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Credit Suisse 23rd Annual Energy Summit – Antero Resources

Antero Resources · Feb 13, 2018 · 53 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. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 1
    Credit Suisse 23rd Annual Energy Summit FEBRUARY 13, 2018
  2. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 2
    Antero Resources at a Glance Market Cap........ 5.4B Consolidated Enterprise Value 10.7B Corporate Debt Ratings Ba2 / BB+ / BBB- Stand-Alone Leverage. 2.6x Net Production (4Q 2017) 2,317 MMcfe/d…
  3. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 3
    Reaching an Inflection Point Announced New Long Lateral Development Plan Joining an Averaging 11,500 Elite Group With: Sustainable Cash Flow Growth Step Change in Capital Generating 5-Year Free Cash Scale Efficiency Reduces…
  4. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 4
    Positioned in the Core of the Core Antero Acreage Antero Marcellus Wells Northern Rich Industry Marcellus Wells High-Graded Core Antero Marcellus Rig 283,000 acres Industry Marcellus Rig 2.24 Bcfe/1,000 Avg. EUR 1,300 lb/ft…
  5. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 5
    Largest Core Drilling Inventory Undrilled Core Marcellus & Utica Locations(1) Marcellus & Utica Liquids Rich Locations SW Marcellus & Utica Dry Locations NE Pennsylvania Dry Locations 4,000 3,500 Who Can Consistently Drill…
  6. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 6
    New Long Lateral Development Plan 59% of Inventory Now 5-Year Plan Averages 11,500 10,000 Lateral Length Average Lateral Length Core Inventory by Lateral Length per Completed Well 14,000 1,600 12,700 1,450 10,800 12,000…
  7. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 7
    Almost 3B Capital Reduction to 5-Year Plan Consolidated Drilling & Completion Capital Production Targets Expenditures As of December 2016 As of December 2017 As of December 2016 As of December 2017 2.5 2.4 2.9B Capex 6.0 2.2…
  8. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 8
    Breakdown of D&C Capex Savings D&C Capex Capital Allocation Lateral Lengths Cycle Times & Enhanced Well Cost Savings Savings Recoveries 0.4B Well Cost Savings Related to reduced AFEs including lower flowback 1.1B water…
  9. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 9
    Why Are We Growing Outstanding Well Economics Single Well Economics Full Cycle ROR: 28% Half Cycle ROR: 82% Well Economics Full Cycle ROR at 60/Bbl Flat: 33% Support Investment 100% Half Cycle ROR at 60/Bbl Flat: 90% ROR Well…
  10. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 10
    Lower Capital & Higher Liquids Free Cash Flow Over 1.6B of Targeted Free Cash Flow from 2018 to 2022 at Strip Pricing Including Maintenance Land Capital Expenditures 5-Year Stand-Alone Free Cash Flow: Cumulative 1,500 Stand-Alone…
  11. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 11
    Attractive Free Cash Flow Yield 10% AR 9% 9% FCF Yield(1) 8% Surpasses Industry Leading Peers, 7% While Maintaining Strong Production Growth 6% FCF Yield 5% 4% 3% 2% 1% 0% 2018 2019 2020 Free Cash Flow…
  12. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 12
    Shareholder Interests in Focus: 5-Year Cash Priorities Priorities Sustain Asset Disciplined Growth Optionality for Cash Base Investments Return of Capital Debt Reduction Land Acquisitions 1.6B Free Cash Flow 10.4B for…
  13. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 13
    Cash Flow Growth Dramatic Delevering 12/31/17 Strip Pricing (Base Case) 50 Oil / 2.85 Gas 60 Oil / 2.85 Gas 5.0x 23% Debt-Adjusted 4.5x Production Growth Stand-Alone Financial Leverage 3.9x Leverage targets inclusive of 500…
  14. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 14
