Your market is:
AR NYSE
Price $18.84 Change +0.06
Volume 772,090
52 Week High 27.23
52 Week Low 17.89
11/22/2017 12:46 PM ET Pricing delayed 20 minutes

Antero Resources Reports Second Quarter 2016 Financial Results

August 02, 2016

DENVER, Aug. 2, 2016 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today released its second quarter 2016 financial results. The relevant condensed consolidated financial statements are included in Antero's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which has been filed with the Securities and Exchange Commission.

Antero Resources logo

Highlights Include:

  • GAAP net loss of $596 million, or $(2.12) per share, compared to a GAAP net loss of $145 million, or $(0.52) per share in the prior year quarter due to non-cash losses on unsettled hedges of $977 million and $198 million, respectively, driven by increasing commodity prices during each quarter
  • Adjusted net income of $41 million, or $0.14 per share, representing a 136% increase compared to the prior year quarter
  • Adjusted EBITDAX of $332 million, a 24% increase compared to the prior year quarter
  • Net daily production averaged a record 1,762 MMcfe/d, a 19% increase over the prior year quarter and flat sequentially
  • Included record net daily liquids production of 75,041 Bbl/d, a 63% increase over the prior year quarter and a 10% increase sequentially
  • Realized natural gas price before hedging averaged $1.93 per Mcf, a $0.02 negative differential to Nymex, with 99% of production priced at favorable markets
  • Realized natural gas equivalent price including NGLs, oil and hedges averaged $3.95 per Mcfe, a 3% increase over the prior year quarter     

Second Quarter 2016 Financial Results

As of June 30, 2016, Antero owned a 62% limited partner interest in Antero Midstream Partners LP's ("Antero Midstream").  Antero Midstream's results are consolidated with Antero's results.  

For the three months ended June 30, 2016, the Company reported a GAAP net loss of $596 million, or $(2.12) per basic and diluted share, compared to a GAAP net loss of $145 million, or $(0.52) per basic and diluted share, in the second quarter of 2015.  The GAAP net loss for the second quarter of 2016 included the following items:

  • Non-cash loss on unsettled hedges of $977 million due to increasing commodity prices during the quarter
  • Non-cash equity-based stock compensation expense of $26 million
  • Impairment of unproved properties of $20 million

Without the effect of these items, the Company's results for the second quarter of 2016 were as follows:

  • Adjusted net income of $41 million, or $0.14 per basic and diluted share, a 136% increase compared to the second quarter of 2015
  • Adjusted EBITDAX of $332 million, a 24% increase compared to the second quarter of 2015
  • Cash flow from operations before changes in working capital of $269 million, a 29% increase compared to the second quarter of 2015

For a description of adjusted net income, adjusted EBITDAX and cash flow from operations before changes in working capital and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."

Antero's net daily production for the second quarter of 2016 averaged 1,762 MMcfe/d, including 75,041 Bbl/d of liquids (26% liquids).  Second quarter 2016 production represents an organic production growth rate of 19% from the second quarter of 2015 and flat compared to the first quarter of 2016.  During the second quarter, Antero shut in 7.3 Bcfe, representing 80 MMcfe/d of production for the quarter due to operational downtime in late June at the Sherwood Processing Plant in West Virginia.  Antero currently has no production shut in.  Second quarter 2016 C3+ natural gas liquids ("NGLs") and oil production averaged 52,424 Bbl/d and 5,244 Bbl/d, respectively, while ethane (C2) production averaged 17,373 Bbl/d. Total liquids production for the second quarter of 2016 represents an organic production growth rate of 63% and 10% from the second quarter of 2015 and first quarter of 2016, respectively.

Antero's average natural gas price before hedging decreased 12% from the prior year quarter to $1.93 per Mcf, a $0.02 per Mcf negative differential to Nymex, as Nymex natural gas prices decreased 26% from the prior year quarter.  Approximately 99% of Antero's second quarter 2016 natural gas revenue was realized at currently favorable price indices, including Columbia Gas Transmission (TCO), Chicago, MichCon, Tennessee Gulf and Nymex.  Antero's average realized natural gas price after hedging for the second quarter of 2016 was $4.31 per Mcf, a $2.36 premium to the Nymex average price for the period.  This represents a 12% increase compared to the prior year quarter.  During the quarter, Antero realized a cash settled natural gas hedge gain of $283 million, or $2.38 per Mcf.

The Company's average realized C3+ NGL price before hedging for the second quarter of 2016 was $17.08 per barrel, or 38% of the Nymex WTI oil price, which represents a 5% increase as compared to the prior year quarter.  Average realized oil price was $35.08 per barrel, a 20% decrease as compared to the second quarter of 2015 due to a 21% decrease in the Nymex WTI oil price.  Antero's average realized ethane price for the second quarter of 2016 was $8.36 per barrel, or $0.20 per gallon.  Antero's average realized C3+ NGL price including hedges was $18.98 per barrel, or $0.45 per gallon, a 3% decrease as compared to the second quarter of 2015.

