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July 2016 Corporate Overview – Antero Resources

Antero Resources · Jul 14, 2016 · 72 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. July 2016 Corporate Overview – Antero Resources – slide 1
    Company Overview July 2016
  2. July 2016 Corporate Overview – Antero Resources – slide 2
    WHY OWN ANTERO 3.8 billion of consolidated liquidity available (3/31/2016) pro forma for recent offering Balance Sheet Ba2/BB corporate ratings affirmed; 4.5 billion AR borrowing base affirmed Strength Stable leverage not increasing…
  3. July 2016 Corporate Overview – Antero Resources – slide 3
    ACQUISITION UPDATE Tag along option recently exercised on 13,000 net acres Strategic core inventory addition of 68,000 net acres and 5.1 Tcfe of Marcellus 3P reserves for 558 million purchase price (1) Pro Forma Acreage Position…
  4. July 2016 Corporate Overview – Antero Resources – slide 4
    LARGE INCREASE IN HIGHLY ECONOMIC WELL LOCATIONS The acquisition acreage is primarily located in areas where Antero is observing EURs of 2.0 Bcf/1,000 and higher driven by improved sand placement and now higher proppant loading…
  5. July 2016 Corporate Overview – Antero Resources – slide 5
    INCREASES MARCELLUS HIGH-GRADED DRY GAS INVENTORY Industry - 8 Well Average Advanced Completions High-Graded Wellhead: 2.6 Bcf/1,000 Adds significant high quality Marcellus dry Acquisition Acreage Processed: 2.8 Bcfe/1,000 Dry Gas…
  6. July 2016 Corporate Overview – Antero Resources – slide 6
    ACQUISITION DRIVES FIRM TRANSPORT UTILIZATION Incremental gas production from accelerated Integrated Firm Transportation Portfolio development will flow to favorably priced indices through ARs existing firm Acquired Acreage…
  7. July 2016 Corporate Overview – Antero Resources – slide 7
    ANTERO MIDSTREAM VALUE CREATION OPPORTUNITY A unique opportunity as most Appalachian core acreage is already dedicated to third party midstream providers Acquisition increases Antero Midstream footprint Antero Midstream Buildout and…
  8. July 2016 Corporate Overview – Antero Resources – slide 8
    NGL GROWTH AND ETHANE OPTIONALITY Antero continues to rapidly grow its liquids production, with 2015 year-over-year growth of 117% and 2016 NGL production growth guidance of 47% Developing significant ethane optionality with an estimated…
  9. July 2016 Corporate Overview – Antero Resources – slide 9
    ETHANE RECOVERY ECONOMICS AND POTENTIAL VOLUMES RECOVERING ETHANE: ARBITRAGE VS. NATURAL GAS PRICING Example C2 Recovery Decision Assuming ATEX costs are sunk and Assuming 3.00/MMBtu Natural Gas NYMEX gas prices are 3.00/MMBtu, C2…
  10. July 2016 Corporate Overview – Antero Resources – slide 10
    POSITIONED TO BENEFIT FROM ETHANE PRICE RECOVERY Antero has significant exposure to upside in ethane price Ethane Prices (/Gallon)(1) Ethane Upside Impact to AR(3) 0.80 Ethane Futures (ICE) Incremental EBITDAX Attributable to Ethane…
  11. July 2016 Corporate Overview – Antero Resources – slide 11
    NGL UPSIDE OPPORTUNITY Antero would directly benefit from an NGL price recovery through its 2.7 BBbls of 3P NGL reserves Mariner East 2 is expected to be in-service by mid-year 2017 which should significantly reduce Anteros differential…
  12. July 2016 Corporate Overview – Antero Resources – slide 12
    LEADERSHIP IN APPALACHIAN CORE DRILLING INVENTORY Antero plans to develop over 1,000 horizontal locations in the Marcellus and Ohio Utica by the end of the decade while depleting less than 25% of its current 3P drilling inventory…
