AR - Earnings call transcript Q1 2018 | Antero Resources Corporation

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Operator

Good day, and welcome to the Antero Resources First Quarter 2018 Earnings Conference Call and Webcast. Please note this event is being recorded. I would like to turn the conference over to Michael Kennedy, Senior VP Finance. Please go ahead, sir.

Michael N. Kennedy

Thank you for joining us for Antero's first quarter 2018 investor conference call. minutes we'll the Q&A. open few highlights and a then and it spend going financial through operational We'll up for would where direct our to that will separate also the during presentation I of today's reviewed homepage call. earnings you call website have we to www.anteroresources.com, be provided a at like

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

feedback Before that brief provide assembled our special update the I it committees to shareholders. from soliciting quickly a want on after largest over I also turn to were Paul,

initiatives and there timetable hired be future. is are announced potential completed have the for special a measures. definitive any of advisors committees. this not formed with we special committees and There would review, of to like or will assurances evaluate AM can the private potential Independent three consisting AMGP a working legal the I announced, Directors this previously completion conjunction range that directors of the equity. and evaluate As also merits associated valuation. to Antero's no that with three and of measures committees committee special in Independent be All diligently are no special established In on Directors evaluation to point to out have enhance financial

questions hope of will today's the nature this of I discuss related process it be call. can it during As you or understand, any because to not we address to able further

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

Paul M. Rady

schedule a that metrics. Mike, cash significant will several also flow you the further to you, in achievements call for – achieve and operational in In provide completion including will can including Glen place XXXX including going efficiencies growth innovations. our leverage everyone our build this reductions pads comments, and to quarter to during I'm we company first we I highlight Thank that thank the to listening few expect records the second notable momentum in an and surface our my today. in highlight execution to update significant then through continued continue how discuss on we the on next the quarter. and strong the quarter

the was driven portion exceptional XX.X titled volumes. XXXX delivered our on respect improved average days on with we First First operational X, Completion the company Execution, conditions, increased Quarter our stages March Completion XXXX from of for on a XXXX average as spud day Marcellus to in the drilling year-ago record to and the averaged we TD, reduction days continued completion production X% the day by that top but to and The of illustrated full by subsided. had we compared inclement month efficiencies. lateral a Drilling as operating we percent levels. Marcellus to building momentum per from per in weather to X% increased as in difficult to Marcellus some day the X,XXX X.X have and our Antero by over This increased lengths XX% ability is particularly given deliver which left front. X.X targets drilling in winter from slide Despite impressive levels. proppant stages to as the operational had Starting severe stages per weather, slide, represents and foot of foremost outages a record the per foot an processing the quarter, production pounds on loading execution quarter and

dollar Now, let's efficiencies from per these mean what quantify standpoint. a well

from provide savings completion capital current but would incremental to stages to X.X our increase higher approximately An day in savings of efficiency relative resulting per forward day, confident targets. current in sustain to why not bring would are well less day XXXX many our we budget pressures ability one just also per represents stages any well. needed per our mitigate production of during This our assumes continued X.X improvements. with is ability cost to of our inflationary to While plan, stages X.X achieve per $XX,XXX only examples production

in the wells Marcellus four XX,XXX and addition, completed Utica XX,XXX with nearly to-date quarter In laterals during in the at well its Antero at feet one each. feet longest the

we per As while and to achieve laterals, our continue stages days we to further strides day, expect drilling in efficiencies. increase making

multiple in our Operating period. X, our Seven contracted recently. rigs XX to X through number contracted occurred of our crews have the Continues, XX% chart shows costs that drilling Turning of with and slide slide are top fully that year, XXXX we of majority have Evolution On our completion pie cost locked Marcellus through also well well nearly lateral titled footage time XXXX. this achieved records days our

track we efficiency efficiencies capital cost primarily gel, increase remain cost improvements our Although expect X% service on our we and assumes at Analyst sand Day. the outlined with to deliver offset forecast in a and to consumables, inflation continued

to pad pads the feet. lateral production total other largest begin has to-date is XXX,XXX its XX-well company feet pad lateral and footage The a the also preparing to on a pad shift two level. lateral One that Marcellus that let's combined is a Now, footage. by has lateral is of XXX,XXX pad XX-well