    Delevering is Driving Ratings Momentum Corporate Credit Ratings History Stable Credit Ratings with Consistent Investment Grade Rating from Upgrades from the Beginning of the Fitch (BBB-) & Recent Decade Through the Downturn Upgrade…
  15. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 15
    Largest NGL Producer in the U.S. NGL Price Exposure Among Top NGL Producers 3Q17 Daily NGL Production Including Recovered Ethane 115.0 45% NGL % of Product Revenues Pre-hedged Realized Price (/Bbl) 105.6 40% 105.0 35% 34%…
  16. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 16
    Rapidly Growing NGL Production Antero NGL Production Growth by Purity Product 250,000 Natural Gasoline (C5+) IsoButane (iC4) 245,000 Normal Butane (nC4) Propane (C3) Ethane (C2) C3+ Production 200,000 C2 Total (Bbl/d)…
  17. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 17
    A Pioneer in Longer Lateral Development in Appalachia Antero Historical & Future Lateral Length Program 300 of Avg. Lateral Antero Wells Length Total Drilling Program 250 945 8,275 to Date 103 2018-2022 Program(2) 790 11,425…
  18. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 18
    Longer Laterals Scale the Resource EURs by Marcellus Lateral Lengths EUR in Bcfe/1,000' 2.3 Bcfe/1,000' R2 = .73 45 A 1:1 Proportional 40 Increase in EURs with 35 Longer Laterals Antero well results show no evidence of…
  19. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 19
    Declining Well Costs Longer Laterals the Next Step Historical Well Costs Marcellus Utica 41% 43% 2014 2017 2014 2017 Lower Costs 2.20 2.60 Marcellus Utica reduction in well costs 2.40 from 2014 to 2017 for a 9,000 lateral…
  20. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 20
    Results in Dramatically Lower F&D Cost F&D Cost per Mcfe(1)(2) Marcellus Utica 1.40 1.28 52% 42% 1.20 Lower F&D in Marcellus Utica 1.00 0.94 0.88 0.80 0.73 0.73 0.74 0.60 0.51 0.42 0.40 0.20 0.00 2014 2015…
  21. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 21
    Operating Evolution Continues Total Well Cost Savings Next Steps in in the Marcellus(1) Efficiency Evolution Fit-for-purpose rigs improves 100% cycle times 42% Drilling Vendor Reduction (3%) Enhanced walking and dual operation…
  22. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 22
    2018 Natural Gas Market Mix Antero Firm Transportation Portfolio in 2018 % of Gas Index Differential Sold TETCO M2 (0.53) 10% Local Mid-Atlantic (0.34) 6% Markets TCO (0.27) 16% 10% of FT Portfolio Gulf Coast (0.14) 41%…
  23. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 23
    Well Hedged at High Prices Relative to Strip Commodity Hedge Position Hedged Volume Average Index Hedge Price(1) Current NYMEX Strip(2) Mark-to-Market Value(2) 100% of 2018 and 2019 Target Gas Production Hedged (/MMBtu) at…
  24. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 24
    A Paired Trade Hedges Support Firm Commitments Net Marketing Expense (High End) Hedge Portfolio Supports Net Marketing Expense (Low End) Firm Commitments Hedge Gains 585 0.48/Mcfe 600 469 5-Year Cumulative: 500 0.45/Mcfe Firm…
  25. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 25
    Antero Profile Should Drive Multiple Expansion Median Debt/ Median EV/ of Adjusted 2018 Adj. Companies EBITDAX EBITDAX AR 2018E U.S. Publicly Traded E&Ps EBITDAX 51 3.1x 6.1x Multiple: 4.6x Premium for: Leverage < 3.0x 24…
  26. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 26
    Antero Midstream At A Glance Market Cap....... 5.2B Enterprise Value........... 6.3B LTM Adjusted EBITDA(1).. 513 MM % Gathering/Compression 57% % Water 43% Net Debt/LTM EBITDA. 2.1x Corporate Debt Rating. Ba2 / BB+ /BBB- Gross…
  27. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 27