  13. July 2016 Corporate Overview – Antero Resources – slide 13
    LEADING UNCONVENTIONAL BUSINESS MODEL Current Flexibility & Prudent Growth Drives Upside Participation in Value Creation Commodity Price Recovery 2 Growth & 3 Flexibility & Momentum Upside Most Active Operator Sustainable…
  14. July 2016 Corporate Overview – Antero Resources – slide 14
    DRILLING MOST ACTIVE OPERATOR IN APPALACHIA COMBINED TOTAL 12/31/15 RESERVES Assumes Ethane Rejection Net Proved Reserves 13.2 Tcfe Net 3P Reserves(1) 42.2 Tcfe Strip Pre-Tax 3P PV-10(2) 12.7 Bn SW Marcellus + Utica Rigs(4) Net 3P…
  15. July 2016 Corporate Overview – Antero Resources – slide 15
    DRILLING CONTINUOUS OPERATING IMPROVEMENT Operating Highlights Utica Shale Ohio Marcellus Shale Top 20 best drilling footage days in Marcellus since 2009 have all occurred in 2016, including 7,079 drilled in 24 hours in West…
  16. July 2016 Corporate Overview – Antero Resources – slide 16
    DRILLING PROVEN TRACK RECORD OF WELL COST REDUCTIONS Marcellus Well Cost Reductions for a 9,000 Lateral (MM)(1) 14 COMPLETION COST DRILLING COST 12.3 12 11.1 34% Reduction in 10.8 0.90 / 1,000 10.2 10.2 Marcellus well costs 10…
  17. July 2016 Corporate Overview – Antero Resources – slide 17
    GROWTH & MOMENTUM THROUGH THE DOWN CYCLE Antero is in the unique position of being able to sustain growth and value creation through the price down cycle AVERAGE NET DAILY PRODUCTION (MMcfe/d) AVERAGE NET DAILY LIQUIDS PRODUCTION…
  18. July 2016 Corporate Overview – Antero Resources – slide 18
    FLEXIBILITY & UPSIDE ANTERO THRIVES WITH RISING PRICES As the most active operator in Appalachia, Antero has kept its workforce intact while also preserving the ability to accelerate efficiently when commodity prices recover…
  19. July 2016 Corporate Overview – Antero Resources – slide 19
    FLEXIBILITY & UPSIDE LOW MAINTENANCE CAPITAL Antero can achieve 17% year-over-year net production growth for 2016 by spending only 675 million, or approximately 500 million less than the 1.2 billion of expected hedge revenues for the…
  20. July 2016 Corporate Overview – Antero Resources – slide 20
    WELL ECONOMICS MARCELLUS UPSIDE POTENTIAL While we have not changed our 1.7 Bcf/1,000' Marcellus project-wide type curve, we are seeing stronger EURs per 1,000' in a significant portion of our Marcellus rich gas acreage for wells…
  21. July 2016 Corporate Overview – Antero Resources – slide 21
    WELL ECONOMICS SUSTAINABLE BUSINESS MODEL At 6/30/2016 strip pricing, Antero has 2,701 locations with well economics that exceed 20% 6/30/2016 NYMEX Strip Pricing - Before Hedges rate of return (excluding hedges), pro forma for…
  22. July 2016 Corporate Overview – Antero Resources – slide 22
    WELL ECONOMICS HEDGING UNDEVELOPED PRODUCTION Antero has hedged a significant portion of its forecasted undeveloped production stream from wells yet to be drilled at prices well above current strip pricing, including virtually all of…
  23. July 2016 Corporate Overview – Antero Resources – slide 23
    MIDSTREAM MLP (NYSE: AM) HIGHLIGHTS SUBSTANTIAL VALUE IN MIDSTREAM BUSINESS Corporate Structure Overview Antero Resources Corporation (NYSE: AR) Public 12.4 Billion Enterprise Value(1) Ba2/BB Corporate Rating 38% LP Interest…
  24. July 2016 Corporate Overview – Antero Resources – slide 24
