DENVER, July 31, 2024 /PRNewswire/ -- Antero Resources Corporation (NYSE:AR) ("Antero Resources," "Antero," or the "Company") today announced its second quarter 2024 financial and operating results. The relevant unaudited condensed consolidated financial statements are included in Antero Resources' Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.  Second Quarter 2024 Highlights: Net production averaged 3.4 Bcfe/d, an increase of 1% from the year ago period Natural gas production averaged 2.1 Bcf/d, a decline of 4% from the year ago period Liquids production averaged 212 MBbl/d, an increase of 10% from the year ago period and which now represents 37% of total production Realized a pre-hedge natural gas equivalent price of $2.98 per Mcfe, a $1.09 per Mcfe premium to NYMEX pricing that averaged $1.89 per MMBtu Net loss was $66 million, Adjusted Net Loss was $60 million (Non-GAAP) Adjusted EBITDAX was $151 million (Non-GAAP); net cash provided by operating activities was $143 million Averaged a record 11.9 completion stages per day in the quarter, including a monthly record of 12.8 stages per day during the month of May Averaged a record of over 18,000 lateral feet per well for completed wells during the quarter, 16% above the prior quarterly record Recorded second highest production rate per well for a pad in company history, averaging 37 MMcfe/d per well over 60 days Achieved investment grade rating following upgrade from S&P and entered into new unsecured credit facility Published Antero's 7th Annual ESG Report highlighting Antero's economic contributions to its communities of $1 billion in 2023 and a reduction in methane intensity by 78% and a reduction in Scope 1 and Scope 2 emissions by 59% since 2019 2024 Full-Year Guidance Updates: Increasing production guidance range to 3.375 to 3.425 Bcfe/d driven by higher liquids volumes Increase is despite deferring the turn in line of a five well drilled but uncompleted pad until the end of this year from the third quarter previously Increasing C3+ NGL realized price guidance to a range of $1.00 to $2.00 per barrel premium to Mont Belvieu pricing, which is expected to increase annual Free Cash Flow by approximately $60 million relative to initial NGL pricing guidance Paul Rady, Chairman, CEO and President of Antero Resources commented, "During the second quarter we continued to deliver strong capital efficiency results. We set a new quarterly completion record of nearly 12 stages per day. These faster completion times have reduced our cycle times to approximately 140 days in 2024, a dramatic reduction of 67% from just five years ago. Looking ahead, we plan to defer turning in line a drilled but uncompleted pad until the end of the year given current natural gas pricing. Despite this activity deferral, we increased our full year 2024 production guidance for the second consecutive quarter as we continue to see strong capital efficiency gains and well performance." Michael Kennedy, CFO of Antero Resources said, "Our quarterly financial results continue to benefit from our significant exposure to liquids prices. Although natural gas production was down 4% from the year ago period, our liquids production increased 10% year-over-year, and now represents a record high 56% of our total revenue. This increase in liquids production drove 34% Adjusted EBITDAX growth from the prior year period, despite natural gas prices being down 10% over that time. In 2024, we made a strategic decision to increase C3+ NGL exposure to spot international prices where spreads have increased to near record levels. Antero's unconstrained access to international markets allows us to capture premiums to Mont Belvieu and leads us to an additional increase in C3+ NGL pricing guidance for this year." Mr. Kennedy continued, "Antero's upgrade to an investment grade credit rating reflects our industry low maintenance capital requirements and our commitment to debt reduction over the last several years.  As a result of the capital efficiency gains, we were able to reduce our maintenance capital requirement by over $200 million in 2024. Additionally, we have reduced debt by more than $2 billion since the start of our debt reduction program in late 2019. We believe this peer-leading capital efficiency drives the lowest breakeven costs and positions Antero Resources as the premier operator in Appalachia." For a discussion of the non-GAAP financial measures including Adjusted Net Income (Loss), Adjusted EBITDAX, Free Cash Flow and Net Debt please see "Non-GAAP Financial Measures." 2024 Guidance Update  Antero is increasing its full year 2024 production guidance to 3.375 to 3.425 Bcfe/d, an increase at the midpoint of 25 MMcfe/d. The higher than expected volumes are driven by stronger well performance, higher liquids volumes and capital efficiency gains.  