The Size and Scale to Capitalize on the Resource Antero Acreage Antero Resources Profile SW Marcellus Core Ohio Utica Core Market Cap............ 6.3B Enterprise Value. 10.1B Corporate Debt Ratings Ba2 / BB+ / BBB- Stand-Alone…
Organizational Structure A 17B Integrated Natural Gas and NGL Business Sponsors(1) Public Sponsors(1) Public 27% 73% 58% 42% NYSE: AR 100% Incentive NYSE: AMGP Distribution Rights E&P Enterprise Value: 7.1B Enterprise…
Natural Gas Liquids Update: Leading Position & Strong Fundamentals 5
Leader in Leverage to NGL Prices Top NGL Producers in the U.S. 2018 Consensus C2+ NGL Production Pre-hedged Realized NGL Price (/Bbl) 140 45% Pre-Hedge NGL % of Total Product Revenues (1) NGLs Generate 33% 40% 120 116 of AR…
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)…
Appalachia: Geographic & Infrastructure NGL Advantaged Permian, Rockies, Mid-Continent & Bakken Appalachia Transport Y-grade for out-of-basin fractionation In-basin fractionation and transport marketable Severely constrained…
Ethane: Positive Frac Spread Driving Recovery Higher Ethane Prices Needed to Ethane price improvement exceeds change Incentivize Recovery in Basins Farther in natural gas on a gallon equivalent basis from U.S. Gulf Coast Natural…
Anteros Ethane Exposure: All Upside Anteros ethane has a natural gas pricing Anteros balanced approach to ethane floor and purity ethane ceiling; increases sales results in 50% of contracts tied in ethane purity prices are all upside…
Strong Propane Fundamentals Current propane days of supply are Material reduction in U.S. propane 18% below last year and 24% inventories relative to the 5-year average below the 5-year average Propane Days of Supply U.S. Propane…
Strong Natural Gas Liquids (C3+) Price Improvement Mont Belvieu C3+ NGL prices have But still remain well within historical increased 28% year-over-year and 145% levels on a on a relative basis since January 2016 lows compared to WTI…
Anteros C3+ NGL Exposure: Highly Leveraged Anteros NGL price directly benefits NGL fundamentals remain constructive and from the recent strengthening support higher prices despite illiquid and of NGL prices at Mont Belvieu…
Powerful C3+ NGL Pricing Upside Exposure Compounded pricing leverage from For every 5.00/Bbl increase in NGL increasing volumes, prices, and Mariner prices, Antero generates an East 2 uplift drives cash flow growth incremental 170MM…
Anteros NGL Pricing Uplift from Mariner East 2 Mariner East 2 will allow AR to access 50,000 Bbl/d Mariner East 2 commitment international LPG markets and realize a equates to over 82 MM of 4.50/Bbl uplift on its exported barrels…
A Cash Flow Inflection Point Joining an Announced Longer Lateral Elite E&P Development Plan Group With: Averaging 11,500 per Well Sustainable Cash Flow Growth Scale Step Change in Capital Generating 5-Year Free Cash Efficiency…
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…
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…
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…
Drilling and Completion Efficiencies Drilling Days Completion Stages per Day 35 10.0 10.0 9.0 30 9.0 8.0 25 Drilling Days Stages per Day 20 7.0 20 6.0 5.4 5.0 5.0 4.6 15 12 10 4.0 3.6 10 8 3.0 5 2.0 1.0 0 2014…
Compelling Full Cycle Well Economics Fully burdened well economics Corporate ROR support investment well in excess of cost of capital Single Well Economics Bridge to Corporate Level Returns 120% Well Assumptions 12,000 Lateral…
Capital Discipline Leads to Free Cash Flow 48% reduction in D&C capital budget Future D&C capital budgets that are and 15 rig reduction since 2014 measured and within cash flow Stand-Alone Adjusted Cash Flow Alongside D&C Capital…
Near Term Free Cash Flow Inflection Point Production growth and strong liquids Capital discipline to reduce completion prices drives free cash flow crews and D&C capex in 2H18 in 4Q18 and beyond Stand-Alone Cash Flow(1) Free Cash…