    TAKEAWAY LARGEST FT AND PROCESSING PORTFOLIO IN APPALACHIA Anteros natural gas firm transportation (FT) portfolio builds to 4.85 Bcf/d by YE 2018 with 87% serving favorable markets, with an average demand fee of 0.46/MMBtu and…
  25. July 2016 Corporate Overview – Antero Resources – slide 25
    TAKEAWAY FIRM TRANSPORTATION AND SALES PORTFOLIO While Antero has excess FT in place through 2017, the expected cost of unutilized FT is estimated to be modest at well under 10% of EBITDA Columbia Stonewall/Tennessee Momentum III EQT…
  26. July 2016 Corporate Overview – Antero Resources – slide 26
    HEDGING INTEGRAL TO BUSINESS MODEL Hedging is a key component of Anteros business model which includes development of a large, repeatable drilling inventory Locks in higher returns in a low commodity price environment and reduces the…
  27. July 2016 Corporate Overview – Antero Resources – slide 27
    LIQUIDITY STRONG BALANCE SHEET AND FLEXIBILITY Antero Resources (NYSE:AR) Antero Midstream (NYSE:AM) Pro Forma 3/31/2016 Debt Liquid Non-E&P Assets 3/31/2016 Debt Liquid Assets Debt Type MM Asset Type MM Debt Type MM Asset Type MM…
  28. July 2016 Corporate Overview – Antero Resources – slide 28
    REALIZATIONS A LEADER IN REALIZATIONS & MARGINS Antero continues to be a leader in its peer group in price realizations and EBITDAX unit margins 1Q 2016 Natural Gas Realizations (/Mcf) 1Q 2016 NYMEX 1Q 2016 Average Average Average…
  29. July 2016 Corporate Overview – Antero Resources – slide 29
    REALIZATIONS FAVORABLE PRICE INDICES Anteros exposure to favorable gas price indices like Chicago, Gulf Coast, NYMEX and TCO is expected to increase to 99% in 2016 Improved 2016 realizations driven by Stonewall gathering pipeline which…
  30. July 2016 Corporate Overview – Antero Resources – slide 30
    REALIZATIONS HIGHEST EBITDAX & MARGINS AMONG PEERS Antero has extended its lead among Appalachia Basin peers in both EBITDAX and EBITDAX margin Quarterly Appalachian Peer Group EBITDAX (MM)(1) 500 Y-O-Y AR: 0MM AR has ranked in the…
  31. July 2016 Corporate Overview – Antero Resources – slide 31
    ASSET OVERVIEW 32
  32. July 2016 Corporate Overview – Antero Resources – slide 32
    WELL COST REDUCTIONS SUPPORT SUSTAINABLE BUSINESS MODEL Antero has reduced average well costs for a 9,000 lateral by 33% in the Marcellus and 33% in the Utica as compared to 2014 well costs At 6/30/2016 strip pricing, Antero has 2,701…
  33. July 2016 Corporate Overview – Antero Resources – slide 33
    WORLD CLASS MARCELLUS SHALE DEVELOPMENT PROJECT 100% operated (1) Operating 6 drilling rigs including 1 LIVINGSTON UNIT VINOLA UNIT intermediate rig 30-Day Rate 30-Day Rate 1H: 18.6 MMcfe/d 1H: 19.7 MMcfe/d 493,000 net acres pro…
  34. July 2016 Corporate Overview – Antero Resources – slide 34
    WORLD CLASS OHIO UTICA SHALE DEVELOPMENT PROJECT 100% operated Operating 1 drilling rig Cadiz Processing 148,000 net acres in the core rich gas/ Plant condensate window (72% includes processable rich gas assuming an 1100 Btu…
  35. July 2016 Corporate Overview – Antero Resources – slide 35
    Antero Midstream (NYSE: AM) Asset Overview 36
  36. July 2016 Corporate Overview – Antero Resources – slide 36
    AMS FULL VALUE CHAIN BUSINESS MODEL Well Pad Condensate Gathering End Stabilization Users (Miles) YE 2015 YE 2016E Compression (Miles) YE 2015 YE 2016E Utica 19 19 Marcellus 76 98 Low Pressure Gathering Utica 36 36 Total 112…
  37. July 2016 Corporate Overview – Antero Resources – slide 37
