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Scotia Howard Weil Annual Energy Conference – Antero Resources

Antero Resources · Mar 25, 2019 · 43 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 Annual Energy Conference – Antero Resources – slide 1
    HowardWeil47th Annual EnergyConference MARCH25, 2019
  2. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 2
    The Size and Scale to Capitalize on the Resource Antero Acreage Antero Resources Profile SW Marcellus Core Ohio Utica Core Market Cap............ 2.9B Enterprise Value(1). 6.4B Corporate Debt Ratings Ba2 / BB+ / BBB- Leverage(2)…
  3. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 3
    Key Investment Points Shareholdersaligned Upstream RecentCompany buybacksandinsider 1 transparency& sharepurchaseactivity ClosedMidstream independentboardatAM 8 Simplification 2 RunbyCofounders DeconsolidatedAntero 9%management…
  4. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 4
    Repositioned With Simplified Structure Midstreamsimplificationtransactionresultsinownershipofonepubliclytraded midstreamentitywithallmidstreaminvestorsowningthesamesecurity Simplified Structure Original Management Private Equity…
  5. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 5
    Shareholder-Friendly Initiatives Improve Transparency AnnounceddeconsolidationofAnteroMidstreamfromAnteroResourcesfinancial statementsgoingforward NewAMisindependentlyfundedwithitsown2billioncreditfacilityandreadyaccessto…
  6. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 6
    LeadingNGLPosition&Integrated StrategyDrivePeerLeadingMargins
  7. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 7
    Prolific Underlying Resource Underpins Growth AnteroResourcesholds40%ofthecoreundrilledliquidsrichlocations inAppalachiawithattractiveeconomicsandlowbreakevenprices Core Liquids-Rich Appalachian Undrilled Locations(1) B H J F I…
  8. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 8
    Largest NGL Producer and the 4th Largest Gas Producer AnteroisthelargestNGLproducerintheU.S.andhasthemost exposuretoNGLpricesamongthetopproducers Top U.S. C2+ NGL Producers - 2019E(1) Top U.S. Natural Gas Producers 4Q18 (MBbls/d)…
  9. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 9
    Drilling and Completion Efficiencies Continue Drilling Days Average Lateral Feet Drilled per Day 35 8,206 6,000 30 5,169 25 5,000 4,562 Drilling Days Lateral Feet 20 18 4,000 2,901 15 12 3,000 10 10 8 2,000 5 1,000 0…
  10. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 10
    Many Years of Capital Efficient Development Lowbreakevengaspricedrillinginventoryandintegratedmarketingstrategy yieldsresilientdevelopmentplan MuchofARsdrillinginventoryisineffect,associatedgas Antero and Industry Best Gas Drilling…
  11. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 11
    Resilient and Flexible Development Plan Anterosflexibledevelopmentprogramthrough2023willberesponsive tocommoditypricestogrowproductionandmaximizefreecashflow Lower Prices: 50 Oil / 2.85 Gas Higher Prices: 65 Oil / 3.15 Gas 10%…
  12. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 12
    Long-Term Outlook Anteroispoisedtoprudentlygrowproductiontomaximizefreecashflow,ultimately resultinginanappropriatemixoffurtherdelevering andreturnofcapital Production Growth Scenarios (2020 2023) 6,000 2.5 - 3.0 Bn Free Cash Flow…
  13. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 13
    Attractive NGL Marketing and Pricing Antero has diversified NGL pricing exposure in Diversified exposure results in Antero realizing 2019 via ME2 to international markets and rail a C3+ NGL sales price effectively in and truck to…
  14. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 14
    Firm Transportation Portfolio is a Strategic Advantage 2016A 2017A 2018A 2019E 2020E 2021E Realized Hedge Premium gas pricing plus realized hedge Gains (/Mcfe):(1) 1.48 0.26 0.25 0.24 0.06 0.02 - 0.03 profits more than offset the cost…