Cash Flow Growth Deleveraging Profile 12/31/17 Strip Pricing (Base Case) 60 Oil / 2.85 Gas 5.0x 50 Oil / 2.85 Gas S&P Upgrade to BB+ 23% Debt-Adjusted 4.5x Moodys Ba2 Outlook Positive Production CAGR 3.9x BBB- Rating…
Antero Profile Should Drive Multiple Expansion Median Debt/ Median EV/ of Adjusted 2019 Adj. AR 2019E Companies EBITDAX EBITDAX unhedged U.S. Publicly Traded E&Ps EBITDAX Multiple: 3.9x 52 2.1x 5.5x Premium for: Leverage <…
Attractive Free Cash Flow Yield Assuming current stock prices, Antero should deliver free cash flow yield well in excess of both the integrateds and the best in class E&P peers AR 7% FCF Yield(1) 9% Surpasses Industry Leading…
Scale & Growth: Liquids-Rich Resource Meets Capital Efficiency
Positioned in the Core of the Core Antero Acreage Antero Marcellus Wells Industry Marcellus Wells Northern Rich High-Graded Core Antero Marcellus Rig 2.24 Bcfe/1,000 Avg. EUR Industry Marcellus Rig 61% Undeveloped 1,300 lb/ft…
Largest Undrilled Core Liquids Drilling Inventory Core Marcellus & Utica Undrilled Locations(1) 4000 Who Can Consistently Drill Long Laterals 3500 Who Has the 3,295 Running Room Antero Holds 40% of Core 3000 Undrilled…
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…
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% 89% 90% 77% 20.0 80% 21.0 58% 15.0 60% 16.6 10.0 40% 11.9 5.0 7.1 20% - 0% 6,000' Lateral 9,000' Lateral 12,000'…
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 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…
Rover Pipeline Uplift and Optionality Unlocks development optionality between Rover Sherwood Lateral expected to be Marcellus and Utica and provides further placed into service in September Chicago & Gulf Coast exposure Rover…
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…
Midstream Driving Value for AR Since Inception Antero Midstream Return on Investment for AR (Pre-tax)(1) 7,000 2,980 6,061 6,000 4.7x Cash Proceeds (SMM) 5,000 ROI 4,000 395 2,830 250 3,000 311 795 179 2,000 1,150…
The Leader in All-In Realized Pricing in Appalachia Anteros integrated strategy has resulted in peer-leading all-in realized prices Consistent results through the price cycles amongst the peer group All-In Realized Pricing (/Mcfe)…
Consistent Leader in EBITDAX Margin Anteros integrated strategy has resulted in Sustainable margins through the price cycles peer-leading EBITDAX margins for over 5 years Stand-Alone EBITDAX Margin vs WTI Oil Price EBITDAX Margin…
Disciplined Capital Efficient Midstream Model
Antero Midstream At A Glance AM Highlights Antero Midstream Marcellus Assets Market Cap....... 5.7B Enterprise Value.......... 7.1B LTM Adjusted EBITDA(1).. 619 MM % Gathering/Compression 65% New Smithburg JV % Water.......... 35%…
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…
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%…
Antero Midstream Return on Invested Capital AM Return on Invested Capital (ROIC) 2017 ROIC of 15% in 25% only fourth year of AM operations 20% Future organic growth 15% 15% capital leverages 13% existing trunklines and 12%…
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 Long-Term Distribution Targets and…
Antero Midstreams Premier Asset Footprint Antero Midstream provides a customized full value chain midstream solution in the lowest cost natural gas and liquids basins: the Marcellus and Utica Shale Integrated system in the core of the…
Northeast Value Chain Opportunity 5-year identified project inventory of 2.7B plus an additional 1.0B of potential downstream opportunities Upstream Downstream AM Assets AM/MPLX JV Assets Potential AM Opportunities 800MM JV…
Most Integrated Natural Gas & NGL Business in the U.S. 53% Ownership World Class E&P A Leading Northeast Levered Exposure to Northeast Operator in Appalachia Infrastructure Platform Infrastructure Buildout Contiguous Core Acreage…