    ANTERO MIDSTREAM GATHERING AND COMPRESSION ASSET OVERVIEW Gathering and Compression Assets Utica Gathering and compression assets in core of rapidly Shale growing Marcellus and Utica Shale plays Acreage dedication of 597,000 gross…
  38. July 2016 Corporate Overview – Antero Resources – slide 38
    ANTERO MIDSTREAM WATER BUSINESS OVERVIEW AM acquired ARs integrated water business for 1.05 billion plus earn out payments of 125 million at year-end in each of 2019 and 2020 The acquired business includes Anteros Marcellus and Utica…
  39. July 2016 Corporate Overview – Antero Resources – slide 39
    HIGH GROWTH MIDSTREAM THROUGHPUT Low Pressure Gathering (MMcf/d) High Pressure Gathering (MMcf/d) 1,600 Utica Marcellus 1,800 Utica Marcellus 1,400 1,303 1,600 1,124 1,400 1,197 1,216 1,195 1,222 1,200 1,038 1,134 935 965 1,200…
  40. July 2016 Corporate Overview – Antero Resources – slide 40
    SIGNIFICANT FINANCIAL FLEXIBILITY AM Liquidity (3/31/2016) Financial Flexibility 1.5 billion revolver in place to fund future growth capital ( in millions) (5x Debt/EBITDA Cap) Revolver Capacity 1,500 Liquidity of 834 million at…
  41. July 2016 Corporate Overview – Antero Resources – slide 41
    KEY CATALYSTS FOR ANTERO 1 Large, low unit cost core Marcellus and Utica natural gas drilling inventory Sustainability of with associated liquids generates attractive returns supported by long-term Anteros Integrated natural gas…
  42. July 2016 Corporate Overview – Antero Resources – slide 42
    APPENDIX 43
  43. July 2016 Corporate Overview – Antero Resources – slide 43
    ANTERO CAPITALIZATION CONSOLIDATED Pro Forma(4) ( in millions) 3/31/2016 3/31/2016 Cash 40 40 AR Senior Secured Revolving Credit Facility 680 400 AM Bank Credit Facility 680 680 6.00% Senior Notes Due 2020 525 525 5.375% Senior…
  44. July 2016 Corporate Overview – Antero Resources – slide 44
    ANTERO RESOURCES UPDATED 2016 GUIDANCE Key Operating & Financial Assumptions Key Variable 2016 Guidance(1) Net Daily Production (MMcfe/d) 1,750 Net Residue Natural Gas Production (MMcf/d) 1,355 Net C3+ NGL Production (Bbl/d)…
  45. July 2016 Corporate Overview – Antero Resources – slide 45
    ANTERO MIDSTREAM UPDATED 2016 GUIDANCE Key Operating & Financial Assumptions Original Updated Key Variable 2016 Guidance 2016 Guidance Financial: Net Income (MM) N/A 165 - 190 Adjusted EBITDA (MM) 300 - 325 325 - 350 Distributable…
  46. July 2016 Corporate Overview – Antero Resources – slide 46
    ASSET ACQUISITION SUMMARY UPDATE Update: With tag along right exercised, final Pro Forma Acreage Position acquisition metrics set out below: Purchase Price: 556 million Assets: 68,000 net acres primarily located in Wetzel, Tyler and…
  47. July 2016 Corporate Overview – Antero Resources – slide 47
    PRO FORMA ACQUISITION METRICS AR AR % Current Acquisition Pro Forma Increase Acreage: Net Marcellus Acres: 425,000 68,000 493,000 16% Total Net Acres: 573,000 68,000 641,000 12% Dry Gas Utica Net Acres (Stacked Pay): 190,000 51,000…
  48. July 2016 Corporate Overview – Antero Resources – slide 48
    ANTERO CREDIT QUALITY AFFIRMED Anteros Ba2 / BB credit ratings were affirmed by Moodys and S&P in February 2016 Moodys reviewed 20 high yield issuers and announced 16 downgrades ranging from 1 to 5 notches S&P reviewed 45 high yield…
  49. July 2016 Corporate Overview – Antero Resources – slide 49
