AR - Earnings call transcript Q3 2018 | Antero Resources Corporation

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Operator

Good day, ladies and gentlemen and welcome to Antero Resources Third Quarter 2018 Earnings Conference. Please also note that this meeting is being recorded. I would now like to hand the conference over to Mr. Mike Kennedy. Please go ahead, sir

Michael N. Kennedy

us third 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 the I'd to www.anteroresources.com, we've today's will a also provided call. that our earnings presentation reviewed direct to where call like separate be website homepage you at of during

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

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

Paul M. Rady

during Thank completed execution recently In the begin liquids-rich number board-approved the thank during to our on quarter my detail our plan, recent plan which execute you, listening fourth provide repurchase financial quarter. pads. several significant highlight update to Glen an you then today. of operational provide achievements will Mike, highlight a and to and quarter of and share third the comments, to call we to for everyone our I'm on going some

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

held in number Marcellus at the the in stages our portion day slide stages and Marcellus, of starting per day quarter. average averaging to we per flat days lateral despite XX X continued September. the These day average drilling days XXXX. flat the third trend the company in Completion This month record Utica, Marcellus feet Efficiencies per day stages slide, average and a including the quarterly held our titled of a stages on quarter. X stages XX,XXX X.X are again stages days, at for day budget the day the the Drilling average our record, the Looking top-left of completion ahead in improvements we in that increasing in in XXXX XX at X.X lengths X.X the which compares assumes set per in and current X.X once of per per prior of to Completion

improvement, released than a completed As initial plan. three pace a are result development we of quicker in completion wells at being as September this crews the

quarter, day of more rate we was produced several was the average liquids-rich per liquids eight-well well ethane sales an and averaged an XX-day average During turned feet equivalent to total rate lateral pad that XX recovery. outstanding drilled million well. of X,XXX third feet of impressive Marcellus X,XXX cubic XX% length the per per was pads. a with liquid One which Even barrels over with

well, XX nearly with our length in of XX% recovery. and with million lateral day highest nearly per total X,XXX rate regime XX,XXX was XX-day a BTU of feet including well a liquids cubic a addition, drilled of produced per barrels In feet ethane equivalent

the expected This on pricing late to pad order to clear among the also East January Appalachian to inventory into the an million the this further completion average Antero BTU free highest pads into in to over is XXXX. is $XX this drilling we by and head gives flow NGL slide liquids-rich on advantage but priced number XXXX Drilling liquids-rich quarter, cash forward extensive reducing maintain regimes depicted early is increases of lateral competitive X.X our enhanced core the peers. during decision outpace This and XX% D&C the our In closest our capitalize competitor. opted compared more program. in to premium Appalachia, spending as environment, average with This locations As pull undrilled from to footprint. Inventory $XXX XXXX which of feet The is Liquids-rich our XXXX strong XX,XXX times nine-well Mariner core of budget, liquids X, holds now XXXX. we production Marcellus BTU Antero's Largest on momentum than third length momentum consistent attractive titled expected X,XXX of one liquids increases X a is we modest targeted export Appalachia, which is access The Despite pull at forward startup prices. continued have our to a in crews pad first development pad million, liquids us for to markets. of

the an third third the curtailments capacity down detailed oil the also production on curtailment the on not due trucking working oil we latter experienced that quarter call, but conference to quarter As during XX second impact cubic per pads. to to the able quarter. were to contract surplus the We hauling These estimate our September begin constraints. quarter only negatively we day feet alleviated of during average were equivalent part and by Antero fully as meet constraints second million production sufficient in inventory production into the oil

and guidance. further production With remain the year trucking contracts on to now track do anticipate in constraints place, we not full achieve trucking

sales a to sales Further, development pace including in October. quicker the the XXX the the touch our during pace quicker first only being during wells year turned completion nine plan, plan. XXXX nine well development projected development the to per month pace three pricing, placed that completion This months combined the to new fourth months of leads to during fourth drive production volumes This quarter. the a to surpassed flow level plan liquids when production the XX briefly to equivalent is spending the day sharp quarter and of history modest of more the activity for a fourth the which, first XXXX attractive in as Antero's sharply Bcf complete during with decrease quarter. quarter any the on for resulted to wells wells considerable significant volumes, during Now in in the higher recently results was free production quarter in during XX third we increase milestone cash of record led the year

