AR - Earnings call transcript Q2 2018 | Antero Resources Corporation

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Operator

Good day, and welcome to the Antero Resources Second Quarter 2018 Earnings Conference Call and Webcast. Please note this event is being recorded. I would now like to turn the conference over to Mr. Michael Kennedy, Vice President of Finance and Head of Investor Relations. Please go ahead.

Michael N. Kennedy

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

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

Before I quickly update to measures also the Paul, turn to brief potential valuations. a to over review of Antero's I on enhance provide want it

Antero process advisors. ongoing. The entities, stakeholders working to special the three our of legal and and Antero of and conducting committees of Midstream options the complex special As create with we full have committees mentioned, is their GP for of a a in remains with which exploring value boards and special board are the long-term range is all Midstream review committee this conjunction independent directors and advisors of financial

there before a as previously, by hope position be the definitive While can to the give you future is made and no of completion special this been no be substantial this completed that update announced result the an to third assurances initiatives the as we evaluation be quarter. will a progress any in stated committees, or of timetable for end there in of review. We has

understand, you address today's discuss we to able it questions can to be review As related will or further during call. this not any

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

Paul M. Rady

Thank our XXXX highlight today. highlight everyone you, our you my Mike, and to several an XXXX listening the guidance. for and provide completion quarter the thank achievements will during Glen quarter execution going schedule. I'm to then financial on to significant updates and the to operational update call comments, In second

discussing quarter. made new Once by begin the we during efficiency Let's improvements during the records set operational second quarter. again, the quarterly Antero

flat slide Looking Completion the Efficiencies, of trend Utica XX days in the X of held the number average the at our portion in we at Drilling average portion on of drilling Marcellus, and days the increasing the as on days, slide. at seen lower-left flat slide, continued XX and the lateral starting length titled top-left despite our

day in assumes average improvements quarter. day. X.X in with per per drilled day we X.X reducing in during Utica, including from second overall increase These Marcellus X.X month of on on stages stages X.X average, during budget we July. in the XXXX. late the stages day XX,XXX In X.X per record completion day Completion per the The per our completed the compares stages Virginia costs This at and current day sideways. are the the in ahead trend first well average on to are day per of April. quarter, the stages During stages feet X.X completed day lateral average per an which to-date company averaged stages per of drilled continues stages longest a West quarter, X.X

we the improvement, of pace our quarter XX pace completed plan. to into this well year unchanged. half at the decision plan recently than sales crews a result discipline quicker to The of wells, quarter. are to an follows X,XXX pad initial being in As Marcellus wells two two XX The maintaining to at in length will largest capital pads recent XX plan lateral average our remains turned drop spend development a full during turned being sales the feet. capital the the in We as to to completion guidance wells release approximately third XXXX of XX second the to-date placed reflects crews also commitment development as during result second these with which of service quicker

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

at We completions to also complete well first drill we located our remote recently a completion coming our completion a we pads. first enabling the end In wells on logistics crews for large to operations. well X at we other XX equipment where on getting while from pad, improved wells thereby conduct the separate the much quarters, we quicker and achieved will pad, first where pad, pad these of end of operations one production concurrent the

the recently in Turning was the have industry that service over constraints the But the this costs, softened. occurring there Permian, continued are costs concern earlier efficiency to gains service well cost and considerable year, given inflation. by

due us we production crude which, well self-sourcing $XXX,XXX trucking per the continue in Despite various the over the market. local experiencing this term long save to sand operational once to of well has takeaway implement options we costs, tightness as largest component upwards fully to it. momentum, assess of potential the some we curtailments our Additionally, are

adequate to trucks to secure drivers our Our crude growing have production. challenged of and move been numbers licensed crude buyers truck