Antero's average natural gas-equivalent price including C2+ NGLs and oil, but excluding hedge settlements, decreased from the prior year quarter by 11% to $2.13 per Mcfe due to a 21% decline in Nymex WTI and a 26% decline in Nymex natural gas prices.  The Company's average natural gas-equivalent price, including C2+ NGLs, oil and hedge settlements, increased by 3% to $3.95 per Mcfe for the second quarter of 2016 as compared to the second quarter of 2015.  For the second quarter of 2016, Antero realized a hedge settlement gain of $293 million, or $1.82 per Mcfe.

Total operating revenue for the second quarter of 2016 was $(249) million as compared to $377 million for the second quarter of 2015.  Operating revenue for the second quarter of 2016 included a $977 million non-cash loss on unsettled hedges, while the second quarter of 2015 included a $198 million non-cash loss on unsettled hedges.  In both periods, the non-cash loss on unsettled hedges was driven by increasing natural gas prices during the period.  Revenue excluding the unrealized hedge loss was $728 million, a 27% increase compared to the second quarter of 2015.  Liquids production contributed 33% of total revenue before hedges in the second quarter of 2016, as compared to a 25% contribution for the prior year quarter.  For a reconciliation of revenue excluding unrealized hedge (gains) losses to operating revenue, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."

Marketing revenue for the second quarter of 2016 was $91 million.  Antero's marketing revenue was primarily associated with the sale of third party gas purchased to utilize the Company's excess firm transportation capacity on the Tennessee Gas Pipeline.  Marketing expense for the second quarter of 2016 was $126 million.  The largest components of marketing expense were the costs related to excess capacity and the cost of purchasing third party gas.  Combining the two, net marketing expense was $35 million or $0.22 per Mcfe for the second quarter of 2016.  For the second half of 2016, due to a third party contractual commitment effective July, 1, 2016, Antero has released to a third party certain unutilized firm transportation capacity and the costs associated with the unutilized capacity.  As a result of the reduction in marketing expense, Antero expects net marketing expense to decrease to a range of $0.10 to $0.15 per Mcfe for the second half of 2016.

Per unit cash production expense (lease operating, gathering, compression, processing, transportation, and production tax) for the second quarter of 2016 was $1.48 per Mcfe, a 2% increase compared to $1.45 per Mcfe in the prior year quarter.  The per unit cash production expense for the quarter included $0.08 per Mcfe for lease operating costs, $1.29 per Mcfe for gathering, compression, processing and transportation costs and $0.11 per Mcfe for production and ad valorem taxes.  Per unit general and administrative expense for the second quarter of 2016, excluding non-cash equity-based compensation expense, was $0.21 per Mcfe, a 9% decrease from the second quarter of 2015.  The significant per unit decrease in general and administrative expenses was primarily driven by the increase in production.  Per unit depreciation, depletion and amortization expense decreased 6% from the prior year quarter to $1.23 per Mcfe, primarily driven by lower development costs.

Adjusted EBITDAX of $332 million for the second quarter of 2016 represents a 24% increase compared to the prior year quarter.  Adjusted EBITDAX margin for the quarter was $2.06 per Mcfe, representing a 4% increase from the prior year quarter.  For the second quarter of 2016, cash flow from operations before changes in working capital was $269 million, a 29% increase from the prior year quarter.

For a description of adjusted EBITDAX, adjusted EBITDAX margin, and cash flow from operations before changes in working capital and reconciliations to their nearest comparable GAAP measures, please read "Non-GAAP Financial Measures."

Antero Midstream Financial Results

Antero Midstream results were released today and are available at www.anteromidstream.com.

Low pressure gathering volumes for the second quarter of 2016 averaged 1,353 MMcf/d, a 40% increase from the second quarter of 2015 and a 4% increase sequentially.  High pressure gathering volumes for the second quarter of 2016 averaged 1,253 MMcf/d, a 5% increase from the second quarter of 2015 and a 3% increase sequentially.  Compression volumes for the second quarter of 2016 averaged 658 MMcf/d, a 45% increase from the second quarter of 2015 and a 9% increase sequentially.  The increase in gathering and compression volumes was due to production growth from Antero in Antero Midstream's area of dedication.  Condensate gathering volumes averaged 1,983 Bbl/d during the quarter, a 34% decrease compared to the prior year quarter and a 33% decrease sequentially. The sequential decrease in condensate gathering volumes was driven by Antero shifting Ohio Utica Shale development from its Highly-Rich Gas/Condensate area to higher rate of return drilling in the Highly-Rich Gas area, as well as the shifting of Antero Resources' development program to the Marcellus Shale from the Utica Shale, due to firm transportation constraints to premium markets in the Utica Shale.  Fresh water delivery volumes averaged 105,379 Bbl/d during the quarter, an 11% increase compared to the prior year quarter and an 8% increase sequentially.  The increase in fresh water delivery volumes was driven by operational efficiencies leading to accelerated Marcellus completions and an increase in the average water used per foot in completions to 41 barrels, a 25% increase as compared to 2015 and an 11% increase compared to the first quarter of 2016.