which simplification. a special Lastly, midstream we results in are excited to our process have recently completed committee

the aware Antero the a of announced very a quarter X acquire Slide on The transaction aligns the The family definitive transaction October has stock Forma AMGP the across the on Pro to structure midstream that all received are and truly titled Structure. agreement have you and upstream X, expected cash X, spoken As Simplified number equity well to transaction Summary XXXX. win-win-win by with. both titled number slide is numerous holders close Transaction shareholders transaction. in and a shown is of merits and Benefits Antero Simplification the AM first simplifies been we that midstream highlights as in

better importantly IDRs, C-corp and investors. transaction we structured for be results believe shareholders, in between increasingly as shareholders. structure alignment the by the is which AR preferred without a will management AM And New midstream

program. minimum repurchase will receive $XXX free of next AR's In when cash to addition, is million fund of with AR flow fully combined the $XXX share million XX AR's that months to a proceeds over targeted XX expected

stable tenured and the As our development peers longest ownership, management plan. approach Appalachian expect consistent our in share with can team significant a among investors

We share period. price, to of to quarter liquids-rich base. begin attractive for of per share to returns XXXX, shareholders generating are the committed fourth free flow, is is back through majority NAV. over comments. unlocking that our I as attractive be it of that, buying integrated we expect to an the delivers will our capital his to considerable will use turn during Entering cash value which accretive Glen shares returned peer-leading, a asset highly strategy today's it With to At

Glen C. Warren, Jr.

you, morning, everyone. Thank Good Paul.

quarter with cash significant we finish began and of me program. flow quarter. to free I'll for portion through Let Antero then point our briefly. capital XXXX to achievements inflection focus also begin from is by a key the that the sustained recently share our on generating as shareholders which key I'll repurchase returning fourth touching financial shift a announced

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

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

quarter, increase liquids unhedged $XX.XX an propane price realized prior-year a on from representing per to quarter. Moving the the pricing we as NGL and XX% during of CX+ barrel, heavier

the premium XXXX, to international significant us operational currently be we in which – the of as give expect MEX continue will fourth the to to forecast We quarter strength the to markets. prices during NGL access price

$XXX incremental barrel in increase prices NGL to million an per basis. Antero $X every reminder, annualized revenue a in an in on results As

have also As increase fourth pricing improving ethane of ethane The the a XX,XXX liquids de-eth XX,XXX upside pricing XX,XXX of to barrels fourth upside compounding average Mont shown X, To at $X.XX addition each new during when growth day impact to with to the results on in in to the increase ethane barrels $XX attractive Sherwood Belvieu the million a gallon looks day incremental outlook Belvieu basis. an a exposure an with combined recent profile on in barrels pricing Antero in improvement XXXX. with of NGL prices. up pricing in economically XX,XXX in we slide positive quarter, quarter, If prices. XX,XXX drives the approximately our remains production to a with to per to for number revenue Mont quantify day annualized further recover volumes

quarter As compared the numbers on NGL and oil based also producer top U.S. is cap X, companies. titled E&Ps estimates Producer. you consensus large third can XXXX even the in Top on to year integrated so full Antero and when number the far, see A U.S. slide

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

Antero EBITDAX years. strategy, a as leader positioned strategy, Our has in almost for six integrated margin

Our result NGL of AR's was outperformance year XX% Mcfe, and per portfolio business. This hedge markets, stand-alone the is transportation midstream $X.XX EBITDAX and industry a integrated from leading firm prior direct period. adjusted consistency exposure, to margin attractive portfolio, increase a

producer we're gas the XXXX XXXX, reminder, $X.XX the MMBtu. U.S. on a of is As expected that natural of hedged are per remainder hedged and at XXX% all only and for production we

fourth since quarter expected flow slide expect about inflection spoken generating XXXX as cash we as XX. sustained Analyst point January's have number on basis to be the important to free Day, illustrated we of on an begin As is a