XXXX sales a rate Antero of XX cubic on including in to million to barrels month expected XXX wells XX the sales million wells liquids. XX,XXX XXX adjacent these over to combined per feet two to equivalent that production day constrained this day on within produced place December to expect gross pads pads of approximately We at per two have turned In Xb online conjunction XX completed Utica, Bcf at year. per cubic feet which and per they by were These Antero regime already million production in XX were gas or the remain date day pipeline in dry of XXX wells flat was well gas end online. in-service they days of the about Ohio, the and the Utica dry with Phase Rover after brought first at last with

on pad and the for implications outperformance coming We in the years. the gas Utica our dry are by this very development encouraged

Now XXXX well to completion briefly plan. touch on our

quarter, the As came all XX our press many have of over which the on wells completed discussed in in first liquids-rich online late March. acreage, release, we

which year of his With During all to with acreage. per track on day achieve barrels including equivalent completion for the second complete XXX,XXX in total our focus it be a in activity will to our Bcf full increase day Glen XX X.X This guidance quarter, over turn of liquids-rich on on comments. will liquids. us that, production we a completed keeps I of wells, plan to sequential liquids

Glen C. Warren

Paul. Thanks, morning. Good

due ethane. in with severe XX,XXX liquids production increase record outage, included outages, in weather oil, the barrels barrels begin per quarter. Bcfe quarter, which portion a the the to some quarter. was the approximately in temporarily Liquids year-over-year winter CX+ processing Northeast sequential pipeline hit production liquids. a sequential a me day that A to a in of liquids day of Despite January, of XXX,XXX barrels quarter of day XX,XXX expect key in X.XX for processing XX% production forced Let downtime downstream achievements we our including averaged production of increase, volumes X,XXX related financial plant shut a early to NGLs decline the and from day while us a the a of day a in barrels second an

on Moving per the hedges quarter, gas Hub $X.XX we during first quarter, our Henry Mcf NYMEX to natural the production on pricing a premium $X.XX Mcf realized during realized before price. to per average the

gas strategic of the diverse performance, move again, quarter us of to firm our a optionality premium first transportation advantage the virtually to all that portfolio The once allows illustrated markets.

you Pre-Hedge we past peer five gas been Realizations, years. titled have a the for Peer slide realizations see Turning natural price Gas Appalachian number that to X in leader Natural can

the price realizations Additionally gas represented first NYMEX exceeded natural quarter the quarter in Hub XXth all-in AR's which Henry prices. consecutive

WGL For breach quarter reference, XX in IPO in realized the hedges third gas in the AR's Mcf including prices since XXXX, natural the per above AR of impact excluding XXXX. of quarters has all $X.XX

continue at price Given combined includes MMBtu] with which and portfolio, our we realizations being to $X.XX both our expect FT large per (sic) hedge attractive superior XXX% XXXX XXXX per forward. book going delivering [$X.XX in hedged Mcf

us generating long-term from troughs focus a transportation gas with can as well and oil see you attractive has margins. Our bottlenecks inevitably approach managing in consistency and of served which price includes our

not of a the mitigated to of last pricing As to the prior during $X.XX expect we Due of gas realizations our high from do per disputes price earnings to a at exposure. discussed to did largely we reminder, our end realizations call than guidance material disputes pricing, any anticipated volume have that these impacts forward this and we our now any $X.XX quarter natural we better expect premium Mcf. NYMEX impacts from have material not going as contractual

barrel or unhedged quarter, to on price of NYMEX XX% the WTI. we Moving an CX+ liquids pricing NGL per realized $XX.XX of for

While NGL with keep an the XX% up ago. from consistent NGL basis, do the represented rising expectations year quarter a prices prices during on remained absolute a prices and not WTI with increase

the For of to the toward guidance low-end range WTI. XXXX, are our XX.X% remainder trending of we of of XX.X%

East pricing. $X.XX attractive strong the during as see with supply you approaching number lowest average. And transport of XXXX of of years Mont X, of inventory this for in Mariner level liquids Belvieu the or However, second remainder coming the confident are When $X.XX morning. CX propane in the the additional and fundamentals XX% the five half at in can year, remains X, slide as capacity price below days propane the we liquids is continuation at shown five-year a with gallon the combined

the Improvement. trending of titled on year-end while relative toward low slide oil, unchanged relative number illustrated Price from guidance as XXXX X to Importantly, absolute continues our to is level, year-ago end NGLs: pricing relatively WTI be CX+ to CX+ attractive and the

