| Reportable Segments |
(16) Reportable Segments
(a) |
Summary of Reportable Segments |
The Company’s operations, which are located in the United States, are organized into three reportable segments: (i) the exploration, development and production of natural gas, NGLs and oil; (ii) marketing and utilization of excess firm transportation capacity and (iii) midstream services through the Company’s equity method investment in Antero Midstream. Substantially all of the Company’s production revenues are attributable to customers located in the United States; however, some of the Company’s production revenues are attributable to customers who then transport the Company’s production to foreign countries for resale or consumption. These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Management evaluates the performance of the Company’s business segments based on operating income (loss). General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.
Exploration and Production
The exploration and production segment is engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin. The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs and oil from unconventional formations.
Marketing
Where feasible, the Company purchases and sells third-party natural gas and NGLs and markets its excess firm transportation capacity, or engages third parties to conduct these activities on the Company’s behalf, in order to optimize the revenues from these transportation agreements. The Company has entered into long-term firm transportation agreements for a significant portion of its current and expected future production in order to secure guaranteed capacity to favorable markets.
Equity Method Investment in Antero Midstream
The Company receives midstream services through its equity method investment in Antero Midstream. Antero Midstream owns, operates and develops midstream energy infrastructure primarily to service the Company’s production and completion activity in the Appalachian Basin. Antero Midstream’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets. Antero Midstream provides midstream services to Antero Resources under long-term contracts.
(b) |
Reportable Segments Financial Information |
The summarized operating results of the Company’s reportable segments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
|
and |
|
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party |
|
$ |
300,668 |
|
|
232,685 |
|
|
245 |
|
|
(245) |
|
|
533,353 |
|
Intersegment |
|
|
530 |
|
|
— |
|
|
224,559 |
|
|
(224,559) |
|
|
530 |
|
Total revenue |
|
|
301,198 |
|
|
232,685 |
|
|
224,804 |
|
|
(224,804) |
|
|
533,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
25,363 |
|
|
— |
|
|
— |
|
|
— |
|
|
25,363 |
|
Gathering, compression, processing, transportation and water handling |
|
|
628,225 |
|
|
— |
|
|
39,499 |
|
|
(39,499) |
|
|
628,225 |
|
General and administrative |
|
|
32,442 |
|
|
— |
|
|
14,810 |
|
|
(14,810) |
|
|
32,442 |
|
Depletion, depreciation and amortization |
|
|
182,810 |
|
|
— |
|
|
27,487 |
|
|
(27,487) |
|
|
182,810 |
|
Impairment of oil and gas properties |
|
|
26,253 |
|
|
— |
|
|
— |
|
|
— |
|
|
26,253 |
|
Other |
|
|
56,113 |
|
|
266,751 |
|
|
1,187 |
|
|
(1,187) |
|
|
322,864 |
|
Total operating expenses |
|
|
951,206 |
|
|
266,751 |
|
|
82,983 |
|
|
(82,983) |
|
|
1,217,957 |
|
Operating income (loss) |
|
$ |
(650,008) |
|
|
(34,066) |
|
|
141,821 |
|
|
(141,821) |
|
|
(684,074) |
|
Equity in earnings of unconsolidated affiliates |
|
$ |
21,450 |
|
|
— |
|
|
24,088 |
|
|
(24,088) |
|
|
21,450 |
|
Capital expenditures for segment assets |
|
$ |
387,783 |
|
|
— |
|
|
82,583 |
|
|
(82,583) |
|
|
387,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
Exploration |
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
and |
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party |
|
$ |
1,904,302 |
|
|
159,985 |
|
|
1,651 |
|
|
(1,651) |
|
|
2,064,287 |
|
Intersegment |
|
|
337 |
|
|
— |
|
|
229,383 |
|
|
(229,383) |
|
|
337 |
|
Total revenue |
|
|
1,904,639 |
|
|
159,985 |
|
|
231,034 |
|
|
(231,034) |
|
|
2,064,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
27,453 |
|
|
— |
|
|
— |
|
|
— |
|
|
27,453 |
|
Gathering, compression, processing, transportation and water handling |
|
|
716,388 |
|
|
— |
|
|
46,648 |
|
|
(46,648) |
|
|
716,388 |
|
General and administrative |
|
|
42,903 |
|
|
— |
|
|
13,587 |
|
|
(13,587) |
|
|
42,903 |
|
Depletion, depreciation and amortization |
|
|
169,607 |
|
|
— |
|
|
34,206 |
|
|
(34,206) |
|
|
169,607 |
|
Impairment of oil and gas properties |
