AR - Earnings call transcript Q4 2017 | Antero Resources Corporation

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Operator

Good day, and welcome to the Antero Resources Fourth Quarter and Full-Year 2017 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Michael Kennedy, Senior Vice President of Finance and Head of Investor Relations. sir. ahead, go Please

Michael Kennedy

it joining We'll Antero's going spend operational we'll financial for investor you through be Q&A. of the call. reviewed quarter we conference provided and open then during and our call. a to highlights, for us call you fourth earnings where homepage a www.anteroresources.com, for today's XXXX to the up Thank few separate I at presentation like would have also direct website that will minutes

I comments, during will our beyond current to of many start earnings certain of like GAAP management outcomes to make control. Antero that, we Before is factors may including implied Such results impact which financial or differ our Today's most you remind would such regarding performance materially financial number of in measures. risks non-GAAP reconciliations based and for Actual measures. also expressed, this will and that to measures, comparable first could future judgments, our regarding call on from Antero are uncertainties, the such press refer statements. release call, the a what forecast statements subject forward-looking important statements. are disclosures contain Antero's are and Please to

over I shareholder address the letter also Before recently it to quickly turn published release. press and I Paul, want to our response

the currently no can our Board or that with there in future. potential is assurances initiatives we to working evaluation, There for definitive timetable be As any are stated completion release, announced no our in various measures. of completed be press will and evaluate this

matter. any will additional During questions related not we to address today's this call,

turn and and will and Paul CFO. Rady, on to me today now the over Warren, President Joining call CEO, Paul. Glen I Chairman call the are

Paul Rady

finish long how unique the it call through we and my cash stable our development have achieved, including today. Thanks, announced flows five-year plan. results update and for update discuss lateral thank I'm to full-year exposure review with discuss respect realizations, operational to quarter firm drilling, XXXX highlight transportation to activities to and our an our with everyone financial comments, activity, recent with and on acreage efficiencies further operational brief recently In a our our marketing and cost Glen going provide then you liquids fourth our including announced the will portfolio, listening position drive and financial Mike, and will Antero's targets our and targets. price recently five-year

have mid-January, to on that Analyst of many I you quickly hosted which touch recent our attended. Day York New we First, in wanted in

this Our today of was decision put lifecycle. reflection to on event a where in is Antero its

the investment of to disciplined years now able virtually from Elite cash growth, lower updated in are reduce and flow. on double-digit largest and cost in per the now the very the phase Appalachian lead oil positions size This Following a small steady continued have through delivery of upside to barrel free and free We've billion flow gas moving with with of outlook flow. targeted These production next environment. Basin cash today, $X.X price the of XXXX been efficiency laterals. five-year large five-year the in our focus free of benefits capital production no producer inventory $XX $X.X scale, to with back we a the seventh plan by our $X.X combined to cash Antero to drilling group the under the growth to that longer into due savings, liquids-rich shift billion and leverage E&Ps substantial gains billion XXXX positive

highlights. development XXXX our of some discuss let's Now

compared plan our XX% executed growth growing to at year-over-year, including liquids second our development straight and program budget of XX% the production while production ahead under $X.XX XXXX. For we year, billion,

entitled, completed Lead to from drilling per XXXX is XX reduction, that the per day. days per the levels, the average stages particularly which decline On further XX% we These to stages by the X%. X,XXX increasing our to the foot the and or green in XX% while the increased In lateral you completion Marcellus are also illustrates Well drilling days Costs, from XX in increased Lower drilling impressive Cycle gains and XXXX increases in Times our number we slide on proppant per completions foot given day diagram, both in in I bars over cost in the while days pounds improved fact continued lengths. focus by completing on slide our three, the Reduced the front, and to want Marcellus days we

left-hand Capital Looking the components of $XX ahead, the this chart, that taken the billion Reduction was to $X as we've touch notice our drilling to maintaining production billion and while of costs slide result that the We'll $X from if out approximately Almost four, X-Year reduction of program. significant capital you'll new five-year on a the on capital page, are budget of a on shown the Plan, number side billion $X.X five-year right as completion but we completion titled, plan. of and reduced look as the targets. Further, drilling development portrayed moment, billion, you consolidated on in achieving

