggered if Antero is assigned an investment grade credit rating by the rating agencies.

Credit Ratings Upgrade

On October 6, 2021, Moody's Investors Service ("Moody's") upgraded Antero's Corporate Family Rating to Ba2 from Ba3, and senior unsecured notes to Ba3 from B1. The upgrade reflects Antero's material debt reduction in 2020 and 2021, and Moody's expectation that the company will deliver additional debt reduction in 2022 that should make the Company's credit profile more resilient to low prices. Additionally, on October 10, 2021, S&P Global Ratings ("S&P") upgraded Antero's issuer credit rating to BB from BB- and its unsecured notes to BB from BB-.

Letters of Credit Reduction and Surety Bond Replacement

As a result of recent upgrades from Moody's and S&P, the amount of letters of credit ("LCs") that Antero provides certain transactional counterparties related to our firm transportation commitments have been reduced by $107 million. In addition, the recent release of select firm transportation commitments resulted in an incremental reduction in LCs by $20 million. Antero also replaced $80 million of LCs with surety bonds with one of its firm transportation counterparties. Pro forma for the Company's new credit facility, the reduction of LCs and the surety bonds, Antero has approximately $535 million of LCs outstanding and $870 million of liquidity under its credit facility as of September 30, 2021.

Debt Reduction and Debt Repurchases

Antero reduced net debt by $70 million to $2.3 billion during the third quarter utilizing Free Cash Flow. In July, Antero redeemed $175 million of its Senior Notes due 2026 at 108.375% of par, plus accrued and unpaid interest. In October, Antero delivered notice to the holders of its Senior Notes due 2029 that it intends to redeem $116 million aggregate principal amount of the notes at 107.625% of par, plus accrued and unpaid interest. As of September 30, 2021, Antero had $98 million drawn on its credit facility. The company plans to continue to utilize Free Cash Flow to reduce debt, with the near-term goal of reducing absolute debt to under $2.0 billion.

Guidance Update

Antero increased guidance for its realized natural gas price to a premium to NYMEX of $0.20 to $0.30 per Mcf from a previous range of $0.15 to $0.25 per Mcf, reflecting a 25% increase at the midpoint. The increase was driven by a greater BTU uplift on the Company's natural gas sales as well as tighter differentials in the NYMEX-related markets where Antero's gas is sold.

Cash production expense guidance was increased by 2% to a range of $2.27 to $2.32 per Mcfe reflecting higher fuel and ad valorem costs due to the increase in commodity prices.

2020 ESG Report

On October 5, 2021, Antero published its 2020 ESG Report highlighting its focus on People, Performance and Purpose. The report details Antero Resources' ongoing commitment to the communities in which it operates, as well as its commitment to safe operations, environmental excellence and strong governance. The report also reiterates the Company's 2025 goals to reduce methane leak loss rate by 50% to under 0.025%, to reduce GHG intensity by 10% and to achieve Net Zero Scope 1 emissions by 2025.

Third Quarter 2021 Free Cash Flow

During the third quarter, Antero generated $91 million in Free Cash Flow. Free Cash Flow before Changes in Working Capital was $122 million during the third quarter.


Three Months Ended September 30,






Net cash provided by operating activities







Less: Net cash provided by (used in) investing activities






Less: Proceeds from VPP sale, net






Less: Distributions to non-controlling interests in Martica






Free Cash Flow







Changes in Working Capital (1)






Free Cash Flow before Changes in Working Capital








Working capital adjustments in 2021 include $28.3 million in changes in current assets and liabilities and a $2.3 million decrease in accounts payable and accrued liabilities for additions to property and equipment. See the cash flow statement in this release for details.

Third Quarter 2021 Financial Results

Net loss was $549 million, or $1.75 per diluted share, compared to a net loss of $536 million, or $1.99 per diluted share, in the prior year period. The net loss was driven by a $834 million unrealized commodity derivative fair value loss primarily as a result of the rise in the natural gas futures strip prices during the quarter. Adjusted Net Income was $61 million, or $0.19 per diluted share, compared to Adjusted Net Income of $13 million, or $0.05 per diluted share, in the prior year period.