    Antero Midstream Asset Overview Year End 2017 Sherwood Midstream Infrastructure (YE 2017) Processing Complex Compressor Gathering Pipelines (Miles) 366 Station Antero Compression Capacity (MMcf/d) 1,590 Clearwater Facility JV…
  28. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 28
    Delivering on November 2014 AM IPO Promise AM Distribution Per Unit and DCF Coverage Delivered on distribution growth 2.00 2.0x 1.8x through the 1.80 1.72 1.8x downturn and 1.60 exceeded DCF 1.4x 1.6x 1.40 1.4x coverage targets…
  29. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 29
    5-year Organic Project Backlog Reduction 500MM in Capital Efficiencies Reduce 5-Year Backlog to 2.7B with No Change in Throughput Targets Midstream Optimized Capital Higher EURs Longer Laterals Capex Savings 25MM from Lateral…
  30. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 30
    Capital Efficiency Drives Free Cash Flow Generation Significant Significant Investment in Investment in Leverage existing asset base Gathering, Processing, and realization of full build-out Compression, Fresh Fractionation, EBITDA…
  31. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 31
    Long-Term Distribution and Coverage Targets Unchanged capital investment philosophy with disciplined financial policies result in ability to target peer-leading distribution growth through 2022 Long-Term Distribution Targets and DCF…
  32. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 32
    Antero Midstream Project Economics Just-in-time capital investment philosophy drives attractive project IRRs AM Project Economics by Investment 45% 40% 40% 40% Weighted Internal Rate of Return 35% Avg: 25% IRR 30% 28% 30%…
  33. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 33
    Most Integrated Natural Gas & NGL Business in the U.S. 53% of LP Units World Class E&P Operator in Appalachia A Leading Northeast Infrastructure Platform Contiguous Core Acreage Position Allows for Long Lateral Drilling and…
  34. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 34
    Appendix 35
  35. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 35
    Organizational Structure A 16B Family Valuation Sponsors(1) Public Sponsors(1) Public 27% 73% 67% 33% NYSE: AR 100% Incentive NYSE: AMGP Distribution Rights Enterprise Value: 8.9B Enterprise Value: 3.6B (IDRs) Corp…
  36. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 36
    2018 Guidance Stand-Alone E&P Consolidated Net Daily Production (Bcfe/d) 2.7 Net Liquids Production (BBl/d) 130,000 Natural Gas Realized Price Differential to 0.00 to 0.05 Premium Nymex C3+ NGL Realized Price 62.5% 67.5% (% of…
  37. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 37
    Antero Long-Term Target Project Assumptions In-Service Date Rover Phase 2 2Q 2018 (April 1) Mariner East 2 2Q 2018 WB Xpress West 4Q 2018 WB Xpress East 4Q 2018 Mountaineer Xpress / Gulf Xpress YE 2018 Note: Based on…
  38. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 38
    Antero Guidance and Long-Term Target Assumptions Stand-Alone E&P Consolidated 20% CAGR through 2020 and 15% Growth in each of Net Daily Production (MMcfe/d) 2021 and 2022 Natural Gas Realized Price Differential to 0.00 to 0.05…
  39. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 39
    Antero Guidance and Long-Term Target Assumptions (Cont.) Stand-Alone E&P Consolidated 10.4B Adjusted Operating Cash Flow(1) N/A (Cumulative 2018 2022) 1,500 1,600 (2018 2020) 1,300 1,400 (2018 2021) Annual D&C Capital…
  40. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 40
    Guidance Summary - 2018 2017 2018 Guidance Guidance Guidance Change Net Income (MM) 305 - 345 435 - 480 +41% Adjusted EBITDA (MM) 520 - 560 705 - 755 +35% DCF (MM) 405 - 445 575 - 625 +41% Distribution Growth 28 30% 28 30% - DCF…