XXXX to expect from XXXX, XXXX As the growth includes to thereafter. arrow, XX% an illustrated through achieve XX% we XX% and in CAGR which purple

capital Now of D&C of Plan Slide and titled, contains capital. let's $X.X Development the a five, reduction waterfall reduction. break New drilling Savings. Slide billion, breaks completion the $X.X number components out five that equals CapEx the components in the billion down

components larger longer One in our shown bar. of the as orange laterals focus on the is

well or spread shift laterals, per the That fixed billion and reduce per out cost we of foot. we the overall costs to well. lengthened $X just of the million almost $X As alone over the capital

concurrent billion includes per for day to bar time increase the illustrated times. purple days expectations were second from $X.X introduction stages in cycle continuing program. we The is function cost reduce to $X.X next and stages pad. be over liquids-rich able areas By billion eliminate drilling of This of our over of high-graded is The Marcellus removed and component day, of capital. with an our the reduced of a we where operations a to allocation by more capital complete drill which Utica and component the concurrently the our separate drilling expect increasing to per on focus on able savings further

still billion right. I'll disposal wastewater the plan, Facility Clearwater primarily shorter a over distance growth. same Virginia in well as to in Antero Clearwater previous peers. removed entitled rather Running savings of ability you acreage wells from of Marcellus, simply we than position. the resulting are number six, slide that truck $X.X Has The cost further the spending, direct The Ohio. separate We Additionally, touch production last delivering to the a the reduction in The driven Room? our To contiguous our us recycle piece there West XX believe the unique wastewater viable on locations more from is Who brown opportunity drier this, many in is bar a Appalachian trucking the to our two because to on the while capital-efficient is the Antero much here shown Facility, by by five-year things

laterals our and anyone laterals Marcellus the contiguous the the on average acreage than allowed in to in of longer to-date, basin. us deepest First, us position long gives drill has inventory

more locations Appalachia. liquids-rich XX% Second, than of the leading inventory, control undrilled in our we peer

come significant and us role room wells combination the producer gives and running to Glenn XX% rate currently five as meaningful the grow This annually which US tremendous get We our upside, free NGL NGL a are over liquids our into plays cash next largest will gives flow. later. significant return production to us to in of drill years expect the high many in by to ability to generate years, exposure for

on Finally, earnings touched highlights release. some in operational that we our

fourth in are of We feet. in today actually long laterals quarter horizontals Marcellus were XX,XXX drilled that we laterals longer as had than XX long delivering the the the nine

Our can and largest a be pad that one of XXX,XXX lateral in is about remarkable the pad. pad XXX from This to-date drilled deliver is approximately equivalent this pad Bcf about reserves. delivered will feet of the reserves XX-well with Marcellus

are We In the pad Utica, will the mentioned. right similar of reserves in feet, is nine-well average result lateral now to lengths pad also I just that to have a drilling XX,XXX expected we with wellhead day placed at is that combined flowing excess a at a year-end million in to gas a dry feet X,XXX rate sales pad of pressures psi. which currently cubic XX-well of over XXX

production only XX it In of Utica, rig record over million in fact the we I With achieved his comments. in the after turn to completing that, in and recently Glen XXXX. only play day for running Ohio, will wells XXX one a

Glen Warren

improved highlight the price from up NGL full-year achieved, realization an actions today, I will highlight recent our long-term for update Paul. liquids favorable fourth during volumes some rating have increased and In marketing comments results, outlook use. comments recently year, our you, with brief recent flow financial announced on free credit the we priorities quarter benefited rating on including agencies, that our cash finish including provide Thank my prices gains and and from our

including the begin an for liquids. year-over-year the X.XX production Production X,XXX the over day Bcfe from the day highlights me quarter, a Let increase of with of barrels more with Liquids key and completions longer year. XX% averaged NGLs. improvements over outperformance included barrels some record and production advanced quarter during XXX,XXX incorporated across widely a a operational were continues laterals by and just to day of XXX,XXX This the XXXX. of driven barrels program associated development that oil be particularly the a