Adjusted EBITDAX was $358 million, a 31% increase compared to the prior year quarter, driven by higher realized natural gas and NGL prices.

Net daily natural gas equivalent production in the third quarter averaged 3.25 Bcfe/d, including 169 MBbl/d of liquids, as detailed in the table below. Third quarter production was negatively impacted by non-recurring downtime at the Sherwood Processing Facility Complex that resulted in a loss of approximately 100 MMcfe/d during the quarter.

Antero's average realized natural gas price before hedging was $4.31 per Mcf, representing a 123% increase compared to the prior year period. Antero realized a $0.30 per Mcf premium to the average NYMEX Henry Hub price by capitalizing on its premium firm transportation.

Antero's average realized C3+ NGL price before hedging was $52.68 per barrel, a 139% increase versus the prior year period. Antero shipped 53% of its total C3+ NGL net production on Mariner East 2 for export and realized a $0.05 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 47% of C3+ NGL net production at a $0.10 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 111,505 Bbl/d of net C3+ NGL production was $52.68 per barrel, which was a $0.02 per gallon discount to Mont Belvieu pricing. Antero expects to sell at least 50% of its C3+ NGL production in 2021 at Marcus Hook for international export at a premium to Mont Belvieu.


Three Months Ended September 30, 2021


Pricing Point


Net C3+ NGL



% by


Premium (Discount)

To Mont Belvieu

Propane / Butane exported on ME2


Marcus Hook, PA







Remaining C3+ NGL volume


Hopedale, OH







Total C3+ NGLs/Blended Premium







All-in cash expense, which includes lease operating, gathering, compression, processing and transportation, production and ad valorem taxes was $2.35 per Mcfe in the third quarter, a 16% increase compared to $2.03 per Mcfe average during the third quarter of 2020. The increase from a year ago was due primarily to an increase in gathering, processing and transportation expense driven by higher fuel costs as a result of higher natural gas prices as well as $12 million in incentive fee rebates earned in the third quarter of 2020 that were not earned in the third quarter of 2021. Transportation expense increased $0.13 per Mcfe due to increased utilization on higher tariff pipelines into the Midwest and Gulf Coast, which in turn led to higher natural gas price realizations. Lease operating expense was $0.08 per Mcfe in the third quarter, an increase of $0.02 per Mcfe from the year ago period. Production and ad valorem expense increased $0.10 per Mcfe from the year ago period due to higher commodity prices.

Net marketing expense was $0.11 per Mcfe in the third quarter, unchanged from the prior year period. Net marketing expense in the fourth quarter of 2021 is expected to benefit from 200 MMcf/d of firm transportation commitments that were released on October 1, 2021.

Third Quarter 2021 Operating Update

Antero placed 16 horizontal Marcellus wells to sales during the third quarter with an average lateral length of 13,448 feet. Nine of the 16 new wells have been on line for at least 60 days and the average 60-day rate per well was 24.9 MMcfe/d, including approximately 1,370 Bbl/d of liquids assuming 25% ethane recovery.

Antero set a company record for completion stages per day in the Marcellus with its second Simulfrac operation with 23 stages per day, a 28% increase from Antero's first Simulfrac and a 64% increase from the prior zipper frac record of 14 stages per day.

Antero is currently operating 3 drilling rigs and 1 completion crew.

Third Quarter 2021 Capital Investment

Antero's accrued drilling and completion capital expenditures for the three months ended September 30, 2021, were $168 million. In addition to capital invested in drilling and completion costs, the Company invested $19.5 million in land during the third quarter. 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 September 30, 2021, Antero's total debt was $2.3 billion, of which $98 million were borrowings outstanding under the Company's revolving credit facility. Net debt to trailing twelve month Adjusted EBITDA ratio (non-GAAP) was 1.6x as of September 30, 2021.

Commodity Derivative Positions

Antero did not enter into any new natural gas, NGL or oil hedges during the third quarter of 2021. The Company has hedged 636 Bcf of natural gas at a weighted average index price of $2.58 per MMBtu through 2023 with fixed price swap positions. Antero also has oil, butanes and natural gasoline fixed price swap positions through December 31, 2021.

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