Antero is increasing its full year 2024 C3+ NGL realized price guidance to a range of $1.00 to $2.00 per barrel premium to Mont Belvieu, up from the previous guidance of a premium of $0.00 to $1.00 per barrel. This increase in NGL realized price guidance reflects higher expected realizations from take-in-kind transactions, primarily through more exposure to premium international prices during 2024. Antero has firm transportation capacity to sell its propane and butane at the Marcus Hook Export Terminal in Philadelphia, PA.  Antero entered into transactions during the second quarter at prices greater than a $0.10 per gallon premium to Mont Belvieu and this premium has further increased in the third quarter. This increasing premium reflects tight Gulf Coast export capacity and continued strong international demand out of Marcus Hook.  Full Year 2024 –  Full Year 2024 –  Full Year 2024 – Initial Prior Revised Full Year 2024 Guidance Low High Low High Low  High Net Daily Natural Gas Equivalent Production (Bcfe/d)   3.3   3.4   3.35   3.4   3.375   3.425 C3+ NGL Realized Price – Expected Premium to Mont Belvieu ($/Bbl)    ($1.00)   $1.00   $0.00   $1.00   $1.00   $2.00 Free Cash Flow Impact From C3+ NGL Price Increase (1) -   +$20 million   +$60 million (1)  Based on the midpoint of C3+ NGL production guidance. Note: Any 2024 guidance items not discussed in this release are unchanged from previously stated guidance. Free Cash Flow During the second quarter of 2024, Free Cash Flow deficit was $63 million. Three Months Ended June 30, 2023 2024 Net cash provided by operating activities $ 155,263 143,499 Less: Net cash used in investing activities (287,236) (187,315) Less: Proceeds from sale of assets, net (220) (55) Less: Distributions to non-controlling interests in Martica (31,745) (19,282) Free Cash Flow $ (163,938) (63,153) Changes in Working Capital (1) (52,709) (11,700) Free Cash Flow before Changes in Working Capital $ (216,647) (74,853) (1) Working capital adjustments in the second quarter of 2023 includes $51 million in net increases in current assets and liabilities and $2 million in net increases in accounts payable and accrued liabilities for additions to property and equipment.  Working capital adjustments in the second quarter of 2024 includes $11 million in net increases in current assets and liabilities and less than $1 million in net increases in accounts payable and accrued liabilities for additions to property and equipment. Second Quarter 2024 Financial Results Net daily natural gas equivalent production in the second quarter averaged 3.4 Bcfe/d, including 212 MBbl/d of liquids. Antero's average realized natural gas price before hedging was $1.92 per Mcf, a $0.03 per Mcf premium to the average First-of-Month NYMEX Henry Hub price. The following table details average net production and average realized prices for the three months ended June 30, 2024: Three Months Ended June 30, 2024 Combined Natural Natural Gas Oil C3+ NGLs Ethane Gas Equivalent (MMcf/d) (Bbl/d) (Bbl/d) (Bbl/d) (MMcfe/d) Average Net Production 2,149 10,462 115,538 85,835 3,420 Combined Natural Natural Gas Oil C3+ NGLs Ethane Gas Equivalent Average Realized Prices ($/Mcf) ($/Bbl) ($/Bbl) ($/Bbl) ($/Mcfe) Average realized prices before settled derivatives $ 1.92 66.66 40.27 8.42 2.98 NYMEX average price (1) $ 1.89 80.57 1.89 Premium / (Discount) to NYMEX $ 0.03 (13.91) 1.09 Settled commodity derivatives (2) $ 0.02 (0.16) 0.17 — 0.02 Average realized prices after settled derivatives $ 1.94 66.50 40.44 8.42 3.00 Premium / (Discount) to NYMEX $ 0.05 (14.07) 1.11 (1) The average index prices for natural gas and oil represent the NYMEX average first-of-month price and calendar month average West Texas Intermediate future price, respectively. (2) These commodity derivative instruments include contracts attributable to Martica Holdings LLC ("Martica"), Antero's consolidated variable interest entity. All gains or losses from Martica's derivative instruments are fully attributable to the noncontrolling interests in Martica, which includes portions of the natural gas and C3+ NGLs derivative instruments, as well as all oil derivative instruments during the three months ended June 30, 2024. Antero's average realized C3+ NGL price was $40.27 per barrel. Antero shipped 53% of its total C3+ NGL net production on Mariner East 2 ("ME2") for export and realized an $0.08 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA. Antero sold the remaining 47% of C3+ NGL net production at a $0.06 per gallon discount to Mont Belvieu pricing at Hopedale, OH. The resulting blended price on 116 MBbl/d of net C3+ NGL production was a $0.02 per gallon premium, or $0.63 per barrel compared to Mont Belvieu pricing.  