For the three months ended June 30, 2016, the Partnership reported revenues of $137 million. Revenues increased 55% compared to the prior year quarter, primarily driven by the startup of produced water handling and high rate transfer services in the first quarter of 2016.  Direct operating expenses for the three months ended June 30, 2016 were $43 million.  Direct operating expenses increased 138% year over year, driven primarily by the inclusion of produced water handling and high rate water transfer services, as well as the expansion of Antero Midstream's gathering and compression and fresh water delivery assets to support the production growth of Antero Resources.  General and administrative expenses were $7 million during the second quarter of 2016, an increase of 17% compared to the second quarter of 2015. Total cash and non-cash operating expenses were $84 million, including $24 million of depreciation, $7 million of equity-based compensation, and $3 million of accretion of contingent acquisition consideration.

The Board of Directors of Antero Resources Midstream Management LLC, the general partner of Antero Midstream, declared a cash distribution of $0.25 per unit ($1.00 per unit annualized) for the second quarter of 2016. The distribution represents a 32% increase compared to the prior year quarter and a 6% increase sequentially.  The distribution is Antero Midstream's sixth consecutive quarterly distribution increase since its initial public offering in November 2014 and will be payable on August 24, 2016 to unitholders of record as of August 10, 2016.

Balance Sheet and Liquidity

As of June 30, 2016, Antero's consolidated total debt and consolidated net debt were $4.2 billion, of which $900 million were borrowings outstanding under the Company's and Antero Midstream's revolving credit facilities.  Total lender commitments under these two facilities are currently $5.5 billion.  Including $708 million in letters of credit outstanding, the company had $3.9 billion in available consolidated liquidity as of June 30, 2016.  For a reconciliation of consolidated net debt to consolidated total debt, the most comparable GAAP measure, please read "Non-GAAP Financial Measures."

Second Quarter 2016 Capital Spending

Antero's drilling and completion costs for the three months ended June 30, 2016 were $315 million.  In addition, the Company invested $30 million for land and $1 million in other capital projects.  Antero Midstream invested $48 million for gathering and compression systems and $42 million for water infrastructure projects including $33 million on the Antero Clearwater treatment facility during the quarter.

Hedge Position

Antero currently has hedged 3.4 Tcfe of future natural gas equivalent production using fixed price swaps covering the period from July 1, 2016 through December 31, 2022 at an average index price of $3.71 per MMBtu.

The following table summarizes Antero's hedge positions held as of June 30, 2016:

Period


Natural Gas

MMBtu/d


Average

Index price

($/MMBtu)

Liquids

Bbl/d

Average

Index price








3Q 2016:







TCO


60,000


$4.81

Nymex HH


1,110,000


$3.44

Dom South


272,500


$5.24

CGTLA


170,000


$4.03

Propane MB ($/Gallon)



30,000

$0.58

                  3Q 2016 Total


1,612,500


$3.86

30,000

$0.58

4Q 2016:







TCO


60,000


$5.01

Nymex HH


1,110,000


$3.57

Dom South


272,500


$5.47

CGTLA


170,000


$4.20

Propane MB ($/Gallon)



30,000

$0.61

                  4Q 2016 Total


1,612,500


$4.01

30,000

$0.61

2017:







Nymex HH


1,370,000


$3.39

CGTLA


420,000


$4.27

Chicago


70,000


$4.57

Propane MB ($/Gallon)



31,500

$0.42

                       2017 Total


1,860,000


$3.63

31,500

$0.42

2018


2,002,500


$3.91

2,000

$0.65

2019


2,330,000


$3.70

2020


1,377,500


$3.66

2021


630,000


$3.36

2022


120,000


$3.24

Conference Call

A conference call is scheduled on Wednesday, August 3, 2016 at 9:00 am MT to discuss the results.  A brief Q&A session for security analysts will immediately follow the discussion of the results for the quarter.  To participate in the call, dial in at 888-347-8204 (U.S.), 855-669-9657 (Canada), or 412-902-4229 (International) and reference "Antero Resources".  A telephone replay of the call will be available until Friday, August 12, 2016 at 9:00 am MT at 877-870-5176 (U.S.) or 858-384-5517 (International) using the passcode 10086424.

A simultaneous webcast of the call may be accessed over the internet at www.anteroresources.com.  The webcast will be archived for replay on the Company's website until Friday, August 12, 2016 at 9:00 am MT.

Presentation

An updated presentation will be posted to the Company's website before the August 3, 2016 conference call.  The presentation can be found at www.anteroresources.com on the homepage.  Information on the Company's website does not constitute a portion of this press release.