day horizontal XX-hour a recently trucking of of a cubic In barrels we Ohio to X,XXX Utica, will months. of Utica, capacity. approximately were XXXX. in there trucking curtailment beginning move production XX,XXX nearly placed additional curtailments a these to day production curtailments lift in nature With for in second wells match the expect us We to capacity to expected of the be lateral additional to the the with company agreements with fourth an under oil production million will by alleviated anticipate sales barrels quarter X,XXX oil. existing average of the that set couple be five as September, additional during the and as record the feet XXX,XXX NGLs of that's drilling Antero X,XXX well lateral a we built is period. curtailment, length also have quarter temporary including companies The day has that for feet. new crude Currently, last XXX barrel-plus capacity crude executed enable per as direct equivalent inventory over up feet

to Ohio show results, Additionally, were feet that the Utica producing XXXX decline. day of exhibiting XX dry a end natural million flat the cubic before the at strong wells over first days completed XXX XXX continue

about liquids While development continued our to liquids-rich Utica, have we pricing. the half we shifted Marcellus to the excited plan strength due economic more remain second Ohio the in XXXX locations in

our include XXXX. the of five-year drilling current plan in the However, and resumption does in completion Ohio activity Utica

production tie-in that Due to quarter wells the resulting production and we complete average on quarter. touch length We X,XXX an that preceded our benefit to remain completion will third feet. our in efficiencies, year XXX see this line outpaced plan. Now XXXX second capital well in dates, the facilities lateral completions the on with approximately spend track of to briefly our in

turn strong result, forecast fourth quarter anticipate during run it With a will production in fourth to over plan As and Nonetheless, his reduction in I we in spend quarterly Glen rate of this result the Antero's is year. a capital to momentum third XXXX. for development comments. providing into quarters our that,

Glen C. Warren Jr.

Thank Good you, Paul. morning.

Let our with press guidance changes and quarter release the outlined in begin color our in on issued achievements yesterday me the we key financial to provide afternoon.

sequentially reflecting and day a of XX,XXX NGLs, quarter, acreage. on sequential our XXX,XXX liquids-rich XX% a growth of X,XXX ethane. per production Liquids second X.XX a oil, record net a day the liquids. barrels record of day, Bcfe increased growth, During day emphasis CX+ XX% day barrels production XX,XXX X% including year-over-year a a and Liquids barrels barrels continued included averaged delivering a of developing

the realized consecutive delivered price. This natural that to quarter XXth at gas NYMEX pre-hedged premium $X.XX Henry average Mcf realizations $X.XX second hedges the representing price Mcf a have natural gas During marks to Henry the was a Hub before quarter, we Antero's per per premium Hub.

price continued During gas the half natural premium realizations a first advantaged in $X.XX from portfolio. transportation benefits to Antero's the per Mcf resulted strategically highlighting firm average XXXX, of before hedges, our NYMEX

service, X exposure to and capacity also the into reach placed will to to markets quarter, be or priced reducing Chicago Utica markets. third the gas Rover unlock Marcellus favorably either further with Gulf optionality which During Coast anticipate our local Phase we

of hedges. range NYMEX number captures second range $X.XX to Mcf shift anticipate geographic $X.XX we from realized XXXX. $X.XX exposure result, natural Mcf the half full-year a guidance of $X.XX are Slide premium As to price favorable a gas to we our the in premium in per that raising a NYMEX before of per X to to

markets page, and chart Gulf the being As a markets in X% shown of decrease gas in Coast our top local sold we and expect the combined. half of the at increase Midwest of an in X%

gas natural result, realizations of premium is achieved half us maintain during year. exceptional the be to we markets a the sold first enabling XX% our expected price approximately As to gas into the of

increase price from of unhedged $XX.XX quarter, the prior year the during an quarter. pricing XX% per liquids barrel, onto Moving a NGL we representing realized CX+

While of early with keep averaging during remained up barrel on year. on NGL XX% did the with NGL this our rise absolute per the guidance prices WTI NYMEX prices quarter WTI basis just $X prices basis, not in an consistent

range full from NGL full our For a of a prices we range XX.X% in-service date Mariner to of WTI of a the down XXXX percentage to XX.X% delayed East XX.X%, the year, for as to guidance to are reducing CX+ due pipeline. X year XX.X% of

fourth speaks summer For differentials in barrel product we only quarter also the a forecast CX+ realized for particularly to prior been segment there during quarter if on X-mile of which that received on had to of months per the NGL be before pipeline currently are benefit significant but this when second currently of working operational online typically uplift potential MEX. of completion are have this our that an volumes is pricing, MEX. during in-service to we be $X to would recognize This the as regulatory the wider. repurposing of project, MEX additional move a context, MEX year, We is construction about the existing it and final a to approval XXXX, they