expect flow generate As we our to $XXX we fourth operating adjusted cash million million to the in outlined in quarter. last $XXX stand-alone evening, release during

to attractive at our E&Ps. the maintenance reduce the capital spending. in to free million, consolidated advantage flow to the as We this range cash to based on million XX, of liquids the producer which stand-alone current $XXX stand-alone pricing NGL of us the expect $XXX D&C XXXX, spend, us like in the the market $XXX with commodity D&C $XXX quarter $XX stand-alone cash completing flow million quarter a largest historical $XXX during it expected and spend the equates today. annual reduction million million enables and capital to to X% we basis, as quarter on spend, based flow our slide approximately also $XXX number We in fourth place relationship fourth between capital stand-alone in to for independent cash a year. of U.S. spend drilling the free yield capital the generate as million guidance When a among you generating which position can consolidated take On for expected the of see of expect the the to land top we million combine D&C approximately would you on XXXX, anticipate prices of

board on to share and today's valuation $XXX our Lastly, million the an fully enterprise if This utilized shares XX% of this recently we use repurchase NAV, over approved share in believe at our attractive discounted of a to plan, repurchase And capital. prices, given EBITDA repurchase. is of results value outstanding. extremely

We to XXXX. during shares buying fourth in of be expect the market quarter the

our to current $XXX prices, ahead free targets on plan based in return in period billion and X cash exiting to while times. previously expect $X.X flow place, program XXXX of least million cash the with $X.X the D&C stated of expected next at assuming That's times. during shareholders majority our repurchase stand-alone Looking capital our free leverage billion With we year. X.X XXXX, under share our flow strip to we to

for payments the meaningful into I view the we In like advantage associated Antero free with in also are this take earn-out today Midstream. first XXXX the equity addition that, to minimum to we as million now expected value. quarter $XXX over our the $XXX with XXXX of water what of transaction in disconnected With early water cash proceeds from to from simplification close first a million will tranche ability of the of We flow, turn to the expect expected of call a operator and the dropdown questions. we where

Operator

Thank you much, Glen. very

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

Subash Chandra

guys. Hi, Yeah.

the outlook? it as we look Appalachian at liquids? do to how the landscape you you And As think for over do issue your When at your that changed Appalachia, liquids an the are has from so situation constraints all macro four-year see you in all there, shift navigate players competitive takeaway again? the three-,

Glen C. Warren, Jr.

Yeah.

to liquids-rich add acreage. Subash, continue, We

have drilling still the inventory. pretty so, but And up, Others stayed we've we theirs our are dominant steady on position.

stronger X peers on we're think When pretty whether if not I short in relative have So, to impediments East right it's just do or some we now part. infrastructure, Mariner term, strong the number as fractionator. the they're liquids-rich our Hopedale

logjams Mariner a to built so pretty I Houston of be and is expand business sailing expect lot or at the right that both capacity. or for that smooth Both expanded being now. the the the it two process and carry years. in way several see are in for that, a don't wide East export next grade can and both We the fractionators next those more to month open go After the quite it's three. while. purity much of Hopedale over in lines the lines of

And on of weeks quarter just on sailing couple having And the so, there then a year. in for while. then first XX our de-eth de-ethanizer – that'll next of came so another smooth the quite yesterday will one come we're be next us a Sherwood. Sherwood and and give in just at

those you elements, those grade if and the again next quite see fractionators long purity or jammed get solved Y de-ethanization, it's time. so relatively up getting really for I all So, at processing, Mariner six don't the whether or all over look think the months a East, in

Subash Chandra

Got it.

you on project. of earlier understand takeaway? could last just Or that Gulf a the canceled Kinder or I route take about, want I there future if And – you're project week, Coast really, that on the that Morgan enough route got that route is you was week, there reflection talking on it? – comment if to versus a to sort producers third-party capacity don't of think, But want the export of was Okay. sort was that this this the

Paul M. Rady

Yeah. look one The I bulked to it Several producers Mariner times, export premium but really expandable. get route Belvieu, does, that see East it the be can is does up. and think

think it's behind So, to producers one. so it's there, competitive, to and and I happy just Belvieu are that favorable align

the you that as it liquids, the And speculation Kinder, to as for instead going that of know. back reversal line gas one is maybe a they're using so,

