J.P. Morgan Global High Yield & Leveraged Finance Conference FEBRUARY 26, 2018
Antero Resources at a Glance Market Cap........ 6.0B Stand-Alone Enterprise Value 9.6B Corporate Debt Ratings Ba2 / BB+ / BBB- Stand-Alone Leverage. 2.9x Net Production (4Q 2017) 2,347 MMcfe/d Liquids.............................…
Organizational Structure A 17B Family Valuation Sponsors(1) Public Sponsors(1) Public 27% 73% 67% 33% NYSE: AR 100% Incentive NYSE: AMGP Distribution Rights Enterprise Value: 7.0B Enterprise Value: 3.6B (IDRs) Corp…
Liquidity & Debt Term Structure 12/31/2017 Debt Maturity Profile AR Credit Facility AM Credit Facility AR Senior Notes AM Senior Notes 2,000 1,800 1,600 555 New credit facilities for AR 1,400 and AM have allowed Antero to…
Deleveraging 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…
Antero at An Inflection Point Joining an Announced New Long Elite E&P Lateral Development Plan Group With: Averaging 11,500 Sustainable Cash Flow Growth Scale Step Change in Capital Generating 5-Year Free Cash Efficiency Reduces…
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…
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…
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…
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…
Cash Flow Growth Dramatic Deleveraging 12/31/17 Strip Pricing (Base Case) 60 Oil / 2.85 Gas 50 Oil / 2.85 Gas 5.0x Leverage targets inclusive of 500 MM 23% Debt-Adjusted 4.5x of maintenance and discretionary land Production CAGR…
Top NGL Producers in the U.S. NGL Price Exposure Among Top NGL Producers 4Q17 Daily NGL Production Including Recovered Ethane 115.0 45% NGL % of Product Revenues Pre-hedged Realized Price (/Bbl) 106.0 40% 105.0 37% 35% NGL…
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…
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…
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…
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…
The Longer, the Better Single Well Economics by Lateral Lengths PV-10 (MM) ROR (%) 25.0 100% 79% 74% 20.0 67% 20.4 80% 15.0 50% 60% 15.9 10.0 11.4 40% 5.0 6.8 20% - 0% 6,000' Lateral 9,000' Lateral 12,000' Lateral…
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…
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…
Diversified 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)…
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…
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 0.45/Mcfe 5-Year Cumulative: 500…
Antero Midstream Overview: Disciplined Capital Efficient Business Model
Antero Midstream At A Glance Market Cap....... 4.9B Enterprise Value........... 6.1B LTM Adjusted EBITDA(1).. 529 MM % Gathering/Compression 67% % Water 33% Net Debt/LTM EBITDA. 2.3x Corporate Debt Rating. Ba2 / BB+ /BBB- Gross…
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…
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…
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…
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%…
Credit Attributes Summary Antero Complex 53% of LP Units World Class E&P Operator in Appalachia A Leading Northeast Infrastructure Platform Focus on Capital Discipline, Free Cash Flow Generation & Deleveraging Profile…
Appendix 33
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…
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…
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…
Financial Policy Overview Fund drilling & completion capital with stand-alone upstream cash Free Cash Flow flow from operations (including AM distributions and earn-out payments from water business sale in 2015) Maintain…
Credit Facility Update: October 2017 Old Facility New Facility Borrowing Base 4,750 4,500 Commitments 4,000 2,500 Maturity 5/5/2019 5 Years (2022) Same as existing, until at least one of Moodys or First-priority, perfected liens…
Financial Policy Overview Maintain conservative leverage profile between 2.0x 2.5x Prudent net debt to LTM Adjusted EBITDA Leverage With ability to flex up to 3.0x on a short-term basis for accretive transactions Fund organic…
Substantial Reserve Growth NET PROVED RESERVES (Tcfe)(1) (Tcfe) Marcellus Utica 18.0 17.3 16.0 15.4 14.0 12.7 13.2 10.8B Proved PV-10 12.0 2017 Year-End proved pre-tax PV-10 10.0 at SEC pricing, including 7.6 0.6B of hedge value…
Increased Proved Developed Reserves 2011 2017 17% Proved developed 49% Proved developed reserves as percentage of reserves as percentage of proved reserves proved reserves Proved Developed Reserves as a % of Total Proved Reserves…
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…
D&C Capital Transparency D&C Capital (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 Lateral…
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…
Antero Resources Stand-Alone E&P Adjusted EBITDAX Reconciliation AR Stand-Alone E&P Adjusted EBITDAX Reconciliation ( in millions) Three Months Ended LTM Ended 12/31/2017 12/31/2017 Net income (loss) including noncontrolling…
Antero Resources Consolidated Adjusted EBITDAX Reconciliation Consolidated Adjusted EBITDAX Reconciliation ( in millions) Quarter Ended LTM Ended 12/31/2017 12/31/2017 Net income (loss) including noncontrolling interest 529,614…
Antero Midstream Non-GAAP Measures Non-GAAP Financial Measures and Definitions Antero Midstream views Adjusted EBITDA as an important indicator of the Partnerships performance. Antero Midstream defines Adjusted EBITDA as Net Income…
Antero Midstream Non-GAAP Measures The GAAP financial measure nearest to Adjusted Operating Cash Flow is cash flow from operating activities as reported in Antero Midstreams consolidated financial statements. Management believes that…
Antero Midstream Non-GAAP Measures Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is Net Income. The non-GAAP…
Adjusted EBITDA and DCF Reconciliation Adjusted EBITDA and DCF Reconciliation ( in thousands) Three months ended Years ended December 31, December 31, 2016 2017 2016 2017 Net income…
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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