|
|
33,924 |
|
|
— |
|
|
— |
|
|
— |
|
|
33,924 |
|
Other |
|
|
114,812 |
|
|
185,377 |
|
|
(1,177) |
|
|
1,177 |
|
|
300,189 |
|
Total operating expenses |
|
|
1,105,087 |
|
|
185,377 |
|
|
93,264 |
|
|
(93,264) |
|
|
1,290,464 |
|
Operating income (loss) |
|
$ |
799,552 |
|
|
(25,392) |
|
|
137,770 |
|
|
(137,770) |
|
|
774,160 |
|
Equity in earnings of unconsolidated affiliates |
|
$ |
14,972 |
|
|
— |
|
|
24,411 |
|
|
(24,411) |
|
|
14,972 |
|
Capital expenditures for segment assets |
|
$ |
244,680 |
|
|
— |
|
|
74,120 |
|
|
(74,120) |
|
|
244,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
Exploration |
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
and |
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party |
|
$ |
1,661,682 |
|
|
562,928 |
|
|
340 |
|
|
(340) |
|
|
2,224,610 |
|
Intersegment |
|
|
551 |
|
|
— |
|
|
681,372 |
|
|
(681,372) |
|
|
551 |
|
Total revenue |
|
|
1,662,233 |
|
|
562,928 |
|
|
681,712 |
|
|
(681,712) |
|
|
2,225,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
71,555 |
|
|
— |
|
|
— |
|
|
— |
|
|
71,555 |
|
Gathering, compression, processing, transportation and water handling |
|
|
1,874,664 |
|
|
— |
|
|
118,368 |
|
|
(118,368) |
|
|
1,874,664 |
|
General and administrative |
|
|
108,693 |
|
|
— |
|
|
46,991 |
|
|
(46,991) |
|
|
108,693 |
|
Depletion, depreciation and amortization |
|
|
564,166 |
|
|
— |
|
|
80,956 |
|
|
(80,956) |
|
|
564,166 |
|
Impairment of oil and gas properties |
|
|
69,618 |
|
|
— |
|
|
— |
|
|
— |
|
|
69,618 |
|
Other |
|
|
141,127 |
|
|
627,822 |
|
|
8,590 |
|
|
(8,590) |
|
|
768,949 |
|
Total operating expenses |
|
|
2,829,823 |
|
|
627,822 |
|
|
254,905 |
|
|
(254,905) |
|
|
3,457,645 |
|
Operating income (loss) |
|
$ |
(1,167,590) |
|
|
(64,894) |
|
|
426,807 |
|
|
(426,807) |
|
|
(1,232,484) |
|
Equity in earnings of unconsolidated affiliates |
|
$ |
57,621 |
|
|
— |
|
|
66,347 |
|
|
(66,347) |
|
|
57,621 |
|
Capital expenditures for segment assets |
|
$ |
510,941 |
|
|
— |
|
|
156,948 |
|
|
(156,948) |
|
|
510,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
Exploration |
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
and |
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party |
|
$ |
4,716,827 |
|
|
335,173 |
|
|
2,288 |
|
|
(2,288) |
|
|
5,052,000 |
|
Intersegment |
|
|
1,149 |
|
|
— |
|
|
676,144 |
|
|
(676,144) |
|
|
1,149 |
|
Total revenue |
|
|
4,717,976 |
|
|
335,173 |
|
|
678,432 |
|
|
(678,432) |
|
|
5,053,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
70,486 |
|
|
— |
|
|
— |
|
|
— |
|
|
70,486 |
|
Gathering, compression, processing, transportation and water handling |
|
|
1,962,878 |
|
|
— |
|
|
131,959 |
|
|
(131,959) |
|
|
1,962,878 |
|
General and administrative |
|
|
123,033 |
|
|
— |
|
|
47,597 |
|
|
(47,597) |
|
|
123,033 |
|
Depletion, depreciation and amortization |
|
|
511,390 |
|
|
— |
|
|
98,181 |
|
|
(98,181) |
|
|
511,390 |
|
Impairment of oil and gas properties |
|
|
79,749 |
|
|
— |
|
|
— |
|
|
— |
|
|
79,749 |
|
Other |
|
|
258,963 |
|
|
415,571 |
|
|
5,375 |
|
|
(5,375) |
|
|
674,534 |
|
Total operating expenses |
|
|
3,006,499 |
|
|
415,571 |
|
|
283,112 |
|
|
(283,112) |
|
|
3,422,070 |
|
Operating income (loss) |
|
$ |
1,711,477 |
|
|
(80,398) |
|
|
395,320 |
|
|
(395,320) |
|
|
1,631,079 |
|
Equity in earnings of unconsolidated affiliates |
|
$ |
54,863 |
|
|
— |
|
|
70,467 |
|
|
(70,467) |
|
|
54,863 |
|
Capital expenditures for segment assets |
|
$ |
721,420 |
|
|
— |
|
|
236,154 |
|
|
(236,154) |
|
|
721,420 |
|
The summarized assets of the Company’s reportable segments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2021 |
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
Exploration |
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
and |
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Investments in unconsolidated affiliates |
|
$ |
232,399 |
|
|
— |
|
|
696,009 |
|
|
(696,009) |
|
|
232,399 |
|
Total assets |
|
|
13,864,402 |
|
|
32,126 |
|
|
5,544,001 |
|
|
(5,544,001) |
|
|
13,896,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
As of September 30, 2022 |
|
|
|
|
|
|
|
Equity Method |
|
|
|
|
|
|
|
Exploration |
|
|
|
Investment in |
|
Elimination of |
|
|
|
|
|
and |
|
|
|
Antero |
|
Unconsolidated |
|
Consolidated |
|
|
|
Production |
|
Marketing |
|
Midstream |
|
Affiliates |
|
Total |
|
Investments in unconsolidated affiliates |
|
$ |
222,882 |
|
|
— |
|
|
659,006 |
|
|
(659,006) |
|
|
222,882 |
|
Total assets |
|
|
14,350,938 |
|
|
62,440 |
|
|
5,563,821 |
|
|
(5,563,821) |
|
|
14,413,378 |
|
|