Three Months Ended June 30, 2024 Pricing Point Net C3+ NGL Production (Bbl/d) % by Destination Premium (Discount) To Mont Belvieu ($/Gal) Propane / Butane on ME2 - Exported to International Markets Marcus Hook, PA 61,587 53 % $0.08 Remaining C3+ NGL Volume – Sold Domestically Hopedale, OH 53,951 47 % ($0.06) Total C3+ NGLs / Blended Premium   115,538 100 % $0.02         Total C3+ NGLs Premium to Mont Belvieu ($/Bbl) $0.63   All-in cash expense, which includes lease operating, gathering, compression, processing and transportation, production and ad valorem taxes was $2.36 per Mcfe in the second quarter, as compared to $2.35 per Mcfe average during the second quarter of 2023. Lower transportation expense was offset by higher gathering, compression and processing costs primarily related to CPI-based adjustments in 2024. Net marketing expense was $0.07 per Mcfe in the second quarter, unchanged from the $0.07 per Mcfe during the second quarter of 2023. The increase in net marketing expense from the first quarter of 2024 was related to higher unutilized expense during the second quarter of 2024 related to maintenance on a third-party long-haul pipeline, which has since been completed. The company continues to forecast annual net marketing expense to be in the range of $0.04 to $0.06 per Mcfe. Second Quarter 2024 Operating Results Antero placed 11 horizontal Marcellus wells to sales during the second quarter with an average lateral length of 18,172 feet. Highlights: A six well pad had the second highest 60-day rate in company history, averaging 37 MMcfe/d per well with approximately 2,044 Bbl/d of liquids assuming 25% ethane recovery. These wells have an average lateral length of 16,750 feet. A five well pad had a 60-day rate averaging 34 MMcfe/d per well with approximately 2,103 Bbl/d of liquids assuming 25% ethane recovery. These wells have an average lateral length of 19,878 feet. Second Quarter 2024 Capital Investment Antero's drilling and completion capital expenditures for the three months ended June 30, 2024, were $164 million. The Company continues to forecast total drilling and completion capital in 2024 to be in the range of $650 to $700 million.  In addition to capital invested in drilling and completion activities, the Company invested $21 million in land during the second quarter. During the quarter, Antero added approximately 3,500 net acres, representing 13 incremental drilling locations at an average cost of approximately $750,000 per location. These incremental locations more than offset the wells Antero turned to sales during the second quarter of 2024. The company continues to forecast total land capital in 2024 to be in the range of $75 million to $100 million. Investment Grade Rating and New Credit Facility On May 15, 2024, S&P upgraded Antero's corporate and issuer credit ratings to BBB- from BB+ with a stable outlook. The Company has maintained an investment grade credit rating from Fitch Ratings since September of 2022.  On July 30, 2024, Antero entered into a new unsecured credit facility with lender commitments of $1.65 billion. With the investment grade rating, letters of credit were reduced from $443 million to $120 million. Antero expects interest expense to decrease by $15 million on an annual basis and realized over $350 million of increased liquidity as a result of the upgrade. 2023 ESG Report Highlights On July 31, 2024, Antero published its 2023 ESG Report, marking the Company's 7th year reporting on its environmental, social and governance (ESG) performance. This year's report highlights the Company's emissions reduction progress, significant local economic impacts, increased water recycling rate, continued commitment to safety across our operations, and our innovative project to directly address energy poverty in Ghana. Contributed $1 billion in 2023 to local communities in which Antero operates, including; $816 million in lease and royalty payments, $158 million in property and severance taxes, and $24 million invested in road infrastructure improvements Reduced methane leak loss rate by 76% and Scope 1 GHG intensity by 63% since 2019 Reduced methane intensity by 78% and its combined Scope 1 and 2 emissions by 59% since 2019, putting the Company on target to achieve its Net Zero 2025 goal Recycled 89% of the wastewater in 2023 and reduced wastewater injection volumes by 72% since 2019 In 2024, Antero finalized a commercial agreement with Envirofit International to provide cleaner-burning LPG stoves in Ghana, Africa. This strategic initiative will improve air quality and overall health for the Ghanaian residents utilizing the stoves, while also providing the opportunity for thousands of Ghanaians to transition to a more modern, reliable and cost-effective energy source. This project will generate significant employment opportunities through local manufacturing and distribution as well as premium certified carbon offsets that are expected to help Antero achieve the Company's 2025 Net Zero Scope 1 GHG emissions goal. Commodity Derivative Positions Antero did not enter into any new natural gas or oil hedges during the second quarter of 2024. Please see Antero's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, for more information on all commodity derivative positions.  