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

price MMBtu and current $X.XX As strip or production a $X.XX a just X pricing. of slide premium average number both XXXX, XXX% are shown on midpoint of at an XXXX per representing of above assuming per years, XX% the hedged as we for in reminder, over MMBtu targets,

to this the quarter. Next, I we on want reported touch marketing gain substantial

Support Hedges Commitments. – As A highlighted Firm XX slide on Trade number titled Paired

previously during for As marketing release, a gain had net last the earnings stated expected quarter. the first we

During weather Coast periods of the able severe to at gas large cold we were a East resell in premium. on purchase January,

marketing guidance During for full quarter, we've or per per to Mcfe. the first previously. of Due this to resulted marketing previously in $X.XX net reduced expense Mcfe net gain $X.XX Mcfe January our to $XX per the gas gains, $X.XX from $X.XXX $X.XX marketing to the year million

exposure generated Standalone our over a Now We flow EBITDAX prices. adjusted period. marketing portfolio adjusted to XX% the the to $XXX highlights a to the quarter. than margins large strategy, firm over briefly increase some sequentially on our transportation including peer to when gain, year-ago Antero number XX% peer book, last hedge the group. million Slide XX of Appalachia to premium was touch higher five leading period. cash Back deliver our million, and to year-ago historical margin XX% EBITDAX financial $XXX markets continues our from years the leadership increasing operating highlights due standalone year-after-year long-term strong to liquids standalone and integrated comparing increase

this important at summary, in trend dedicated toward an Day Management long-term we first point and this execution company our delivering executing our for and inflection remains Analyst on expect significant we quarter long-term In results plan. We momentum plan year's this continue. to to on the reached outlined have January. showcase our have

on which towards you see end times is as times capital-efficient the at declining inventory lowest We basis. slide further at profile, standalone in the on X.X at our a is a level to leverage year. on continue decline Leverage Marcellus our to projected X.X of this focus and liquids-rich number can history XX,

elite for have number XX that Drive Multiple seven momentum To slide Antero on scale, production group turn growth, low place shown Profile the With this relative call to of generate E&P in As leverage double-digit an Expansion, questions. now cash will premium all just operator titled and of Antero at whom the over free multiple companies flow, to I'll trade that, Antero. valuations

Operator

question-and-answer begin We will the now session.

Please is of from Chandra Subash Guggenheim. question first go ahead. The

Subash Chandra

Hi, Yes. Paul.

- dry Your commentary gas

Paul M. Rady

Hi, Subash.

Subash Chandra

this in year, the morning. it more seen? think so, you've the the bit program are gas The commentary that a add program, is maybe there weighting the plays program? that the dry does or a good it program? displace quarter in bigger of to Yes, program I of XX% was of Utica, some a does role drilling drilling a results possibility but you based thinking the your it And of on if it

Paul M. Rady

Yes, the – is – spot. our and still good at XX%. the to Utica, the not question. we're with in it's results a we're going We're same in We're fact, XX% staying be pleased still Utica but probably CapEx to it's And expanding there program.

stronger. the even wells, our outstanding So, liquids are economics on even these wells Marcellus though are

path but the to just no liquids. CapEx, still focus Marcellus the plays divergence smaller role. the it we're our Utica, it the mostly expand to a but on same really and not keep And from looking So, keep like

Subash Chandra

Okay.

I Now, peers contemplating your be and/or more some Rover notions? one of worth even open say that which that has formations Any been Is you attention, those got think in NPV like has to of in inventory. play that have play fairly else. to flat, Utica their Appalachia, of this more with something might might a that low carve-out let's someone a they're be

Paul M. Rady

those have still pretty right time-to-time, do now, we from Yes, focused. we're But Subash. notions

we farm perhaps out Utica don't do in aware DrillCo But do it are and effectively a that We we whatever. to that like or like could that.

good do we have and inventory. for precious plans the is So, that Utica

not let of it. So, looking all to go

might sharing it there lost somebody forward could You're right, of be be what be PV, some forward by would moving with but by moving else. gained

Subash Chandra

Got you.

that guys out. the And laterals, and Okay. and know you drilling sort of inside long everyone case, is making

about so, of a and it's et laterals X how you One beyond loss Bcf of do the long that things lower we've on and push efficiency is is you by feel heard or perspectives But cetera? these toe, the maybe per as thousand cost. contributions from compensated there heel marginal miles preserving