Subash Chandra

you. Got

just the the any to on you all final Okay. maturities If I mean, the be we of off, de-levering, could or path need sub-X towards to need one. I do like that is de-levering? times feel On ask paid one know

Glen C. Warren, Jr.

the off Yeah. I roll mean, just cash we using assume naturally based forecasts flow pricing. commodity maturities that on our strip

a the off credit roll investment it is big if not so. we the the grade year our notes. facility we So, sizable. more right maturities just quite to payoff But, those need particularly to that assume refi and favorable onto over or over It's next time, we possible move which put now, gets

plan AR. for that's now So, right the

Subash Chandra

you. Thank Okay.

Glen C. Warren, Jr.

Thank you, Subash.

Paul M. Rady

you, Thank Subash.

Operator

you The is next Stifel. Jane ahead. Thank question Please from very of go much. Trotsenko

Jane Trotsenko

morning. Good

have been and XX% of XX% You to through WTI XXXX. price for WTI realizations XXXX for XXXX for CX+ guiding of

strong given still NGL to expecting backwardation the XX% WTI achieve for forecasts, So, the coming and of in years? in WTI CX+ both are you

Michael N. Kennedy

Hi, Yes, if the guided time assuming actual to do our is percentages through on on to out at you the that quarter expect comes same by-product, through we've of obviously period percentages And this look XXXX. we MEX it is in Yeah. Jane, Mike. the the XXXX. those fourth barrel,

Jane Trotsenko

Okay.

which be driver confidence X those? it's the your in Mariner So, like for key East will

Michael N. Kennedy

Correct. Yes.

Jane Trotsenko

Perfect. Okay.

Michael N. Kennedy

so time period. you at that international that pricing, When you Mont compared the gives drives an to over realization really increasing really Belvieu look uplift that pricing, that

Jane Trotsenko

Mariner there brought and status online be East you Okay. Got going pipeline, please were And pipeline us to phases? the it. Could in of update about on delay. reports the some on X then possible it's if

Paul M. Rady

in it that the XXX,XXX And more. Well, danger get the some day. production as within a allow third-party it that going repurposed once smaller quite their next using our expand bypasses amounts commenting But on always a they're the said, with the of projects. to early will is then Subash out order then of on be bit on along, it's barrels phases with just can brought moving it worked on of that's a standing they year

So, after of then afar. that is the we next I more phases, in one and from know general within next the few is that's months couldn't say We view year. think early one the the than our course, public. next again, the two But

Jane Trotsenko

Okay.

up be to going think Antero's, related NGL say, we Mariner Is pipeline? flows this, up gradual like pipeline how ramp Maybe let's in on X? that to should about flows on Okay. East ramp it in

Michael N. Kennedy

in flowing third our by MVC. XXXX, Transfer a barrels butane has I by the that entire pipeline January per And Energy propane XX,XXX X, we'll think be of XXXX. quarter is we of January and assume just then day stated on they to plan have what

are flow the we're XX,XXX the all using extent quarter of day more to now of and a our our XXXX, assumptions all third want on MEX, the to those to So, right that that barrels able MVC we're we by propane, the essentially of butane that by flow XXXX, liquids of than is.

Jane Trotsenko

much. so you Thank

Michael N. Kennedy

you. Thank

Operator

Howard Thank you. next Please Holly is The question of ahead. go Weil. Scotia Stewart from

Holly Barrett Stewart

gentlemen. morning, Good

Michael N. Kennedy

Good morning.