For detail on current commodity positions, please see the Hedge Profile presentations at www.anteroresources.com. Conference Call A conference call is scheduled on Thursday, August 1, 2024 at 9:00 am MT to discuss the financial and operational results. A brief Q&A session for security analysts will immediately follow the discussion of the results. To participate in the call, dial in at 877-407-9079 (U.S.), or 201-493-6746 (International) and reference "Antero Resources." A telephone replay of the call will be available until Thursday, August 8, 2024 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13743656. To access the live webcast and view the related earnings conference call presentation, visit Antero's website at www.anteroresources.com.  The webcast will be archived for replay until Thursday, August 8, 2024 at 9:00 am MT. Presentation An updated presentation will be posted to the Company's website before the 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, and is not incorporated by reference into this press release. Non-GAAP Financial Measures Adjusted Net Income (Loss)   Adjusted Net Income (Loss) as set forth in this release represents net income (loss), adjusted for certain items. Antero believes that Adjusted Net Income (Loss) 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 (Loss) 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 GAAP measure most directly comparable to Adjusted Net Income (Loss) is net income (loss). The following table reconciles net loss to Adjusted Net Loss (in thousands): Three Months Ended June 30, 2023 2024 Net loss and comprehensive loss attributable to Antero Resources Corporation $ (83,084) (65,663) Net income and comprehensive income attributable to noncontrolling interests 15,151 5,208 Unrealized commodity derivative (gains) losses (4,803) 11,479 Amortization of deferred revenue, VPP (7,618) (6,739) Gain on sale of assets (220) (18) Impairment of property and equipment 15,710 313 Equity-based compensation 13,512 17,151 Equity in earnings of unconsolidated affiliate (19,098) (20,881) Contract termination and loss contingency 4,441 3,009 Tax effect of reconciling items (1) (414) (938) (66,423) (57,079) Martica adjustments (2) (17,255) (3,225) Adjusted Net Loss $ (83,678) (60,304) Diluted Weighted Average Common Shares Outstanding (3) 300,141 310,806 (1) Deferred taxes were approximately 21% and 22% for 2023 and 2024, respectively. (2) Adjustments reflect noncontrolling interest in Martica not otherwise adjusted in amounts above. (3) Diluted weighted average shares outstanding does not include securities that would have had an anti-dilutive effect on the computation of diluted earnings per share. Anti-dilutive weighted average shares outstanding for the three months ended June 30, 2023 and 2024 were 15.3 million and 5.8 million, respectively.   Net Debt Net Debt is calculated as total long-term debt less cash and cash equivalents. Management uses Net Debt to evaluate the Company's financial position, including its ability to service its debt obligations. The following table reconciles consolidated total long-term debt to Net Debt as used in this release (in thousands): December 31, June 30, 2023 2024 Credit Facility $ 417,200 496,000 8.375% senior notes due 2026 96,870 96,870 7.625% senior notes due 2029 407,115 407,115 5.375% senior notes due 2030 600,000 600,000 4.250% convertible senior notes due 2026 26,386 — Unamortized debt issuance costs (9,975) (8,777) Total long-term debt $ 1,537,596 1,591,208 Less: Cash and cash equivalents — — Net Debt $ 1,537,596 1,591,208   Free Cash Flow Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow or as a measure of liquidity. The Company defines Free Cash Flow as net cash provided by operating activities, less net cash used in investing activities, which includes drilling and completion capital and leasehold capital, plus payments for derivative monetization, less proceeds from asset sales or derivative monetization and less distributions to non-controlling interests in Martica. The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts. Free Cash Flow is a useful indicator of the Company's ability to internally fund its activities, service or incur additional debt and estimate our ability to return capital to shareholders. There are significant limitations to using Free Cash Flow as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income, the lack of comparability of results of operations of different companies and the different methods of calculating Free Cash Flow reported by different companies. Free Cash Flow does not represent funds available for discretionary use because those funds may be required for debt service, land acquisitions and lease renewals, other capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations. Adjusted EBITDAX Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), ...