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Scotia Howard Weil 2018 Energy Conference – Antero Resources

Antero Resources · Mar 26, 2018 · 59 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. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 1
    Howard Weil 46th Annual Energy Conference MARCH 26, 2018
  2. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 2
    Antero Has Reached 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…
  3. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 3
    New Long Lateral Development Plan 59% of Inventory Now 5-Year Plan Averages 11,500 10,000 Lateral Length Average Lateral Length Core Drilling Inventory by Lateral Length per Completed Well 14,000 1,600 12,700 1,450 10,800…
  4. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 4
    Step Change in Capital Efficiency 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 Reduction 6.0 2.2…
  5. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 5
    Highest Leverage to NGL Prices Among Top Producers Top NGL Producers in the U.S. 4Q17 Daily NGL Production Including Recovered Ethane 115.0 45% NGL % of Product Revenues Pre-hedged Realized Price (/Bbl) 40% 105.0 37% NGLs…
  6. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 6
    The Size and Scale to Capitalize on the Resource Antero Resources Profile Market Cap............ 6.5B Enterprise Value.. . 10.1B Corporate Debt Ratings Ba2 / BB+ / BBB- Stand-Alone Leverage.. 2.9x Net Production (2018E)....... 2.7…
  7. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 7
    Outstanding Corporate Level Well Economics Single Well Economics Excluding Hedges Well Economics Support Investment Full Cycle ROR Half Cycle ROR Full Cycle ROR at 60/Bbl Flat Half Cycle ROR at 60/Bbl Flat ROR Well in Excess of…
  8. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 8
    Lower Capital & Higher Liquids Free Cash Flow D&C Capital Investment Fully Funded with Cash Flow 1.6B of Targeted Free Cash Flow Over the Next 5 Years 5-Year Stand-Alone Free Cash Flow: Cumulative 1,500 Stand-Alone E&P Free Cash…
  9. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 9
    Cash Flow Growth Deleveraging Profile 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…
  10. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 10
    Shareholder Interests in Focus: 5-Year Cash Priorities Priorities Sustain Asset Disciplined Growth Optionality for Cash Base Investments Return of Capital Debt Reduction Further Land Consolidation 1.6B Free Cash Flow 10.4B…
  11. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 11
    Antero Profile Should Drive Multiple Expansion Median Debt/ Median EV/ of Adjusted 2018 Adj. Companies EBITDAX EBITDAX AR 2018E EBITDAX U.S. Publicly Traded E&Ps Unhedged 52 2.6x 6.3x Multiple: 5.4x Premium for: Leverage <…
  12. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 12
    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)…
  13. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 13
    C3+ NGLs: Price Improvement Mont Belvieu C3+ Spot Price 2.00 Balance 2018 (1) 1.80 C3 0.78 / Gal 1.60 C3+ 0.92 / Gal 1.40 0.90/gal 1.20 /Gallon 1.00 0.80 0.60 0.40 0.20 0.00 2010 2011 2012 2013 2014 2015 2016…
  14. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 14
    Antero Leverage to Liquids Prices % of Volumes Realized Product Revenues Product (Guidance) Price 29% Revenue Liquids as a Percent Natural Gas of Total Volume 1,925 GAS 2.85/Mcf 2.0B 57% MMcf/d C2 44 MBbl/d 10/Bbl 0.2B…
  15. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 15
    Strong Propane Fundamentals Current propane days of supply are 26% Material reduction in U.S. propane below last year and 35% inventories relative to the 5-year average below the 5-year average Propane Days of Supply U.S. Propane…
  16. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 16
    LPG: Marcus Hook vs. Mont Belvieu Mariner East 2 is Expected to go In-service Mid-year 2018 and to Deliver a 0.06 to 0.09 per Gallon Uplift to Anteros Propane Netback Pricing LPG Shipping Routes and 2H 2018 Propane Netbacks (/Gallon)…
  17. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 17
    Powerful C3+ NGL Pricing Upside Exposure Significant Upside to C3+ NGL Pricing (2018 vs. 2017) C3+ Cash Flow Incremental C3+ Cash Flow 900 840 800 C3+ NGL Cash Flow (MM) 700 656 184 600 500 400 374 300 200 100…
  18. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 18
    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…
  19. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 19
    Largest Undrilled Core Drilling Inventory Core Marcellus & Utica Drilling Locations(1) Marcellus & Utica Liquids Rich Locations SW Marcellus & Utica Dry Locations NE Pennsylvania Dry Locations 4,000 3,500 Who Can Consistently…
  20. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 20
    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…
  21. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 21
    The Longer, the Better Single Well Economics by Lateral Lengths PV-10 (MM) ROR (%) 25.0 100% 79% 20.0 74% 80% 67% 20.4 15.0 60% 50% 15.9 10.0 40% 11.4 5.0 6.8 20% - 0% 6,000' Lateral 9,000' Lateral 12,000'…
  22. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 22
    Operating Evolution Continues Achievements Next Steps in 2018 Marcellus Well Cost(1) to Date Efficiency Evolution Facilities, Pad Flowback Water & Road Drilling Rigs/Services 42% 5% Allocation 9% Fit-for-purpose rigs with dual…
  23. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 23
    Diversified Natural Gas Market Mix Antero Firm Transportation Portfolio in 2018 % of Gas Index Differential Production Gulf Coast (0.14) 41% Local Midwest (0.13) 27% Markets TCO (0.27) 16% 10% of FT Portfolio TETCO M2 (0.53)…
  24. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 24
    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…