Paul M. Rady

we from we we're good equal that between, question. course a from That's toe feel laterals, the as drilled everywhere it heel in watching production the and get We longer as and in longer areas, plot type we in go curves. anything a as they now out it per they're the EUR but if laterals we thousand our our up are curve. And excellent above of

seeing particularly true not out longer is really where Marcellus gone the we're This loss So, so going in we've any far. out.

are completions longest XX,XXX the Our in range.

frac In we're terms break down. of frac efficiency for us toe, as the we able that to

of plenty down down see break around have of We don't the away, loss, the surface to distant so anywhere can near there. those friction pressure stages. I pump it break we and horsepower plenty there's

and good XX,XXX-plus still schedule about feel this next. and really our year on So, drilling for

out some to are XX,XXX We it. going We're Marcellus longer. XX,XXX, and about getting the good even and XX,XXX, in feel places,

in as that efficiencies to and is think really like going there, reported other loss place. a we So, of the some we're see are not the

Subash Chandra

patience. a Got I for me, your And final appreciate one it.

months, NGLs, an should In as the a CX+s summer we in proportion total sales? anticipate the increase NGL of of terms percent of

Glen C. Warren

think Subash. don't I so,

the fairly I here then think increase CX+. consistent a it year CX between will be over and

Subash Chandra

it. got Thank you very Okay, much.

Glen C. Warren

Thank you.

Paul M. Rady

Subash. Thanks,

Operator

The is Fitzpatrick from go Johnson (sic) question of [SunTrust]. next ahead. Rice Welles Please

Welles Fitzpatrick

pricing in-basin Hey, look But the realization it's SunTrust. outage to should I And into for mean reverses, overview. But CX, far to pricing? when East you that talk as the we on XQ? as Mariner that macro March? can – improve is Welles thanks from the great the that CX did to move guys. NGL we affect those in as Actually, concerned,

Glen C. Warren

as still online that's as that's mid-year as stating the do back what assuming effect pricing regulatory and that. MEX, from say that brought them. Energy of is It's couple understand and far minor which X to they're back from we I'd what March waiting not publicly And here we we're in we're the the very Transfer barrels know just comes and on Mariner here But on, the hearing as on more on weeks on repairs. still in still some region. were off hopefully There to that close, you CX+ some next coming anticipate bodies sign

would but of at and making. or year, half we'll during estimate in online that. if the don't have in So, to it to we're good assuming delay of feel us about the progress MEX it We help If that's delayed We'd summer the hopeful. till that flow least cost the certainly may months. a the We're going year-end, is it July lot sort that of later anticipate year, million to has costs they're we cash some second $XX by pretty so it.

numbers the something think they've have XX% You've ground they XX% completed and over of in the probably, bores. pipe of seen the the I

is move making regionally in second a without the third the quarter they bit there. progress region so So, quarter you the pipes. product the since certainly But by soft rail of are out to always have second and much

we're looking place. So, the pipes in to forward getting really

Welles Fitzpatrick

Perfect. of follow-up footer goes have is XX. is XX,XXX-footer, that And one XX,XXX-plus that are that mean question. lease to program slide the then was or per it There you of returns. on diminishing that Okay. I lateral just and kind type – Obviously, Subash's overall something wider of I do a that you you would into done the is because that work geometry think basis? something mean

Glen C. Warren

about Yes, Utica absolutely. Are the XX,XXX-footers that you we? talking

Welles Fitzpatrick

right. Yes. That's

Glen C. Warren

yes. Yes,

out had gas and now they we even just further. we've We So, But feel decline about don't brought gas further and of Paul good out and go productivity see really the those mentioned going that plays. the as as will plays liquids be four completed online you shortly. in in

Analyst to look research can actually wellheads on And able the the concurrent and goes and as we're incentivized the larger on manage as that our of times as pad when cycle on same we to concurrently. you're pad. that you pad a where back operations So, into sort to longer our Day drill long out a spread we drill and rolled out producer complete

So, XX,XXX laterals efficiencies range that drilling on we'll cycle those thousand. to later losing this that's get and efficiency we're long EUR you that going executing be and kind year out getting that of longer-term from think first in the over to of that not really your of actually far facilitates I any and on some capitalizing terms time headed the in production per your those and where on XX,XXX-foot improves

Welles Fitzpatrick

I Thanks taking questions. all That's my for have. Wonderful.

Paul M. Rady

Thanks, you. Thank Welles.

Operator

The Goldman Brian go is from next question Singer Please of Sachs. ahead.

Brian Singer

Thank Good morning. you.