Non-GAAP Financial Measures

Revenue excluding unrealized hedge (gains) losses as set forth in this release represents total operating revenue adjusted for unsettled hedge (gains) and losses.  Antero believes that revenue excluding unrealized hedge (gains) losses is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Revenue excluding unrealized hedge (gains) losses is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenue as an indicator of financial performance.  The following table reconciles total operating revenue to revenue excluding unrealized hedge (gains) losses (in thousands):



Three months ended

June 30,


Six months ended

June 30,



2015


2016


2015


2016










Total operating revenue


$

376,714


$

(249,198)


$

1,606,401


$

471,806

Hedge (gains) losses


2,227


684,634


(757,327)


404,710

Cash receipts for settled hedges


195,880


292,500


380,720


616,847

Revenue excluding unrealized hedge (gains) losses


$

574,821


$

727,936


$

1,229,794


$

1,493,363

Adjusted net income as set forth in this release represents net income (loss), adjusted for certain items.  Antero believes that adjusted net income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance.  The following table reconciles net income (loss) to adjusted net income (in thousands):



Three months ended


Six months ended

June 30,


June 30,



2015


2016


2015


2016












Net income (loss)


$

(145,373)


$

(596,244)


$

249,058


$

(601,299)

Non-cash commodity derivative (gains) losses on unsettled derivatives



198,107



977,134



(376,607)



1,021,557

Impairment of unproved properties



26,339



19,944



34,916



35,470

Equity-based compensation



27,582



25,816



55,365



49,286

Contract termination and rig stacking



1,937





10,902



Income tax effect of reconciling items



(91,307)



(385,928)



114,324



(417,401)

Adjusted net income


$

17,285


$

40,722


$

87,958


$

87,613

 

Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operating activities before changes in working capital.  Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt.  Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity.

The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release (in thousands):



Three months ended

June 30,


Six months ended

June 30,



2015


2016


2015


2016










Net cash provided by operating activities


$

243,668


$

238,538


$

595,108


$

578,706

Net change in working capital


(35,361)


30,218


(94,344)


(18,612)

Cash flow from operations before changes in working capital


$

208,307


$

268,756


$

500,764


$

560,094

The following table reconciles consolidated total debt to consolidated net debt as used in this release (in thousands):



December 31,


June 30,



2015


2016








Bank credit facilities


$

1,327,000


$

900,000

6.00% senior notes due 2020



525,000



525,000

5.375% senior notes due 2021



1,000,000



1,000,000

5.125% senior notes due 2022



1,100,000



1,100,000

5.625% senior notes due 2023



750,000



750,000

Net unamortized premium



6,513



5,974

Net unamortized debt issuance costs



(39,731)



(36,960)

Consolidated total debt


$

4,668,782


$

4,244,014

Cash and cash equivalents



23,473



28,251

Consolidated net debt


$

4,645,309


$

4,215,763








Adjusted EBITDAX is a non-GAAP financial measure that the Company defines as net income (loss) from continuing operations including noncontrolling interest after adjusting for those items shown in the table below.  Adjusted EBITDAX, as used and defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP.  Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  Adjusted EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position.  Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations.  However, Antero's management team believes adjusted EBITDAX is useful to an investor in evaluating the Company's financial performance because this measure:

  • is widely used by investors in the oil and gas industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
  • helps investors to more meaningfully evaluate and compare the results of Antero's operations from period to period by removing the effect of its capital structure from its operating structure; and
  • is used by the Company's management team for various purposes, including as a measure of operating performance, in presentations to its board of directors, as a basis for strategic planning and forecasting and by its lenders pursuant to covenants under its credit facility and the indentures governing the Company's senior notes.

There are significant limitations to using adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero's net income, the lack of comparability of results of operations of different companies and the different methods of calculating adjusted EBITDAX reported by different companies.  The following tables represent a reconciliation of the Company's net income (loss) from continuing operations including noncontrolling interest to adjusted EBITDAX, a reconciliation of adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before cash receipts for settled hedges to adjusted EBITDAX margin (in thousands except adjusted EBITDAX margin).




Three months ended


Six months ended

June 30,


June 30,


2015


2016


2015


2016











Net income (loss) from continuing operations including noncontrolling interest

$

(139,483)


$

(575,490)


$

259,688


$

(564,840)

Commodity derivative (gains) losses


2,227



684,634



(757,327)



404,710

Gains on settled derivative instruments


195,880



292,500



380,720



616,847

Interest expense


59,823



62,595



113,008



125,879

Income tax expense (benefit)


(84,089)



(376,494)



163,249



(371,679)

Depreciation, depletion, amortization, and accretion


177,454



197,982



360,154



390,162

Impairment of unproved properties


26,339



19,944



34,916



35,470

Exploration expense


628



1,109



1,999



2,123

Equity-based compensation expense


27,582



25,816



55,365



49,286

Equity in earnings of unconsolidated affiliate




(484)





(484)

State franchise taxes


(106)





129



39

Contract termination and rig stacking


1,937





10,902



Total Adjusted EBITDAX


268,192



332,112



622,803



687,513

Interest expense


(59,823)