the million by flow $XXX sequential EBITDAX. margin some million, over which driven touch Now per a $X.XX XXX touch to financial on a primarily million $X.XX briefly on Adjusted represents $XXX resulting pricing, in will increase we This minute. EBITDAX in or operating $XXX just per increase in generated highlights share. a in The consolidated cash liquids was Mcfe. consolidated XX% up sequential of sorry I was million quarter, improved from

production Hub NYMEX of $X.XX $X.XX Mcf on fourth our to per the quarter, $X.XX gas Mcf and to during guidance quarter, on differential the before above Moving during pricing hedges realized differential natural we $X.XX Henry realized Mcf. per a per to

local per disputes natural hedging $X.XX the negative indices. again price have of transportation $X.XX or would firm away gas Excluding to to of from premium portfolio the in strategic Henry once gas a ago advantage $X our unfavorable and the of from average been impact allows before Mcf that premium, the all Hub, Mcf, move virtually line per illustrating year NYMEX contract us with

disputes in part XXXX, and differentials on strip more one contracts, to the current narrow not from a expect pricing. futures expectation did impact amendment an basis capacity of additional takeaway During based due we regional material to contractual of

XXXX, gas with line of Mcf Mcf initial Henry $XXX million in disputes, for per produced guidance. a premium $X.XX impact and Hub of or realized excluding year produced negative fourth quarter gain or natural per NYMEX full realized Mcf during the $X.XX We hedge the of year from gas year. per we contractual full $XXX $X.XX during For a gas million $X.XX the to the

firm forward, as we pricing competitive to and Antero Northeast and believe book both advantages to our Moving transportation is will as that hedge uncertainty overall basis gas be around a certainty - for continue. continue likely

for bridge in over both years. assuming of lumpier an across targets, reminder are adjusted pricing. higher midpoint strip gas MMBtu over just at a the per $X.XX current a average markets, in Providing XXXX, price This growth hedged demand. growing than is is a production $X.XX XXXX MMBtu As by XXX% a supply of premium and challenging or XX% we steadily per

in of a mentioned first I and impact release Next, net quarter yesterday our expense. items that to want couple marketing we did production will on both touch

to essentially front, rupture production to On pipeline of the that of early of These production a hit winter completions as the quarter well, a in in severe shutdowns the portion with weather combined few downstream forced fourth timing XXXX. of result as XXXX in will shut Northeast result we and our January for production the throughout were a the the days. flat

to positive attractive with attractive and more gain from to weather continue expect with capital XXXX firm to higher from significant in us production severe prices mitigate $X.X marketing significantly our guidance the very the note resulted spending. for in costs We than Bcfe a transportation. the day production shut-downs The originally X.X billion opportunities meet of offsets the our forecast the provided consolidated January and unutilized quarter. On per gas impact than of pricing

high Natural our efforts important transport titled are incur early Transportation end mitigation an the slide next year, Firm This report & prior to over the Update, on production. expect of guidance net $X.XXX in with outlined number to expense Antero quarter gain a equity due part unutilized Sales expect most our As we the the net filling to to XXXX to in marketing of we to mitigate marketing continue is firm of costs the seven, per And first Mcfe. our of highlight of lowering fact years we couple the in as XXXX. that Gas

earlier, of equal quarter, Moving XX% the capacity in was relative differential quarter to WTI. Paul to an in in LPG prices. liquids NGL enables NGL for significant guidance our ethane pricing. of during liquids in of the product to export The The pricing liquids XX% stream is topic, production. the or XX% pricing the significantly $XX.XX pricing our a CX to to gallon barrel, generated the our and $X.XX year, achieve Continuing was plus NYMEX XX% volumes we on upside strengthening on WTI narrowing global pricing to growth of mentioned liquid realized unhedged primarily WTI initial full year, was us Belvieu plus driven which Northeast. realized as per XX% giving us resulted by of inventory function pricing of Mont XX% the improvement Belvieu above of price of WTI, revenue pricing barrel exposure and Mont liquids-rich of realized $XX.XX WTI. and for price great rise in for the an CX liquids by Nearly tremendous per to our strengthening the of per and The of or