  15. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 15
    Hedge Position Supports Operating Plan Including FT InordertosupportitsFTcommitments,ARhasconsistentlyexecutedthemost comprehensivecommodityhedgingprogramintheindustry Antero Hedge Profile (MMcf/d) (/MMBtu) 2,500 2,330 NYMEX Collar…
  16. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 16
    2019 FT Benefits Outweigh Costs Firm commitment fees are expected to be offset by gas and liquids price uplift enabled by the FT plus proceeds from hedges put in place to support the FT Excerpt from 2018 10-K (Page F-31) Natural gas…
  17. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 17
    Peer-leading EBITDAX Margins for Six Years Forwardthinkingbusinessstrategyincludingliquidsrichfocus,transportation capacitytopremiummarketsandforwardsales(hedging)hasresultedinpeer leadingrealizedpricesandmarginsfor6straightyears…
  18. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 18
    Strong Balance Sheet and Scale Anterohasthebalancesheetandcashflowscaletoactivelydevelopitslowcost, liquidsrichinventorywhiledelevering andreturningcapitaltoshareholders Year-end 2018 Net Debt / LTM Adj. EBITDAX Appalachian Peer 2018…
  19. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 19
    PremierNortheast InfrastructurePlatform PremierIntegratedAppalachian MidstreamAssets AnteroClearwaterFacility 20
  20. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 20
    Midstream Driving Value for AR Since Inception Owningandcontrollingtheinfrastructurehasbeencriticaltosustainable development;AnteroMidstreamprovidesacustomizedmidstreamsolution Midstream Ownership Benefits AM Infrastructure…
  21. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 21
    LongTrackRecordOfSuccess AnteroMidstreamhasdelivereda27%dividendCAGRthroughthedownturn andexceededDCFcoveragetargetsby22%onaveragesinceitsIPO AM Dividend Per Share and DCF Coverage Since IPO (2) 1.40 Dividends Per Share DCF Coverage…
  22. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 22
    LongTermOutlook BasedonARsflexiblelongtermoutlook,AMistargetingan18% 25% distributablecashflow(DCF)CAGRfrom2020to2022 AM Distributable Cash Flow Growth Scenarios (2020 2022) 1,600 1,400 1,200 1,000 Millions 800 600…
  23. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 23
    DCFProfileSupportsCapitalRetention AnteroMidstreamscashflowgrowth,selffundingbusinessmodel,and decliningcapexprofiledrivesoptionalityforNewAM Distributable Cash Flow vs. Growth Capex (MM) 1,400 25% DCF CAGR Target 1,200 18% DCF…
  24. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 24
    HighestDCFGrowthAmongTop20Midstream AnteroMidstreamisauniquemidstreamvehiclewithscale,lowleverageand highdistributablecashflowgrowthallinaCCorpstructure C-Corp MLP Leverage * Eliminated IDRs (Simplified) 3-Year Distributable Cash…
  25. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 25
    Summary Comments DiversifiedCommodityMixEnhancesValueProposition Shareholder Value 9.1MMshares repurchasedin Proformaleverageof Maintain 2.1xat12/31/18 4Q2018 Returnof StrongBalance Capital 100%hedgedon Sheet naturalgasin2019…
  26. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 26
    Appendix
  27. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 27
    2019 Capital Plan and Guidance Consistent with guidance previously categorized as Stand-alone (released January 8, 2019) 2019 Guidance Ranges Net Production (Bcfe/d) 3.15 3.25 Net Natural Gas Production (Bcf/d) 2.225 2.275 Net…
  28. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 28
    Antero Capitalization Pro forma as of 12/31/18 Antero Midstream Antero Resources Antero Resources As of December 31, 2018 (MM) (Stand-alone) (Consolidated) Pro Forma Status Quo for AM Senior Notes Offering Cash 0 0 0 Debt…
  29. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 29