    BORROWING BASE AFFIRMED Anteros 4.5 Billion borrowing base was reaffirmed by its lender group, representing one of only five public E&P companies that did not receive a reduction in its borrowing base thus far in the redetermination…
  50. July 2016 Corporate Overview – Antero Resources – slide 50
    2016 CAPITAL BUDGET Anteros 2016 initial capital budget is 1.4 billion, a 23% decrease from 2015 capital expenditures of 1.8 billion and a 58% decline from 2014 capital expenditures 1.8 Billion 2015(1) 1.4 Billion 2016 By Segment…
  51. July 2016 Corporate Overview – Antero Resources – slide 51
    LARGEST GAS HEDGE POSITION IN U.S. E&P 3.1 billion mark-to-market unrealized gain based on 3/31/2016 prices 3.6 Tcfe hedged from April 1, 2016 through year-end 2022 COMMODITY HEDGE POSITION BBtu/d Hedged Volume Average Index Hedge…
  52. July 2016 Corporate Overview – Antero Resources – slide 52
    OUTSTANDING RESERVE GROWTH NET PROVED RESERVES (Tcfe)(1) 2015 RESERVE ADDITIONS Proved reserves increased 4% to 13.2 Tcfe at 12/31/2015 with a pre-tax (Tcfe) Marcellus Utica PV-10 of 6.7 billion at SEC pricing, including 3.1 billion…
  53. July 2016 Corporate Overview – Antero Resources – slide 53
    CONSIDERABLE RESERVE BASE WITH ETHANE OPTIONALITY 27 year proved reserve life based on 2015 production annualized Reserve base provides significant exposure to liquids-rich projects 3P reserves of over 2.4 BBbl of NGLs and condensate…
  54. July 2016 Corporate Overview – Antero Resources – slide 54
    INCREASING RECOVERIES AND LOW VARIANCE IN MARCELLUS Anteros Marcellus average 30-day rates have increased by 55% over the past two years as the Company increased per well lateral lengths by 13% and shortened stage lengths by 33%…
  55. July 2016 Corporate Overview – Antero Resources – slide 55
    MARCELLUS SINGLE WELL ECONOMICS IN ETHANE REJECTION Assumptions Marcellus Well Economics and Total Gross Locations(1) Natural Gas 6/30/2016 strip Oil 6/30/2016 strip 80% 69% 1,500 1,154 Total 3P Locations NGLs 37.5% of Oil Price…
  56. July 2016 Corporate Overview – Antero Resources – slide 56
    UTICA SINGLE WELL ECONOMICS IN ETHANE REJECTION Assumptions Utica Well Economics and Gross Locations(1) Natural Gas 6/30/2016 strip 100% 300 79% 84% Oil 6/30/2016 strip 71% 250 Total 3P Locations 80% 70% NGLs 37.5% of Oil Price…
  57. July 2016 Corporate Overview – Antero Resources – slide 57
    PORTFOLIO APPROPRIATELY DESIGNED TO ACCOMMODATE GROWTH (BBtu/d) 2016 Firm Transport Antero projects firm transportation in excess of 4,000 Total Firm Transport equity gas production of approximately 1,660 BBtu/d 3,525 BBtu/d in…
  58. July 2016 Corporate Overview – Antero Resources – slide 58
    FT MARKETING EXPENSE UPDATE Illustrative Marketing Example: No Spread 2016 Projected Marketing Expenses: Unmarketable (EQT / M3) (/MMBtu) ( in millions, except per unit amounts) Demand 2016E 2016E 2016E 2016 TETCO M2 Pricing (Sold…
  59. July 2016 Corporate Overview – Antero Resources – slide 59
    STRONG FINANCIAL LIQUIDITY AND DEBT TERM STRUCTURE Approximately 3.8 billion of combined AR and AM financial liquidity as of 3/31/2016 pro forma for 848 million equity offering on 6/9/2016 No leverage covenant in AR bank facility, only…
  60. July 2016 Corporate Overview – Antero Resources – slide 60
    POSITIVE RATINGS MOMENTUM Anteros corporate credit ratings were recently affirmed at Ba2/BB by Moodys and S&P, respectively, despite the severe commodity price down cycle Moodys / S&P Historical Corporate Credit Ratings Moodys Rating…