execution acreage you early Fitch credit of eight Antero Positive AM four, one, contiguous best-in-class profile. model The with to within our volumes towards by update, model to number an our this integrated Now, three, our we've both provided as sheet the direct and and balance S&P to believe not rating January gears a an investment titled BB positive the In grade We liquids-rich grade week only which number to portfolio, our several on core and years. position year, free for were I'll shifting commodity investment BBB environments leverage is pricing. in by number the number and our illustrates an year-end Utica; a our AM to ratings outlook, years. price and and of expectations built, momentum given BB. of with you volatile the Momentum. minus number recently based flow book rating Ratings last To AR continued slide extended slide business cash two, discuss AR both FT supporting quick our Marcellus this hedge the nine, plus direct the netbacks; over of strip from next momentum over long-term I'll speaks declining Midstream; to our upgrade production but And strong supported business

targeting a production in to XXXX. average net achieve XXXX, growth XXXX of each XX% CAGR expect XX% while of and We on through

generating We flow. significant expect this to achieve while growth free cash

to and times Flow As outlined we titled in to Growth the slide two decline XXXX flow below in we strip deliver in XXXX have Deleveraging, assuming plan on assuming pay we in Cash inflection point profile. status Drives is a year-end to to XXXX, basis, down leverage debt. two In leverage used below as quo all XX anticipate declining number reached pricing summary, cash on free Dramatic times cash an flow,

call to companies share big this slide to integrated questions. cash Elite XX, now free an cash E&Ps. the leading projected shown free using companies Profile in in over number group, range with growth, flow low in turn for operator puts result just to generate double-digit relative - As that titled Drive Expansion, and Multiple price, the us The yield that, large-cap a the cash XX flow leverage, XXXX attractive in any would and on Antero the I flow. oil X% very will With the current free of to scale

Operator

Instructions] We from The will ahead. Please question with Holly Howard now begin the [Operator Weil. Scotia question-and-answer session. comes go first Stewart

Holly Stewart

Good morning, gentlemen.

Paul Rady

Good Holly. morning,

Holly Stewart

think first first been one, during public. quarter, the since I we've the you don't accomplishments think Maybe, gain have you've actually a around marketing your marketing just

highlight, specific you importantly, here can and any maybe again? So, can you this more replicate

Paul Rady

and it certainly were our of the get to not only Well, course, the a gas, beginning lot so move Northeast, that strong of cold year, distressed gas third-party able hit reflects the we was by to out couldn't that the of and it but area. a

good able we so were deliver And to markets. gas high to

and even about draw-down talking we're So seaboard January, along Chicago Michigan, the of Gulf the through self-storage because good prices and had then Eastern too.

it really situation. So, good was

advantage it our beginning as of more tell, able As that a at year, the grows, good be will fill production time of to capacity, prices. is advantage for we our Will more certainly us. good strategic but the we will take be to and of able we still duplicate

Holly Stewart

you little Okay, the of great. what's any been just butanes pricing weak if And like now, have and on color on have as maybe looks propane liquids both then sort right of a late.

as are macro higher curious you just to So a maybe seeing there? maybe - out level from what guys

Paul Rady

the Well, seeing that what in $X.XX market up Asian at quite drove a gallon should buyers XXXX. little so least nearly on they've gone buyers propane away. into of came market driving the of where and bit drifted have seen XX, part balance demand had front as propane And or we're Cal back price a remainder down the of higher international say some prices was of to some, the the you've has I

order the or balance $X.XX So our XXXX you're of so. as now is front, probably on aware

prices, that bit and have up now we're production hedged our little or expectations half move watching have good at a right of pretty and propane will again. We about just Cal-XX production some

Holly Stewart

Okay, then Glen, a I if item And maybe for housekeeping that's great. could.

quarter, first course the about of obviously, of XQ the up, how and Just flowing through kind given be about service GPNT just over trend quarters? we would the Glen, of should thinking the year, but expense kind the of think the in kind Rovers

Michael Kennedy

Yeah, one. take Holly, Mike. This I'll is that

year. expect XXs, that's the Rover from that's We to transport high Mcfe about for impact. per up $X.XX the portion to full and related up the from the ticks Rover And directly

Holly Stewart

Okay. That's great. Thanks, Mike.

Michael Kennedy

Yeah.