  25. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 25
    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…
  26. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 26
    Antero Midstream Overview: Disciplined Capital Efficient Business Model
  27. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 27
    Antero Midstream At A Glance Market Cap....... 5.0B 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…
  28. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 28
    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…
  29. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 29
    Capital Efficiency Drives Free Cash Flow Generation With No Change Leverage existing asset base 500MM in Capital and realization of full build-out Efficiencies to Throughput Volumes EBITDA multiples Over 2.4 billion of Free Cash…
  30. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 30
    AM 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 AM Long-Term Distribution Targets…
  31. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 31
    AMGP Attractive Valuation Proposition Visible distribution growth provides attractive long-term yield and valuation proposition AMGP Long-Term Distribution Targets and Implied Yield Distribution Per Share AMGP Forward Yield 13.2%…
  32. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 32
    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…
  33. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 33
    Appendix 34
  34. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 34
    Organizational Structure A 17B Integrated Natural Gas and NGL Business Sponsors(1) Public Sponsors(1) Public 27% 73% 67% 33% NYSE: AR 100% Incentive NYSE: AMGP Distribution Rights E&P Enterprise Value: 7.5B Enterprise…
  35. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 35
    Antero Long-Term Target Pricing Assumptions Commodity prices: All forecasts reflect the following commodity price cases: Base case: Strip commodity pricing at 12/31/17 (54.71 WTI crude oil & 2.84 Nymex Henry Hub) for 2018 - 2022…
  36. Scotia Howard Weil 2018 Energy Conference – 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. Scotia Howard Weil 2018 Energy Conference – 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. Scotia Howard Weil 2018 Energy Conference – 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. Scotia Howard Weil 2018 Energy Conference – 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. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 40
    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…
  41. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 41
    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…
  42. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 42
    AR Gathering and Compression Fees Analysis AR has Highly Competitive Gathering & Compression Fees with AM - ARs gathering and compression fees paid to AM are below the Appalachian average based on extensive internal analysis of 20…
  43. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 43
    Appalachia Gathering and Compression Fee Study AR Fees Paid to AM Converted to MMBtu AR Contracted Gathering/Compression Fees to AM (/Mcf) 0.66 1.00 BTU Conversion (Average BTU of 1250) 1.25 0.90 Gathering/Compression Fees…
  44. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 44
    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…
  45. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 45
    Propane Futures Have Not Been Good Indicator of Eventual Price Propane Futures vs Actuals (/Gal) Futures Price at 12/31/15 Futures Price at 12/31/16 Futures Price at 12/31/17 Actual Spot Price 1.20 Average Year 1 Difference Average…
  46. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 46
    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 1.81 1.81 Recycle Ratio(1) 1.60 0.45 0.21 1.50 0.45 Hedges 1.00 Hedges 2.7x Unhedged…
  47. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 47
    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 1.78B Stand- 0.45 Hedges Alone E&P 0.65 3.50…
  48. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 48
    Antero NGL Barrel (4Q 2017 Pricing) Antero realized 39.16/Bbl for its C3+ NGL barrels in the fourth quarter of 2017 71% of WTI oil price Including 21% ethane recovery, Antero realized 29.83 per barrel for its NGL barrels Antero is…
  49. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 49
    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…
  50. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 50
    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…
  51. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 51
    Peer Leading Margins 4Q 2017 Stand-Alone E&P Adj. EBITDAX Margins (Pre-Hedge / Pre-Marketing Expense)(1) Margin Rank: 1 1 2 3 4 4.00 3.77 3.28 3.50 3.02 3.00 2.44 2.21 2.50 (/Mcfe) 1.63 2.00 2.12 1.46 0.98 1.21 1.50…
  52. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 52
    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…
  53. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 53
    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…
  54. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 54
    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…
  55. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 55
    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…
  56. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 56
    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…
  57. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 57
    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…
  58. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 58
    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…
  59. Scotia Howard Weil 2018 Energy Conference – Antero Resources – slide 59
    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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