As for year. XXXX relative in quantify strip this below shown through result that year-end to reflects to of up a and outlook years number to pricing increased expected incremental recover $XX X, based lowest economically the to recent remains the per attractive, during absolute pricing Mont XXXX looks on barrels five days The per we pricing increase To improvement the cash level X, percentage on in of supply at our barrel to volumes would during If flow to balance in the the ethane the the illustrated remain prices. million relative guidance. at $X.XX and of midpoint Mont XXXX five-year on the the fundamentals of propane in of in result average. our gallon reducing Belvieu CX+ inventories $XX second through increase number to XXXX, on slide increases average per half important Further, as slide range with XX,XXX second inventory upside strong ethane $X.XX XX% pricing are updated an million to impact, to second based WTI, price, an with the XX,XXX It's note exports January positive of guidance, half ethane Antero. NGL in Belvieu pricing half in implied an CX+ tightening day. also have despite

Leverage see today. of Mariner slide U.S. to delay, XXXX in the for X the year. X $X.XX basis $X.XX is to Mcfe guidance a $X.XXX on the number down In to are expense entitled our for can the per lowering $X.XX X point per the on of also pipeline Mcfe Antero with is numbers unchanged to Prices, X you $X.XX a full-year cost XXXX was producer NGL number NGL as second guidance released conjunction standalone high with reflecting on expected, Net Mcfe. second producer in and we top in a the Leader range As $X.XX from East cash based NGL at quarter the marketing per to quarter

lower net expect over begin We Phase trend this to production increases volumes marketing on Sherwood year Lateral. the half second expense X and as the of Rover flowing we

in of its $XXX our XX% in period. Standalone higher the peer standalone XX% generated can period, Leader titled over number quarter. X on Antero production for touch Realized pricing cash briefly was increase by Pricing favorable flow adjusted again $XXX once to Appalachia. million, led on you realized primarily a group adjusted The financial Antero year-ago as like the EBITDAX I'd prices. Now, the All-In million, highlights see slide driven and natural than gas operating year-ago higher liquids in

As flow that the an fourth our Appalachian this when X point a in group. forecasted, historical of peer we cash comparing to for highlights anticipate year, being margin free flow a expect be EBITDAX our we inflection Slide to sustained XXXX. throughout leader to number standalone peer cash return consistency in free quarter

firm our result direct exposure, business. markets, for portfolio AR's integrated past Antero portfolio, Our consistency strategy integrated transportation positioned EBITDAX to X.X leading margin has industry and the This hedge a and liquids outperformance a leader years. attractive is of in as midstream

only reminder, and we we're a is to remainder $X.XX continue liquids-rich as by inventory of XX. remain the hedged expected the year-end our Xs focusing differentiate executing per U.S. including creating on a and In by delivering And on gas the our XXX% declining natural XXXX. producer to ourselves low strategy. production We long-term long-term all to summary, shareholders that on committed for of are by we As hedged MMBtu. our shown number our profile for on XXXX year this extensive at leverage slide value on targets,

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

Operator

Thank you. Okay.

with Please ahead. Chandra first go Subash The question comes Guggenheim. from

Subash Chandra

about Question I the concluded can you you your do a Glen cetera. or his Yeah. Utica do comments all bypass but Thanks. Good liquids-rich, development? morning. in reinitiate on for activity active you, in get think to more it it's I you at plan, talking the Marcellus think Paul. And et need to five-year Utica

Paul M. Rady

Yeah.

latter. the think I

we but prices. think penciled judging and in I year, have prices things it always next liquids we're gas on for based these

side. example. So, No there's obligation to no say, Ohio for to leases the go to Utica over

So, there. we have flexibility

Subash Chandra

deemed it asset of in Utica are And could or Okay. need you non-core, if sort the develop there as hooks in the portfolio that would don't be it? it keep to

Paul M. Rady

gives we respectable Well, like a rate us the inventory return. and it still of

that it for would there So, hooks in plan but no say it's our fits are sacred, now.