(62,595)



(113,008)



(125,879)

Exploration expense


(628)



(1,109)



(1,999)



(2,123)

Changes in current assets and liabilities


35,361



(30,218)



94,344



18,612

State franchise taxes


106





(129)



(39)

Other non-cash items


460



348



(6,903)



622

Net cash provided by operating activities

$

243,668


$

238,538


$

595,108


$

578,706


Three months ended


Six months ended



June 30,


June 30,


Adjusted EBITDAX margin ($ per Mcfe):


2015



2016


2015


2016


Realized price before cash receipts for settled hedges

$

2.40


$

2.13


$

2.72


$

2.12


Gathering, compression, and water handling revenues


0.04



0.02



0.03



0.02


Lease operating expense


(0.05)



(0.08)



(0.05)



(0.07)


Gathering, compression, processing and transportation costs


(1.23)



(1.29)



(1.23)



(1.29)


Marketing, net


(0.22)



(0.22)



(0.17)



(0.23)


Production taxes


(0.17)



(0.11)



(0.17)



(0.11)


General and administrative(1)


(0.23)



(0.21)



(0.23)



(0.21)


Adjusted EBITDAX margin before settled hedges


0.54



0.24



0.90



0.23


Cash receipts for settled hedges


1.45



1.82



1.42



1.93


Adjusted EBITDAX margin ($ per Mcfe):

$

1.99


$

2.06


$

2.32


$

2.16


(1)       Excludes equity-based stock compensation that is included in G&A







Antero Resources is an independent natural gas and oil company engaged in the acquisition, development and production of unconventional liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. The Company's website is located at www.anteroresources.com.

This release includes "forward-looking statements".  Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, maximized realized natural gas and natural gas liquids prices, acreage quality, access to multiple gas markets, expected drilling and development plans, future financial position, future technical improvements and future marketing opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

Antero cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for the year ended December 31, 2015.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2015 and June 30, 2016

(unaudited)

(In thousands, except per share amounts)











December 31, 2015


June 30, 2016


Assets








Current assets:








Cash and cash equivalents


$

23,473



28,251


Accounts receivable, net of allowance for doubtful accounts of $1,195 in 2015 and 2016



79,404



71,606


Accrued revenue



128,242



133,479


Derivative instruments



1,009,030



429,920


Other current assets



8,087



6,528


Total current assets



1,248,236



669,784


Property and equipment:








Natural gas properties, at cost (successful efforts method):








Unproved properties



1,996,081



1,984,515


Proved properties



8,211,106



8,794,515


Water handling and treatment systems



565,616



655,251


Gathering systems and facilities



1,502,396



1,596,460


Other property and equipment



46,415



44,919





12,321,614



13,075,660


Less accumulated depletion, depreciation, and amortization



(1,589,372)



(1,977,790)


Property and equipment, net



10,732,242



11,097,870


Derivative instruments



2,108,450



1,673,907


Other assets



26,565



117,219


Total assets


$

14,115,493



13,558,780










Liabilities and Equity








Current liabilities:








Accounts payable


$

364,160



211,106


Accrued liabilities



194,076



201,320


Revenue distributions payable



129,949



135,054


Derivative instruments





2,726


Other current liabilities



19,085



19,226


Total current liabilities



707,270



569,432


Long-term liabilities:








Long-term debt



4,668,782



4,244,014


Deferred income tax liability



1,370,686



1,063,331


Derivative instruments





5,179


Other liabilities



82,077



75,925


Total liabilities



6,828,815



5,957,881


Commitments and contingencies








Equity:








Stockholders' equity:








Preferred stock, $0.01 par value; authorized - 50,000 shares; none issued






Common stock, $0.01 par value; authorized - 1,000,000 shares; issued and outstanding 277,036 shares and 304,158 shares, respectively



2,770



3,042


Additional paid-in capital



4,122,811



5,022,848


Accumulated earnings



1,808,811



1,207,512


Total stockholders' equity



5,934,392



6,233,402


Noncontrolling interest in consolidated subsidiary



1,352,286



1,367,497


Total equity



7,286,678



7,600,899


Total liabilities and equity


$

14,115,493



13,558,780


 

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 2015 and 2016

(unaudited)

(In thousands, except per share amounts)











Three Months Ended June 30,




2015


2016


Revenue:








Natural gas sales


$

242,065



229,787


Natural gas liquids sales



59,525



94,713


Oil sales



23,032



16,740


Gathering, compression, and water handling and treatment



4,490



3,294


Marketing



49,829



90,902


Commodity derivative fair value losses



(2,227)



(684,634)


Total revenue



376,714



(249,198)


Operating expenses:








Lease operating



6,673



12,043


Gathering, compression, processing, and transportation



166,669



206,060


Production and ad valorem taxes



22,519



17,458


Marketing



79,053



125,977


Exploration



628



1,109


Impairment of unproved properties



26,339



19,944


Depletion, depreciation, and amortization



177,046



197,362


Accretion of asset retirement obligations



408



620


General and administrative (including equity-based compensation expense of $27,582 and $25,816 in 2015 and 2016, respectively)