  61. July 2016 Corporate Overview – Antero Resources – slide 61
    HEALTH, SAFETY, ENVIRONMENT & COMMUNITY Antero Core Values: Protect Our People, Communities And The Environment Strong West Virginia Keys to Execution Presence Antero has more than 3,500 employees and contract personnel working…
  62. July 2016 Corporate Overview – Antero Resources – slide 62
    CLEAN FLEET & CNG TECHNOLOGY LEADER Antero has two clean completion fleets operating to both enhance the economics of its completion operations and reduce the environmental impact Replaces diesel engines (for pressure pumping) with…
  63. July 2016 Corporate Overview – Antero Resources – slide 63
    POSITIVE OUTLOOK FOR LONG-TERM NGL MARKETS Forecast global LPG demand growth of 800 MBbl/d to 1 MMBbl/d by 2020 to be driven by petrochem projects in Asia and Middle East as well as residential/commercial, alkylate and power generation…
  64. July 2016 Corporate Overview – Antero Resources – slide 64
    POSITIVE OUTLOOK FOR LONG-TERM ETHANE MARKETS AS WELL U.S. ethane demand is projected to increase at an annual 3.5% CAGR through 2020, primarily based on an 8% CAGR for U.S. petrochem demand and a 30% growth in exports primarily to…
  65. July 2016 Corporate Overview – Antero Resources – slide 65
    2015 GLOBAL LPG DEMAND Global LPG demand is 8.5 MMBbl/d and growing 66
  66. July 2016 Corporate Overview – Antero Resources – slide 66
    GLOBAL LPG DEMAND DRIVEN BY PETCHEM AND RES/COMM Largest end-use sectors for LPG are residential/commercial, which tends to grow with population and improvement in living standards in the emerging markets PIRA forecasting 1.0 MMBbl/d…
  67. July 2016 Corporate Overview – Antero Resources – slide 67
    GLOBAL LPG TRADE DRIVEN BY U.S. SHALE The U.S. is the largest single driver of the rapid expansion in LPG trade accounting for over 90% in trade growth MMBbl/d 5.2 4.6 3.9 3.3 2.6 2.0 United States 1.3 0.7 1.…
  68. July 2016 Corporate Overview – Antero Resources – slide 68
    U.S. SHALE NGL EURS SUPPORT LPG TRADE GROWTH U.S. shale play NGL reserves are 50.8 billion barrels (1) Eagle Ford, Marcellus, Utica, Bakken and Permian are the work horses of U.S. shale production growth Marcellus/Utica NGL resource…
  69. July 2016 Corporate Overview – Antero Resources – slide 69
    NGL EXPORTS AND NETBACKS STEP-UP BY 2Q 2017 Upon in-service of Mariner East II, Antero will have the ability to market its propane and n-butane to international buyers, which we expect will provide uplifts of 0.16/Gal and 0.18/Gal,…
  70. July 2016 Corporate Overview – Antero Resources – slide 70
    ANTERO RESOURCES DECEMBER 31, 2015 RESERVES Anteros proved reserves were 13.2 Tcfe, while its 3P reserves were 37.1 Tcfe Proved pre-tax PV-10 at strip prices was 5.7 billion, while the 3P pre-tax PV-10 was 11.2 billion Including…
  71. July 2016 Corporate Overview – Antero Resources – slide 71
    ANTERO RESOURCES EBITDAX RECONCILIATION EBITDAX Reconciliation ( in millions) Quarter Ended LTM Ended 3/31/2016 3/31/2016 EBITDAX: Net income including noncontrolling interest 10.7 591.5 Commodity derivative fair value (gains)…
  72. July 2016 Corporate Overview – Antero Resources – slide 72
    ANTERO MIDSTREAM EBITDA RECONCILIATION EBITDA and DCF Reconciliation Three months ended in thousands March 31, 2015 2016 Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow: Net income 32,327 42,918 Add:…

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