    U.S. Gas Supply and Base Decline SignificantU.S.basedeclinerequiressubstantialnew supplyjusttomaintainflatproduction 100 Base Decline Current(1): % Contribution to Current Supply 85 Bcf/d 90 Gas supply grew 12% in 12% 80 the…
  30. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 30
    Appalachian Gas Supply and Base Decline Appalachianbasedeclineat33%isabitsteeperthanU.S.basedeclineas2018 supplygrowthinAppalachiawashigherthantheU.S.asawhole Appalachia Base Decline Gross Wellhead Production (Bcf/d) (1)(2) 35 Annual…
  31. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 31
    Antero Production and Base Decline Anterosbasedeclinerateisalmostidenticaltothebasedeclinerateestimatedfor AppalachiawithPlattsdata TypecurveshapeisverysimilaracrossalloperatorsintheMarcellus…
  32. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 32
    Maintenance Capital Capitalrequiredtomaintainflatproductionisafunctionofthebasedeclinerate,whichisafunction ofgrowthovertheprior12months,aswellasthebeginningproductionlevelandcapitalefficiency…
  33. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 33
    Maintenance Capex Sensitivities Anterosannualmaintenancecapitaldeclineseachyearandaverages600MM(2.7 Bcfe/d)to740MM(3.2Bcfe/d)overthenextfiveyearsforflatproduction Maintenance Capex Wells Completed Maintenance Capex (MM) of Number of…
  34. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 34
    Summary Decline Rate & Maintenance Capex Comments In general, the higher the supply or production growth in the prior 12 months, the higher the base decline, which assumes no more wells are completed 4Q 2018 / 4Q 2017 2019 YoY…
  35. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 35
    Competitive Gathering and Compression Fee Structure 1 ARPaysCompetitiveGathering&CompressionFees ARsgatheringandcompressionfeespaidtoAMarebelow theAppalachianaverage…
  36. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 36
    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…
  37. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 37
    Competitive Fresh Water Fee Structure 1 ARPaysHighlyCompetitiveFreshWaterFees ARpaysafixedfeeperbarreltoAMforfreshwaterpipelineserviceatthewellpadthatisfirm andis0.39/Bbl lowercostthanvariablesourcingandtruckingcosts PeerChallenges:…
  38. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 38
    AR Saved 0.39/Bbl on Fresh Water in 2018 Anteroanalyzedits2018completionsandtheavoidedcostofutilizingAMsfreshwaterpipeline systemvs.truckingwaterforcompletions…
  39. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 39
    Antero Resources D&C Capital Throughnegotiatingcontractsandselfsourcingsand,Anterowasabletomitigatea majorityofinflationarypressuresonD&Ccapitalfor2019 Antero Resources Marcellus Well Cost (MM/1,000 assuming 12,000 Lateral)…
  40. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 40
    EV / 2019E EBITDAX Reconciliation Consolidated Deconsolidated (Pro Forma (Pro Forma Simplification) Simplification) Pro Forma for Enterprise Value Simplification (3 Market Capitalization 2,636 per AM unit only) 2,636 Net Debt…
  41. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 41
    Antero Resources Adjusted EBITDAX and Net Debt Reconciliation Twelve months ended (in thousands) December 31, 2018 Net (loss) and comprehensive (loss) attributable to Antero Resources Corporation (397,517) Commodity derivative fair…
  42. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 42
    Antero Resources Adjusted EBITDAX Per Mcfe Adjusted EBITDAX per Mcfe Reconciliation (Annual) 2013 2014 2015 2016 2017 1Q2018 2Q2018 3Q2018 4Q2018 (/Mcfe) Natural Gas, Oil, Ethane and NGL sales 4.31 4.74 2.53 2.60 3.35 3.56 3.35 3.70…
  43. Scotia Howard Weil Annual Energy Conference – Antero Resources – slide 43
    AnteroMidstreamNonGAAPReconciliation The following reconciles net income to Adjusted EBITDA and Distributable Cash Flow: 2014 in Thousands G&C Only 2014 2015 2016 2017 Net income 16,832 127,875 159,105 236,703 307,315 Interest…

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