Bank of America Merrill Lynch 2019 Leveraged Finance Conference DECEMBER 3, 2019
Antero Family at a Glance The Most Integrated Natural Gas and NGL Platform in the U.S. A World Class E&P Operator in Appalachia NYSE: AR Ba2 / BB / BB+ Corporate Debt Ratings 31% A Leading Northeast Infrastructure…
Large Well-Delineated Core Drilling Inventory 10+ Years of Premium Drilling Inventory Does not assume infill drilling Liquids-rich Inventory AR holds 40% of the core undrilled liquids-rich locations in Appalachia Contiguous Acreage…
Credit Enhancement Momentum Strong Balance Sheet Supports Strategy 2.6x leverage at 9/30/2019 (2) Ba2 / BB / BB+ corporate debt ratings Credit facility reaffirmed in 2Q at 4.5 B borrowing base Lender commitments increased in 3Q to…
The Facts Moderate Leverage - 2.6x leverage, in line with Appalachian peers 9/30/19 Appalachian Peer E&P Net Debt / LTM Adjusted EBITDAX 4.5x 4.0x 3.5x 3.2x 3.0x 2.4x 2.4x 2.6x 2.5x 2.2x 2.0x 1.5x 1.0x 0.7x 0.5x 0.0x COG…
The Facts With abundant liquidity and the expectation of further cost and debt reduction, AR can be patient regarding 2021 and 2022 bond maturities No intention of issuing secured debt despite capacity under covenants Credit Facility…
The Facts Large Hedge Position AR has hedged 91% and 89% of expected natural gas production in 2020 and 2021 at 2.87/MMBtu and 2.80/MMBtu, respectively AR has also hedged 32% and 100% of its expected 2020 C3+ NGL and oil production,…
Cost Reduction Momentum Antero is targeting a 300 MM reduction to its cost structure in 2020 Cost Savings Update 2020 Expected Impact ( MM) Well Cost Reduction Progress 3Q19 represents lowest capex spend since IPO Continued…
Marcellus Well Cost Reductions Significant Reduction in Well Costs already in-hand Targeting reduced well costs by 14% (1.7 million per well) Targeted Marcellus Well Cost Reductions (January 2019 AFE to 2020 Target) (MM) 12.00…
Appalachian Peer Marcellus Well Cost Comparison AR targeting 830/ft or lower Southwest Marcellus Peer Well Costs (/Foot of Lateral) 1,200 1,020 982 1,000 970 895 875 850 830 /Foot of Lateral 800 735 730 600 400…
LOE Reductions Materially Reducing LOE Targeting reduced LOE by at least 35% in 2020 (74 MM+) Antero Lease Operating Expense Reductions (2020 Target) (MM) 225 200 42.0 175 32.0 150 125 42 MM (0.03/Mcfe) reduction driven by 32…
Cost Structure Delivers Premium Realized Pricing ARs cost structure delivers peer-leading natural gas and liquids pricing Firm transport provides access to premium natural gas markets and international propane and butane markets…
2020 Drilling Program Generates Attractive Rates of Return 2020 drilling program is expected to generate a 39% cash on cash half cycle rate of return supporting ARs moderate growth plans AR 2020 Drilling Program Pad Economic Summary…
NGL Transportation Delivering Premium Pricing Antero realized a 0.12 per gallon premium to Mont Diversified exposure to both international and domestic Belvieu on the 54% of its C3+ NGLs that were markets results in blended C3+ NGL…
NGL Prices Have Strengthened Materially Weekly Benchmark Index Pricing as of 11/29/2019 Net of Shipping (1) This data reflects benchmark pricing estimates and does not directly reflect Anteros realized prices or hedges 2019 AR C3+ NGL…
ARs Targeted FCF Profile vs. Street Estimates Lower well and operating costs, attractive hedges and improving NGL pricing support Anteros modest growth profile Projecting manageable outspend through 2021 as AR grows into FT position;…
Premier Northeast Infrastructure Platform
Antero Midstream Core Business Provides a customized, integrated full value chain midstream solution 50/50 JV Exploration & Gathering & Natural Gas C3+ NGL Production Compression Processing Fractionation Terminals & Storage Long…
High Growth Year-Over-Year Midstream Throughput AM reported strong year-over-year gathering and processing growth in 3Q19 Low Pressure Gathering (MMcf/d) Compression (MMcf/d) Fixed Fee: 0.32/Mcf 2,698 2,800 Fixed Fee: 0.19/Mcf 2,800…