Subash Chandra

Okay. about, the you if really these curious pads you Yeah. the if was if regardless larger quarter go are drill The efficiencies or you that pads the in to Got or just it. to pad durable talked size? efficiencies smaller correlated

Paul M. Rady

faster definitely we're I think getting pads helps, pads faster. for both. it's The same-size larger even and but

Subash Chandra

cetera, for loaded? that what Great. front-end the gathering, et And second one half? also AR the expenditures the midstream is in me. facilities final level, it The Is a at for outlook

Glen C. Warren Jr.

actually straight-line actual That's are They're facilities, in responsible The Midstream. facilities Midstream all the by so borne No. across putting quarters. that's Antero those all for more not.

Subash Chandra

Thanks. Okay.

Paul M. Rady

Thanks, Subash.

Glen C. Warren Jr.

Thank you.

Operator

Okay. with question The ahead. Please Trotsenko from next Stifel. comes Jane go

Jane Trotsenko

Good morning.

online of and at slide market, to Canadian will gas the the that Canadian competition, half be if then Nexus XXXX how exposure think this targets gas Midwest that your during you you also do will regional to gas-on-gas supply-demand second of supply? Midwest Rover pipelines the push production with natural growing XX% increase evolve Looking half out the ET dynamics able and X, think Marcellus and gas With coming will during XXXX. from first increasing XX%

Paul M. Rady

Yeah.

is gas of Lateral because go Sherwood So, yes, reason portion is Rover Sherwood to going Midwest the the to finally more reach will the project processing the that plant.

yes, So, we'll pushing and cost that's so that gas. that is gas seen volume And far in we've Michcon, towards year it move this Chicago, and direction advantaged, more is so what the Midwest. Marcellus/Utica is

nor to Chicago, to coming in over not much gas is as nearly Ontario. gas Mid-Continent So, Dawn Rockies or

will Rockies back Northeast from gas continue. the is and Canada, displacing So the think pushing and I from it gas Mid-Continent and from the

Jane Trotsenko

just process you pipelines us have behind early to going are first? question second half pipelines Could of several and online please My filled which you be the over Thanks. XXXX. remind XXXX are thought coming second the

Paul M. Rady

coming have mentioned So, several Sherwood do the Lateral. pipes we I on.

for And so that's an important us. one

with which We There's connects Gulf, goes TECO, Tennessee Columbia. project there through of Washington, an projects goes westbound so Baltimore MXP us to acreage. have for and three the line eastbound the is heart then area. which important to our the There's is that with our WB over the right that WB

next all group We best so, so. of the a basis. does. basis basis, filling day-to-day over on marketing on months those net-back And opportunities project day-to-day be judge a on our to also And we or a look third-party XX do we marketing

million day gas collect move a $X.XX. to third-party we anywhere So, XXX margin from $X.XX a million XXX recently of of where and between we

juggle the all which net-back we with we all the We with what for opportunities to best is So, remainder be that our our the where are gas is it going to and see that. fill weigh until own, plan. longer-term filling third-party

Jane Trotsenko

That's it much. you from me. Thank so

Glen C. Warren Jr.

Thank you.

Paul M. Rady

Thank you.

Operator

next Sneeden comes go Sean Guggenheim. ahead. from with The Okay. Please question

Sean M. Sneeden

the Hi. you for taking Thank questions.

Paul M. Rady

Hi, Sean.

Sean M. Sneeden

to you think day. a just the threshold think recovery What's to kind you more? that where guys ethane, to I up studied recovering of on make Maybe price on XX,XXX start sense guys it I starts for of potential

Paul M. Rady

Yeah.

range. be the $X.XX So mid in the $X.XX range answer to the would low broad high to

as And is we're well. the what gas balancing local value so,

ethane the of the in an on the ethane have collect value the MMBtu option gas basis. leave we to So and stream

regional prices dictates. that change, as also gas So

in we recover because it. that's the can anywhere can ethane elect $X.XX recover stream say with and range why to $X.XX that's a to there's is is is make for answer But choose so, can the from a on we threshold to it where we broad leave or it to And the the price choose there profit.