59,191



60,102


Contract termination and rig stacking



1,937




Total operating expenses



540,463



640,675


Operating loss



(163,749)



(889,873)


Other income (expenses):








Equity in earnings of unconsolidated affiliate





484


Interest



(59,823)



(62,595)


Total other expenses



(59,823)



(62,111)


Loss before income taxes



(223,572)



(951,984)


Provision for income tax benefit



84,089



376,494


Net loss and comprehensive loss including noncontrolling interest



(139,483)



(575,490)


Net income and comprehensive income attributable to noncontrolling interest



5,890



20,754


Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(145,373)



(596,244)


















Loss per common share


$

(0.52)



(2.12)










Loss per common share—assuming dilution


$

(0.52)



(2.12)










Weighted average number of shares outstanding:








Basic



277,003



281,786


Diluted



277,003



281,786


ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Six Months Ended June 30, 2015 and 2016

(unaudited)

(In thousands, except per share amounts)











Six Months Ended June 30,




2015


2016


Revenue:








Natural gas sales


$

557,007



484,563


Natural gas liquids sales



138,311



167,778


Oil sales



35,489



26,919


Gathering, compression, and water handling and treatment



10,658



7,138


Marketing



107,609



190,118


Commodity derivative fair value gains (losses)



757,327



(404,710)


Total revenue



1,606,401



471,806


Operating expenses:








Lease operating



14,775



23,336


Gathering, compression, processing, and transportation



330,331



414,798


Production and ad valorem taxes



46,737



36,742


Marketing



152,402



263,910


Exploration



1,999



2,123


Impairment of unproved properties



34,916



35,470


Depletion, depreciation, and amortization



359,346



388,944


Accretion of asset retirement obligations



808



1,218


General and administrative (including equity-based compensation expense of $55,365 and $49,286 in 2015 and 2016, respectively)



118,240



116,389


Contract termination and rig stacking



10,902




Total operating expenses



1,070,456



1,282,930


Operating income (loss)



535,945



(811,124)


Other income (expenses):








Equity in earnings of unconsolidated affiliate





484


Interest



(113,008)



(125,879)


Total other expenses



(113,008)



(125,395)


Income (loss) before income taxes



422,937



(936,519)


Provision for income tax (expense) benefit



(163,249)



371,679


Net income (loss) and comprehensive income (loss) including noncontrolling interest



259,688



(564,840)


Net income and comprehensive income attributable to noncontrolling interest



10,630



36,459


Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation


$

249,058



(601,299)


















Earnings (loss) per common share


$

0.92



(2.15)










Earnings (loss) per common share—assuming dilution:


$

0.92



(2.15)










Weighted average number of shares outstanding:








Basic



271,181



279,418


Diluted



271,192



279,418


ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2015 and 2016

(unaudited)

(In thousands)











Six Months Ended June 30,




2015


2016


Cash flows from operating activities:








Net income (loss) including noncontrolling interest


$

259,688



(564,840)


Adjustment to reconcile net income (loss) to net cash provided by operating activities:








Depletion, depreciation, amortization, and accretion



360,154



390,162


Impairment of unproved properties



34,916



35,470


Derivative fair value (gains) losses



(757,327)



404,710


Gains on settled derivatives



380,720



616,848


Deferred income tax expense (benefit)



163,249



(371,679)


Equity-based compensation expense



55,365



49,286


Equity in earnings of unconsolidated affiliate





(484)


Other



3,999



621


Changes in current assets and liabilities:








Accounts receivable



(2,987)



7,798


Accrued revenue



66,091



(5,237)


Other current assets



1,047



1,559


Accounts payable



4,579



3,430


Accrued liabilities



15,417



6,431


Revenue distributions payable



8,529



5,105


Other current liabilities



1,668



(474)


Net cash provided by operating activities



595,108



578,706


Cash flows used in investing activities:








Additions to unproved properties



(131,683)



(58,195)


Drilling and completion costs



(1,009,421)



(709,974)


Additions to water handling and treatment systems



(34,076)



(78,625)


Additions to gathering systems and facilities



(200,045)



(97,300)


Additions to other property and equipment



(2,794)



(1,296)


Investment in unconsolidated affiliate





(45,044)


Change in other assets



(759)



(47,925)


Proceeds from asset sales



40,000




Net cash used in investing activities



(1,338,778)



(1,038,359)


Cash flows from financing activities:








Issuance of common stock



537,693



752,599


Proceeds from sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation





178,000


Issuance of senior notes



750,000




Repayments on bank credit facilities, net



(612,000)



(427,000)


Payments of deferred financing costs



(15,254)



(96)


Distributions to noncontrolling interest in consolidated subsidiary



(12,617)



(31,681)


Employee tax withholding for settlement of equity compensation awards



(4,513)



(4,819)


