Scotiabank Investor Conference Call DECEMBER 16, 2019
Pathway to Sustainable Free Cash Flow 1 300 MM reduction in well costs and LOE in 2020 as compared to 2019 Well cost savings of 12% to 16%, or 1.4 to 1.9 MM per well (targeting 830/ft in 2020) LOE savings of 74 MM expected in 2020 as…
Enhanced Antero Outlook Midstream fee reductions and internal cost saving initiatives expected to eliminate Anteros cash flow Free Cash Flow (MMs) outspend in 2020 and 2021 on a combined basis Previous Outlook New Outlook Execution…
Substantial Liquidity Enhancements Antero has substantial capacity to address its late 2021 and 2022 bond maturities due to: Internal cost reduction initiatives Third party midstream fee reductions Targeted asset sales 215 million…
Total Debt and Free Cash Flow Enhancements Antero is targeting 750 MM to 1.0 B of asset sales in 2020 and 1.35 -1.55 B in cash flow improvements over next four years Debt Reduction (2020) Cash Flow Improvements (2020 through 2023)…
Asset Monetization Opportunity Set AR has multiple assets that can be monetized to reduce debt, including undeveloped leasehold, mineral position, producing properties, hedge portfolio and midstream ownership Asset Monetization…
Cost Reduction Momentum Antero is targeting a 375 MM reduction to its cost structure in 2020 Cost Savings Update 2020 Expected Impact ( MM) Well Cost Reduction Progress Continued momentum provides further confidence in targeting 12%…
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…
Significant Reduction in Operating Cost Structure A 0.15/Mcfe reduction in cash costs expected in 2020 and 0.35+/Mcfe reduction by 2022 AR All-in Cash Operating Cost Structure (/Mcfe) Net Marketing Expense Cash Production Expenses…
Premium Realized Pricing AR expects to generate a 3.00+ realized price per Mcfe even in a 2.50/MMBtu price environment Firm transport provides access to premium natural gas markets and international propane and butane markets…
Unhedged E&P Recycle Ratio Assuming a 3.00 unhedged realized price and unlevered cost structure of 2.15 per Mcfe all-in, AR expects to be able to generate a 2.2x recycle ratio on its capital Even in a low price environment, AR still…
Pathway To Sustainable Growth Growth Incentive Fee Program Incentivizes ARs Modest Growth Plan and Delivers Revenue and Cash Flow Growth Wedge to AM Midstream fee reductions from AM and other third party providers, expected to reduce…
Growth Incentive Program Summary AR/AM Growth incentive targets structured in a manner that aligns ARs plan to grow net production by 8% to 10% through 2021 in order to fill its premium FT portfolio Actual reduction in low pressure…
Significant Capital Reductions Antero Midstream has reduced its 2019 and 2020 capital budgets by 325 to 350 million in total since the beginning of 2019 in response to lower commodity prices Visibility into ARs development plan and…
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…
AR Credit Enhancement Momentum Announced Asset Sale Target of 750 MM to 1.0 B through 2020 Asset monetization alternatives include lease acreage, minerals, producing properties, hedge restructuring or sale of AM shares to Antero…
AR and AM High Yield Trading History Anteros bonds have widened only in the last 5 months, driven by lower gas and NGL prices and market fears of an Antero secured bond transaction subordinating its unsecured bond holders AR 2025s…
Appendix
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…
2020 Drilling Program Generates Attractive Rates of Return GP&T and net marketing expense reductions are expected to drive higher rates of return for 2020 drilling Expected to generate a 43% cash on cash half-cycle rate of return…
AR Assumptions The AR forecast used in this presentation was based on the following assumptions. Commodity prices are based on 12/05/19 strip pricing. NYMEX Natural Gas Pricing (/MMBtu) Oil and C3+ NGL Pricing (/Bbl) NYMEX WTI Oil…
NGL Prices Have Strengthened Materially Weekly Benchmark Index Pricing as of 12/16/2019 Net of Shipping (1) This data reflects benchmark pricing estimates and does not directly reflect Anteros realized prices or hedges 2019 AR C3+ NGL…
C3+ NGLs: Absolute & Relative Price Improvement NGL prices have risen on both an absolute basis and as a percent of WTI during the fourth quarter of 2019 AR Monthly Realized C3+ NGL Price /Bbl AR C3+ Realized Price (/Bbl) % of WTI…
Natural Gas Hedges Paired With Firm Transportation 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…
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:…
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 (the Company) views Adjusted EBITDA as an important indicator of the Companys performance. Antero Midstream defines Adjusted EBITDA as Net…
Antero Midstream Non-GAAP Measures The following table reconciles pro forma net income to pro forma Adjusted EBITDA for the twelve months ended September 30, 2019 as used in this presentation (in thousands): Twelve Months Ended…
Adjusted EBITDA and DCF Reconciliation Adjusted EBITDA and DCF Reconciliation ( in thousands) Three Months Ended September 30, 2018(1) 2019 Net income 57,975 (289,477) Amortization of customer relationships 17,843 28,863…
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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