AM Capital Reductions AM has significantly reduced its capital budget in both 2019 and 2020 is expected to result in 250MM in incremental retained cash flow vs. the original 2019 and 2020 budgets 2019 Capex Budget(MM) 2020 Capex…
Fixed Fee Business Model Insulates EBITDA Growth Antero Midstream generates all of its revenues through fixed-fee contracts, insulating Adjusted EBITDA growth from commodity price volatility Details Antero Midstream Adjusted EBITDA…
Antero Credit Attributes Summary Reduced leverage from 3.9x at Leverage in the mid 3-times YE 2014 to 2.6x at 3Q19 despite flexing to high 3-times for commodity price volatility accretive transactions Diversified product mix…
Appendix
C3+ NGLs: Absolute & Relative Price Improvement NGL prices have risen on both an absolute basis and as a percent to WTI during the fourth quarter Mont Belvieu C3+ NGL Price (/Gal) + % of WTI /Gallon C3+ Gallon % of WTI 2.00 100%…
C3+ NGL Hedges Capturing Recent Pricing Strength Antero C3+ NGL Hedges Net of Shipping 2019 AR C3+ NGL Guidance: 110,000 Bbl/d 4Q19 2020 100% Volume Hedged (Bbl/d): 28,422 Volume Hedged (Bbl/d): 13,201 % C3 Hedged: 46% % C3 Hedged:…
Natural Gas Rig Count is Responding to Price Gas rig count is responding to lower natural gas prices with a 31% reduction in horizontal gas rigs since March 2019 Completion crew count is down 30% since April 2019 Horizontal Gas Rig…
U.S. Gas Supply and New Supply Wedge Material demand growth through 2023 plus base decline requires 80 Tcf of new supply YE 2023E: 97.7 Bcf/d 100 YE 2018: Current (1): 86.0 Bcf/d 92.7 Bcf/d Marketed Dry Gas Production Forecast Rest…
Natural Gas Prices Must Support Dry Gas Development Only 32% of the new gas supply needed in the 2019 through 2023 period is forecast to come from associated gas plays where natural gas price is not the driving factor for development…
Antero Resources Sustainability Focus Environmental Stewardship GHG Emissions Water Management Active member of industry Antero is an industry leader in Extensive fresh water pipeline leading greenhouse gas greenhouse gas (GHG)…
AR & AR+AM GHG Emission Intensity (CO2e/MBOE) Antero had one of the lowest GHG Intensities among reporting upstream and integrated companies 70 2018 GHG Intensity (tons Co2e/MBOE) 60.7 60 Direct comparison of AR and AR+AM GHG…
AR Term Debt Structure As of September 30, 2019 Antero Resources had 275 MM drawn on its 2.6 B revolving credit facility, resulting in 1.7 B of liquidity (1) Antero 9/30/2019 Debt Term Structure AR Credit Facility AR Senior…
AM Term Debt Structure As of September 30, 2019, Antero Midstream had 726 MM drawn on its 2.0 B revolving credit facility, which matures in 2022 9/30/2019 Debt Term Structure 800 AM Credit Facility AM Senior Notes 700 600 500…
Antero Resources Adjusted EBITDAX & Net Debt Reconciliation LTM Adjusted EBITDAX Reconciliation Twelve months ended (in thousands) September 30, 2019 Net income and comprehensive income attributable to Antero Resources Corporation…
Antero Midstream Non-GAAP Measures Non-GAAP Financial Measures and Definitions Antero Midstream uses Adjusted EBITDA as an important indicator of Antero Midstreams performance. Antero Midstream defines Adjusted EBITDA as net income…
Antero Midstream Non-GAAP Reconciliation The following reconciles net income to Adjusted EBITDA on a Pro Forma basis: ( in thousands) 2018 Pro forma net income 585,944 Amortization of customer relationships Impairment expense…
Antero Midstream Non-GAAP Reconciliation The following reconciles net income to Adjusted EBITDA: 2014 in Thousands G&C Only 2014 2015 2016 2017 Net income 16,832 127,875 159,105 236,703 307,315 Interest expense, net 4,620 6,183 8,158…
Antero Midstream Non-GAAP Measures Antero Midstream has not included a reconciliation of Adjusted EBITDA to their nearest GAAP financial measure for 2019 because it cannot do so without unreasonable effort and any attempt to do so…
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