Other



(2,332)



(2,572)


Net cash provided by financing activities



640,977



464,431


Net increase (decrease) in cash and cash equivalents



(102,693)



4,778


Cash and cash equivalents, beginning of period



245,979



23,473


Cash and cash equivalents, end of period


$

143,286



28,251










Supplemental disclosure of cash flow information:








Cash paid during the period for interest


$

103,133



121,128


Supplemental disclosure of noncash investing activities:








Decrease in accounts payable and accrued liabilities for additions to property and equipment


$

(210,217)



(155,671)


ANTERO RESOURCES CORPORATION

The following tables set forth selected operating data for the three months ended June 30, 2015 compared to the three months ended June 30, 2016:

















Three Months Ended June 30,


Amount of

Increase


Percent


(in thousands)


2015


2016


(Decrease)


Change


Operating revenues:













Natural gas sales


$

242,065


$

229,787


$

(12,278)


(5)

%

NGLs sales



59,525



94,713



35,188


59

%

Oil sales



23,032



16,740



(6,292)


(27)

%

Gathering, compression, and water handling and treatment



4,490



3,294



(1,196)


(27)

%

Marketing



49,829



90,902



41,073


82

%

Commodity derivative fair value losses



(2,227)



(684,634)



(682,407)


30,642

%

Total operating revenues



376,714



(249,198)



(625,912)


*

%

Operating expenses:













Lease operating



6,673



12,043



5,370


80

%

Gathering, compression, processing, and transportation



166,669



206,060



39,391


24

%

Production and ad valorem taxes



22,519



17,458



(5,061)


(22)

%

Marketing



79,053



125,977



46,924


59

%

Exploration



628



1,109



481


77

%

Impairment of unproved properties



26,339



19,944



(6,395)


(24)

%

Depletion, depreciation, and amortization



177,046



197,362



20,316


11

%

Accretion of asset retirement obligations



408



620



212


52

%

General and administrative (before equity-based compensation)



31,609



34,286



2,677


8

%

Equity-based compensation



27,582



25,816



(1,766)


(6)

%

Contract termination and rig stacking



1,937





(1,937)


*


Total operating expenses



540,463



640,675



100,212


19

%

Operating loss



(163,749)



(889,873)



(726,124)


443

%














Other earnings (expenses):













Equity in earnings of unconsolidated affiliate





484



484


*

%

Interest expense



(59,823)



(62,595)



(2,772)


5

%

Loss before income taxes



(223,572)



(951,984)



(728,412)


326

%

Income tax benefit



84,089



376,494



292,405


348

%

Net loss and comprehensive loss including noncontrolling interest



(139,483)



(575,490)



(436,007)


313

%

Net income and comprehensive income attributable to noncontrolling interest



5,890



20,754



14,864


252

%

Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(145,373)


$

(596,244)


$

(450,871)


310

%














Adjusted EBITDAX


$

268,192


$

332,112


$

63,920


24

%


























 
















Three Months Ended June 30,


Amount of

Increase


Percent




2015


2016


(Decrease)


Change


Production data:













Natural gas (Bcf)



110



119



9


9

%

C2 Ethane (MBbl)





1,581



1,581


*


C3+ NGLs (MBbl)



3,655



4,771



1,116


31

%

Oil (MBbl)



523



477



(46)


(9)

%

Combined (Bcfe)



135



160



25


19

%

Daily combined production (MMcfe/d)



1,484



1,762



278


19

%

Average prices before effects of derivative settlements:













Natural gas (per Mcf)


$

2.20


$

1.93


$

(0.27)


(12)

%

C2 Ethane (per Bbl)


$


$

8.36


$

8.36


*


C3+ NGLs (per Bbl)


$

16.29


$

17.08


$

0.79


5

%

Oil (per Bbl)


$

44.06


$

35.08


$

(8.98)


(20)

%

Combined (per Mcfe)


$

2.40


$

2.13


$

(0.27)


(11)

%

Average realized prices after effects of derivative settlements:













Natural gas (per Mcf)


$

3.86


$

4.31


$

0.45


12

%

C2 Ethane (per Bbl)


$


$

8.36


$

8.36


*


C3+ NGLs (per Bbl)


$

19.51


$

18.98


$

(0.53)


(3)

%

Oil (per Bbl)


$

47.33


$

35.08


$

(12.25)


(26)

%

Combined (per Mcfe)


$

3.85


$

3.95


$

0.10


3

%

Average Costs (per Mcfe):













Lease operating


$

0.05


$

0.08


$

0.03


60

%

Gathering, compression, processing, and transportation


$

1.23


$

1.29


$

0.06


5

%

Production and ad valorem taxes


$

0.17


$

0.11


$

(0.06)


(35)

%

Marketing, net


$

0.22


$

0.22


$


%

Depletion, depreciation, amortization, and accretion


$

1.31


$

1.23


$

(0.08)


(6)

%

General and administrative (before equity-based compensation)


$

0.23


$

0.21


$

(0.02)