Appendix
Updated 2018 Guidance Stand-Alone Consolidated Net Daily Production (Bcfe/d) 2.7 Net Liquids Production (BBl/d) 130,000 Natural Gas Realized Price Differential to 0.05 to 0.10 Premium Nymex C3+ NGL Realized Price 57.5% 62.5%…
Antero Guidance and Long-Term Target Assumptions Stand-Alone Consolidated 20% CAGR through 2020 and 15% Growth in each of Net Daily Production (MMcfe/d) 2021 and 2022 Natural Gas Realized Price Differential 0.05 to 0.10 Premium…
Antero Long-Term Target Project Assumptions In-Service Date Rover Phase 2 2H 2018 Mariner East 2 2H 2018 WB Xpress West 4Q 2018 WB Xpress East 4Q 2018 Mountaineer Xpress / Gulf Xpress YE 2018 Note: Based on publicly…
Liquidity & Debt Term Structure 6/30/2018 Debt Maturity Profile AR Credit Facility AM Credit Facility AR Senior Notes AM Senior Notes 2,500 2,000 New credit facilities for AR 770 and AM have allowed Antero to extend its…
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…
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 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…
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…
Competitive Gathering and Compression Fee Structure 1 AR Pays Competitive Gathering & Compression Fees - ARs gathering and compression fees paid to AM are below the Appalachian average based on extensive internal analysis of 19…
Appalachia Gathering and Compression Fee Study AR Fees Paid to AM Converted to MMBtu AR Contracted Gathering/Compression Fees to AM (/Mcf) 0.66 Typical BTU Conversion (Average BTU of 1250) for 2018/2019 Programs 1.25 1.00 AR…
Competitive Fresh Water Fee Structure 1 AR Pays Highly Competitive Fresh Water Fees - AR pays a fixed-fee per barrel to AM for fresh water pipeline service at the well pad that is firm and is 0.50/Bbl lower cost than variable sourcing…
AR Saved 0.50/Bbl on Fresh Water in 2017 Antero analyzed its 2017 completions and the avoided cost of utilizing AMs fresh water pipeline system vs. trucking water for completions - Antero utilized mapping and routing expertise to find…
Expected Natural Gas Price Realization Improvement Antero 2018 Firm Transport Index Breakdown 100% 5% decrease to 8% 3% Local 90% Local Markets 16% 23% Midwest 80% +0.05 - 0.10 70% 17% 8% increase in 14% exposure to Midwest…
Fresh Water MVCs and Earn-Outs Minimum volume commitments (MVCs) on fresh water delivery volumes were put in place to support revenues and rates of return for AMs acquisition of the water business in September 2015 Earn-outs at…
Core of the Core Development Programs Half Cycle Total Average BTU 2018 Well 2019 Well Well EUR Regime Undrilled Lateral Range Completions Completions Economics Locations Length (Strip Price) Marcellus Highly-Rich Gas 1275-1350…
Antero Consolidated and Stand-Alone Enterprise Value Hedged Multiple 2019E EBITDAX (MM): 2,094 Excludes AM Distributions EV / 2019E EBITDAX: 3.4x (MM) Unhedged Multiple 2019E EBITDAX (MM): 1,520 Excludes AM Distributions & Hedge…
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…
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%…
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…
Antero Resources Stand-Alone Adjusted EBITDAX Reconciliation AR Stand-Alone Adjusted EBITDAX Reconciliation ( in millions) Three Months Ended LTM Ended 6/30/2018 6/30/2018 Net income (loss) including noncontrolling interest…
Antero Resources Consolidated Adjusted EBITDAX Reconciliation Consolidated Adjusted EBITDAX Reconciliation Three Months ( in millions) Ended LTM Ended 6/30/2018 6/30/2018 Net income (loss) including noncontrolling interest…
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 June 30, 2017 2018 Net income 87,175 109,466 Interest expense 9,015 14,628 Impairment of property and equipment…
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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