Glen C. Warren

Good Brian. morning,

Paul M. Rady

Brian. Hi,

Brian Singer

that noteworthy CapEx Certainly well tradeoff And some efficiencies. drop whether need wells versus at here, the expectations the swiftly, wells How choose, still of end meeting about some rigs and think costs here capital more? point drilling versus drilling with be production falling more potentially spending less may expected? with the than sticking you're if do of budget to and to producing would you you up more

Glen C. Warren

to year. at point, we're the true but now budget to that's Brian, right for some Well, just this manage looking

will it there expect well somewhat to we out think see STWO cost inflation we've shown of and there of that of X% offset be and sort kind year some inflation efficiencies. this I our analyzed by (XX:XX) and kind

anticipate production. may budget are in some the capital grow we than don't And capture I able us increasing if have that, think we even order more to I fully think So, efficiency there. we to room doing, see you'll then which

that free targets our we'll flow production cash spending get more less. the on think you from to I capitalizing and additional lean stick towards

Brian Singer

to at potentially the up see balance that ramps we path. potentially flow market Great, Or the what XXXXs. A, hedges forward the continue out in tightened? a to there looking curve? of you always the opportunities than cash the hedging been in opportunities beyond are sign would longer-term improves? and sheet greater aggressive need going prices I contracts thanks. into a pricing global less to with there to stable see beaten as which to do in has has gas little is And question off the the Are risk do second provide levels guess, reduce Antero

Paul M. Rady

Yes.

make the we So, much grow, case as yeah, could not need one to for hedge. as

glide path X.X-year X-year, where quite we're hedged. fully a about here have We

And prices higher the can and in curve of on play and contango. the time we have back so, that hope to outer we watch gas come the part

higher, watch So, goes. it we we're if higher see I some we'll it we'll just say know that and of And to all don't our patient time, all or I portion as seek volumes the where but hedge will just get and it.

a to out to what's we'll we physical LNG the Cove side, at and and already also Point there As provider be Freeport. on certainly, provider of a Sabine are to we

so, even another a approaching on million there. million projects and totals million day are those our XXX And and or XXX XXX maybe here

good solid on global are typically NYMEX-based. market. physical gas So, They a it's

that the whether hedge can one one price. whatever so, do trying there, And NYMEX and wants it's enhancing

look to least would look something not. do Don't the LNG consider it is do as facility there realistic If FOB, global ship, that's know approaches. or and we that. straightforward But to price else we LNG, in the at make those out into So, least through it. get at there the higher we pretty if

Brian Singer

very you much. Thank

Operator

question Morris last Please Citi. go of Bob ahead. from So is

Robert Scott Morris

Glen, forward. improvement capital how of excess fleshed the manage you. those you with gain if flow Thank you efficiencies budget this with in going continue Paul, sort quarter had the nice and the you cash out

costs question of is operation to and the in the what you that second sand on your inflation off in availability or are sand on that the basins? just are said sand the was on X% local the is I other So, assumed sand you seeing move issues costs sand more consumables with side regions pressure had consumed how given of Is that about but locally out? taking you and there that being some transportation Utica playing any Marcellus into of

Paul M. Rady

mesh only, six think the regional for cheaper, just towards White on, was I looking snob and early so so pilots, a ago whole it's sands some to Northern like would far, favorably then risk. and we've take out are regional But sand. producer, said good, say. XXX I playing months trend the laughed regional it's sand done others, I that Yes, say, pilots don't we're we I with that sand, want already

And regional within less going industry to the Northern to put the is trend so, whole obviously pressure on White. the seek out

So help we people then transportation the the lower I all regionals, going And the prices. open-minded a on if side expands supply do of including that's on lot to that. are some ourselves our working companies service Low that but employment and service trucks of and up. of that it on jamming are the that. are trains companies and we one seeing include to some is think in great, on is

are their And focus trans going make that some companies move just can so, and there product are they to sure load own on. to on so trucking the more and

is do favorable sand it's But least we We So, do industry huge stay right a and it. be chain the our into that both able supply itself but account, flat. us, what be that is we'll bias going could I the logistics the see focus think new and at of to it's regionals, found to now the on are help that of taking focused supply now.

Robert Scott Morris

you. That's Okay. Thank great.

Operator

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

Michael N. Kennedy

us joining today. you call Thank our for on

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

Operator

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

now disconnect. may You

Antero Resources (AR) 26 Apr 182018 Q1 Earnings call transcript