(9)

%


*Not meaningful or applicable

 

ANTERO RESOURCES CORPORATION

The following tables set forth selected operating data for the six months ended June 30, 2015 compared to the six months ended June 30, 2016:
















Six Months Ended June 30,


Amount of

Increase


Percent


(in thousands)


2015


2016


(Decrease)


Change


Operating revenues:













Natural gas sales


$

557,007


$

484,563


$

(72,444)


(13)

%

NGLs sales



138,311



167,778



29,467


21

%

Oil sales



35,489



26,919



(8,570)


(24)

%

Gathering, compression, and water handling and treatment



10,658



7,138



(3,520)


(33)

%

Marketing



107,609



190,118



82,509


77

%

Commodity derivative fair value gains (losses)



757,327



(404,710)



(1,162,037)


(153)

%

Total operating revenues



1,606,401



471,806



(1,134,595)


(71)

%

Operating expenses:













Lease operating



14,775



23,336



8,561


58

%

Gathering, compression, processing, and transportation



330,331



414,798



84,467


26

%

Production and ad valorem taxes



46,737



36,742



(9,995)


(21)

%

Marketing



152,402



263,910



111,508


73

%

Exploration



1,999



2,123



124


6

%

Impairment of unproved properties



34,916



35,470



554


2

%

Depletion, depreciation, and amortization



359,346



388,944



29,598


8

%

Accretion of asset retirement obligations



808



1,218



410


51

%

General and administrative (before equity-based compensation)



62,875



67,103



4,228


7

%

Equity-based compensation



55,365



49,286



(6,079)


(11)

%

Contract termination and rig stacking



10,902





(10,902)


*


Total operating expenses



1,070,456



1,282,930



212,474


20

%

Operating income (loss)



535,945



(811,124)



(1,347,069)


*

%














Other earnings (expenses):













Equity in earnings of unconsolidated affiliate





484



484


*

%

Interest expense



(113,008)



(125,879)



(12,871)


11

%

Income (loss) before income taxes



422,937



(936,519)



(1,359,456)


*

%

Income tax expense (benefit)



(163,249)



371,679



534,928


*

%

Net income (loss) and comprehensive income (loss) including noncontrolling interest



259,688



(564,840)



(824,528)


*

%

Net income and comprehensive income attributable to noncontrolling interest



10,630



36,459



25,829


243

%

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation


$

249,058


$

(601,299)


$

(850,357)


*















Adjusted EBITDAX


$

622,803


$

687,513


$

64,710


10

%

 
















Six Months Ended June 30,


Amount of

Increase


Percent




2015


2016


(Decrease)


Change


Production data:













Natural gas (Bcf)



222



242



20


9

%

C2 Ethane (MBbl)





2,662



2,662


*


C3+ NGLs (MBbl)



6,895



9,452



2,557


37

%

Oil (MBbl)



889



949



61


7

%

Combined (Bcfe)



269



320



52


19

%

Daily combined production (MMcfe/d)



1,485



1,760



275


19

%

Average prices before effects of derivative settlements:













Natural gas (per Mcf)


$

2.51


$

2.00


$

(0.51)


(20)

%

C2 Ethane (per Bbl)


$


$

7.68


$

7.68


*


C3+ NGLs (per Bbl)


$

20.06


$

15.59


$

(4.47)


(22)

%

Oil (per Bbl)


$

39.93


$

28.36


$

(11.57)


(29)

%

Combined (per Mcfe)


$

2.72


$

2.12


$

(0.60)


(22)

%

Average realized prices after effects of derivative settlements:













Natural gas (per Mcf)


$

4.12


$

4.42


$

0.30


7

%

C2 Ethane (per Bbl)


$


$

7.68


$

7.68


*


C3+ NGLs (per Bbl)


$

22.66


$

18.93


$

(3.73)


(16)

%

Oil (per Bbl)


$

46.40


$

28.36


$

(18.04)


(39)

%

Combined (per Mcfe)


$

4.14


$

4.05


$

(0.09)


(2)

%

Average Costs (per Mcfe):













Lease operating


$

0.05


$

0.07


$

0.02


40

%

Gathering, compression, processing, and transportation


$

1.23


$

1.29


$

0.06


5

%

Production and ad valorem taxes


$

0.17


$

0.11


$

(0.06)


(35)

%

Marketing, net


$

0.17


$

0.23


$

0.06


35

%

Depletion, depreciation, amortization, and accretion


$

1.34


$

1.22


$

(0.12)


(9)

%

General and administrative (before equity-based compensation)


$

0.23


$

0.21


$

(0.02)


(9)

%


*Not meaningful or applicable

 

Logo - http://photos.prnewswire.com/prnh/20131101/LA09101LOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/antero-resources-reports-second-quarter-2016-financial-results-300308004.html

SOURCE Antero Resources Corporation

Michael Kennedy, SVP, Finance, (303) 357-6782, mkennedy@anteroresources.com