Glen C. Warren Jr.

on we X,XXX recover, high high about recovering on some capitalize to bit $X.XX actually that of barrels incrementally what just had the we a recently, And August in per over day to capitalized a planned pricing have July and gallon. in range

Sean M. Sneeden

helpful. need bunch the Is That's currently for refinance potentially you to until How begins that grade? or maturities? Great. or preference a to do wait something are something And a you that lastly that callable. to some you to think bonds get of that you just investment about front-end of is your to, trying me, sense make then have

Glen C. Warren Jr.

opportunistic. always We're No.

So, And seen that's them the point that something we execute bond deal over do time NPV continually over that where premium watch. made from we to an the could quarters. the continually, of bond. haven't like think we of some sense and see us we the any standpoint I we pay move a to call But coming felt to you'll that watch

Sean M. Sneeden

Great. Thanks guys. so much,

Paul M. Rady

Sean. Thanks, Yes.

Operator

Warrior. Brave Okay. next from The with Glenn comes go ahead. Please question Greenberg

Glenn Hank Greenberg

morning, Glen, morning, Good and Paul. good

Paul M. Rady

Hi, Glenn.

Glenn Hank Greenberg

Earlier the discuss discussions. formed kind them objective wondering this company. those and special of in I'm deliberations the and where formed exploration what's become having point? to being the AR, this you of your the year, the was the to behind just there committees assets partnership midstream did were of and What take structure general committees special

Paul M. Rady

continue, the Well, deliberations Glenn.

seen make that think special simplification. discussions. the all with levers committees and They're pulled. which legal be bases picture be it's which combined looked market and very financial. and And and big so, has I committee And And the been advisors, the Each could could has serious special sure carefully are covered. what has move deliberate to

been all say. we so, but there, can And that's that's out

serious continue Of will guarantee course, discussions anything but to happen happen. that no

Glenn Hank Greenberg

Thank you.

Operator

Heikkinen MacCurdy a Advisors. I Kevin Please from question Okay. ahead. have with go Energy

Kevin M. MacCurdy

this crews operations that mentioned dropping I'm see more cost future you CapEx region. the the well wondering frac efficient. some could are and for we saw I guys. what means are in that Appalachian if maybe in if Hey, lower you two future

Glen C. Warren Jr.

crews. Well, just than really number for day the delta rather is of there per you're that the stages frac looking more

and We of we completions our rate pure partly X.X because loaded driven of now stages that we X.X had July. budgeted and day in per was year even the because late increase crews frac we've seen crack needed increase. front-end but because also partly X.X, So, of that this

$XX,XXX need just stages in of we you increase But well to crews. savings. up cost So a for $XXX,XXX well, day fewer every pick per on

we of So, of magnitude. say, average X.X, save rest the can $XXX,XXX that's kind year, almost the per the If we'll well.

Kevin M. MacCurdy

for or crews be four plan? to you this execute next enough of the will is XXXX year And crews add back will your kind

Paul M. Rady

and No, think and be I as when. we'll many we'll make judgment a call adding back to how

As the call make we'll of factor, efficiency per Glen what time. as get price the get or is the said, in load the as And see we these make fourth faster, more and their end amount price per They covering more equipment. there. a is accomplish quarter stages current a more our and year but an we way the affairs many is structured, it of the and crews in accomplish judgment they can But are And shorter how so state a at stage faster contracts break. day there of then base they money goes are down. off, stages can

Kevin M. MacCurdy

right. clarity. the for All Thanks

Paul M. Rady

Yeah. Thank you.

Operator

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

Michael N. Kennedy

Thank you conference joining today's on call. for us

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

Operator

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

disconnect. may now You

Antero Resources (AR) 2 Aug 182018 Q2 Earnings call transcript