Operator

The ahead. next from Please with go JPMorgan. question Jayaram Arun comes

Arun Jayaram

with little morning. related some the you Yeah, wondering given help a I timing occur bit how if impacts. will of was us weather XXXX, good in completion could now the

between around in by you maybe XXX give guidance of and at completions, Day, a something if I I us think you highlighted XXXX. trend wondered could bit a that little Analyst how XXX quarter

Paul Rady

pretty the the in actually referenced we the in just evenly that out It that happens of XXX quarter, majority activities first through quarters. Analyst so in Day, March. it's The the occurring split

So first the get impact quarter, you'll second as and full weather, a from a that scheduled. was of as the delay bit the completion quarter in but because starting scheduled,

Arun Jayaram

Great. your to then agreement, realizations the part gas XXXX affect the just A the in talk follow-up you that and beyond how just happens? WGL early what will on amendment about can price

Glen Warren

into Yeah. Well, of our to we did the our their was WGL constricted restructure restricted the system. part on part with that buy ability difficulties ran it at a of or receive they gas certain to TECO contracts pointer

instead a move is we just done Cove damages. was in realizing all lower instead we to area. gas What to end the over the gas Loudoun, and beginning neutralize is will we've inferior Virginia, the problem some delivering be WB that to at completed the Point that had as year, that to the so markets, and realizations of way contract, over And so that

gas. over restrictions don't they the to the there receive so have And

reducing worked points. we that's it receipt shifting and how was So out,

that I and And issue so will minimized. be big going that we think don't differential see that forward,

Arun Jayaram

back Thanks of for just that. the Analyst going question is Great. Day. just And final kind to

basis on annum about D&C billion You XXXX. XXXX $X.X consolidated per guys spending between highlighted a through in

because an increasing completed XXXX the in can well between are do that to lengths is One you environment, a questions kind XX% of gotten and a kind help we've of just X% or bit and of reconcile inflationary XXXX, maybe your you lateral count. have of us higher

maybe $X.X XXXX just on a spending bit give between XXXX? the So D&C comfort us and of of level billion

Paul Rady

in XX. new page and think I the it's yesterday, a have the, and it's we out CS presentations and slide label Yeah, put summit

much really can So part year. difference in you it's you're really working see slide that there's by previous during may but that the And the year, so the and in the you a completed not the that through year, in driven there January, happened of because the each so wells forth. cost a wells on the are on appendix, and well you but it's is takes so complete

X.X we for kind normalizes you slide are a of and some that wells of there. And in being are it on this concurrent that pick per have takes we up worked operations in given then points to also that through also then actually year and in kind from So that going year. assuming stages do ratably, baked the some three over X.X out years day this

it the So but of that see $X.X check and numbers page yesterday those that out a summit down you then can CS nets XX. year, to slide Energy you billion average presentation on

Arun Jayaram

Thanks lot. a that. Appreciate

Paul Rady

Thank you.

Operator

Tudor, & next Please Company. The Holt Instructions] Jeoffrey Pickering, from question [Operator with comes Lambujon ahead. go

Jeoffrey Lambujon

Good my morning. taking question. Thanks for

talked prioritize As you generate? to inventory but get comes you you drilling do highlight, returns? do shareholder versus options how free to you how cash You targets, using when leverage you what flow versus adds the your balance about it

Paul Rady

like Yeah, plan. our we drilling

but Day. are no So on we relative that said what the at to at at shareholder was Analyst return. deleveraging we're focused to we current time, prioritizing also And Day Analyst the very plans said we what change

There play So, if we'll how those lower and liquids it be flow, is some cash be a see lower. liquids of a bit prices prices, to higher sensitivity a bit could that quite will could out. get be balance things higher with

nice news is quarter-by-quarter, have year-by-year, there, to bucket but something bucket - to allocate. this capital good is So a is sized we'll there just determine there's nice the

Jeoffrey Lambujon

Thanks.

Operator

any for concludes This remarks. turn question-and-answer session. would to back to Michael our over I closing conference the Kennedy like

Michael Kennedy

conference joining our today. Thanks everyone us on call for

feel questions, out have us. to reach Thanks you further to any free If again. please

Operator

attending presentation. Thank now concluded. is for conference today's The you

may You disconnect. now

Antero Resources (AR) 14 Feb 182017 Q4 Earnings call transcript