  41. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 41
    2018 Product Revenue Buildup Volumes Realized % of Total Product Revenues (Guidance) Price Volume 38% Liquids as a Percent Natural Gas of Total Volume 1,925 GAS 2.85/Mcf 2.0B 52% MMcf/d C2 44 MBbl/d 10/Bbl 0.2B 5%…
  42. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 42
    2018 Stand-Alone E&P EBITDAX Margin Stand-Alone E&P EBITDAX Margin Waterfall (/Mcfe) 4.50 AM Distributions 4.18 Fully Burdened Stand-alone gathering fees 4.00 0.17 0.10 0.11 1.75B Stand- 0.45 Hedges Alone E&P 0.65 3.50…
  43. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 43
    Attractive 2018 E&P Margins and Recycle Ratio Antero Fully Burdened Stand-Alone E&P Cash Margins (/Mcfe) (/Mcfe) 2.50 3.4x 2.00 1.80 1.80 Recycle Ratio(1) 1.59 0.45 0.21 1.50 0.45 Hedges 1.00 Hedges 2.7x Unhedged…
  44. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 44
    Antero Consolidated and Stand-Alone Enterprise Value Hedged Multiple 2018E EBITDAX (MM): 1,604 Excludes AM Distributions (MM) EV / 2018E EBITDAX: 4.0x 12,000 Unhedged Multiple 2018E EBITDAX (MM): 1,140 Excludes AM Distributions &…
  45. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 45
    2018 C3+ NGL Pricing & Market Mix Antero 2018 C3+ NGL Production Netbacks 100% 90% Weighted Average C3+ /Bbl Pre-ME2 Post-ME2 80% Marcus Realized Pricing Location Houston, PA 70% Hook Dock Propane (C3) 56% 60% Mont Belvieu…
  46. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 46
    Significant Value Derived from Midstream Ownership Antero Midstream Targeted Distributions to Antero Resources 450 400 350 300 in MMs 250 200 150 132 112 100 89 50 - 2015A 2016A 2017A 2018E 2019E 2020E 2021E…
  47. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 47
    D&C Capital Transparency D&C Capital Math (MM) 2018 2019 2020 Total Well Completions (I.e. First Sales) 145 155 160 Average Lateral 9,700 10,500 11,600 Adjusted Well Count (I.e. Based on Capital Timing) 155 157 150 Average…
  48. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 48
    Antero Assumptions: Single Well Economics SWE Cost Type Description of Cost Half Cycle Full Cycle Drilling and completion costs Assumes well costs for a 12,000 lateral, Marcellus: 10.6MM Marcellus: 11.4MM 2,000 lbs of proppant per…
  49. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 49
    Single Well Economics: Marcellus In Ethane Rejection Highly-Rich Classification Highly-Rich Gas Rich Gas Dry Gas Gas/Condensate Modeled BTU 1313 1250 1150 1050 EUR (Bcfe): 32 29 26 24 EUR (MMBoe): 5.3 4.9 4.3 3.9 % Liquids: 33%…
  50. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 50
    Single Well Economics: Utica In Ethane Rejection Highly-Rich Highly-Rich Classification Condensate Gas/ Rich Gas Dry Gas Gas Condensate Modeled BTU 1275 1235 1215 1175 1050 EUR (Bcfe): 13 25 29 28 26 EUR (MMBoe): 2.2 4.2 4.8 4.6…
  51. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 51
    Antero Resources Stand-Alone E&P Adjusted EBITDAX Reconciliation AR Stand-Alone E&P Adjusted EBITDAX Reconciliation ( in millions) Three Months LTM Ended Ended 09/30/2017 09/30/2017 Operating loss (114.1) (235.8) Commodity…
  52. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 52
    Antero Resources Consolidated Adjusted EBITDAX Reconciliation Consolidated Adjusted EBITDAX Reconciliation ( in millions) Quarter Ended LTM Ended 9/30/2017 9/30/2017 Net income including noncontrolling interest (90.0) (197.3)…
  53. Credit Suisse 23rd Annual Energy Summit – Antero Resources – slide 53
    Cautionary Note Regarding Hydrocarbon Quantities The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserve estimates (collectively, 3P). Antero has provided internally…

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