Paul M. Rady

Holly. Hi,

Holly Barrett Stewart

the you CapEx stages through gone and of that down. just all us update think first you slide? transparency I'm the guys one Can Maybe D&C average are efficiencies per just seeing. has day trying the on to trends capital sort on that

on costs at question just this any I given is, are So the changes guess well to those trends? point there highlight

Michael N. Kennedy

earlier we the that No. doing been well has the feet Holly. accelerated still cost. The same X.XX than per We're but periods, the quicker obviously thought, or holds. much capital Hi, stages so just into $XXX,XXX X,XXX actually

Holly Barrett Stewart

Okay.

stays? have And schedule you still today, assuming that TIL Okay. guys here just the shift I'm that that outlined

Michael N. Kennedy

in kind McKim XXXX, wells those wells of January XXXX capital in It does. midyear-ish of that of will coming result instead shift XXXX. more Yeah. on nine of in pad, quicker come on The

unchanged. schedule, the actual but the well that's are XXXX the change TILs So for in

Holly Barrett Stewart

Got it.

several projects as Okay. here Thanks. have where some there's of And been just late. that's then, you guys capacity pipeline on come

the can couple and on anticipating you currently us are next on just still months? come utilizing So you you of update to what what over are then

Paul M. Rady

Yeah.

Holly. through list, me go the Let

Columbia a called full So, pipe new for on in things come and has on million day. times, their that Westbound XXX WB have a come WB now recent

was So a ties that. million to And we're that upgraded to XXX from that million our utilizing XXX Tennessee day.

less XXX or the goes that the million with So, more XXX ties the million to Gulf.

So, upgraded just T million to goes that pool. projects another all TCO TCO System have day. that on. We've to there a our using come that of the We're two XXX

Point We to area. expect which WB Eastbound goes over Cove the

we're to a million million We going on just that that, to have of forward on Sherwood. as within It's day away. as XX, line a from that November should down that Rover next down and the X. Phase a so weeks that is to looking month then, certainly And area XXX is be soon comes day XXX Clarington couple be one

anything Chicago allow redirect – will markets That us gas and So to now volumes what shut in gas but going Gulf or Down we're – will to allow those that TETCO not capacity is do it South. are MX on to Rover. us and our

will is XXX So that's is an the January to It's on line have upgrade we And come year. in on day this be there a that there to TCO, of And on next TransCanada come due that. and then project, netbacks. on a million called yet one Mountaineer.

to big growing I think any, sure – but and redirect allows So, to those to the also the I've keep our volumes and better ones, both us are markets. not it so missed that's

Holly Barrett Stewart

we you, I a you've of for right, focused and been bigger the a that's And had here side. of in Thank so you. you're on I'm lot Paul. watching perfect. the or Yeah. last the late just the No, picture M&A markets, then happen, another, but gosh, as deals and simplification, maybe oil on sure week know question

as curious right you're to of in seeing kind now basin? the what just So,

Michael N. Kennedy

makes we next to Yeah. to be the EQT, five around agree see the a lot over which seen sense in consolidations It over cases. past the year. be deals large a I of of here deal. wouldn't or Rice that. Holly, basin, That's basin, you surprised year. four more and of in number kind of trend, them. smaller had obviously a was But with tended deal, happen have the have of the occurring several following certainly that deals the we They

in I So, Appalachia. you'll see think some

Holly Barrett Stewart

Great. Thank guys. you,

Michael N. Kennedy

you. Thank

Paul M. Rady

Holly. Thanks

Operator

Thank much. very you

ahead. is question Advisors. Heikkinen next Energy go Our from Please Kevin of MacCurdy

Kevin Moreland MacCurdy

morning, guys. Good

Michael N. Kennedy

Good morning.

Kevin Moreland MacCurdy

slide XX, at Antero. seems Looking flow cash free million to around of imply $XXX it to

water Just does the and on, CapEx fully what that cost? number curious that's include based burdened

Michael N. Kennedy

billion Yeah. $X.X number the stand-alone water. $X.X $X.X number being and It of billion does. consolidated is the to The CapEx billion, is kind difference the

Kevin Moreland MacCurdy

Great. our compelling And That's up for clarity certainly thanks free on to cash follow CX+ on earlier question, flow. the the prices.

get you bit to Just that Antero's realizations saying little prices? color, be forward more will are a better than Belvieu Mont

Michael N. Kennedy

calculation I the go. on mean, volumes based Yeah. on Mont where the Northwest is It's mainly, not Europe, Belvieu. and would actual based

ahead So, pricing. those are of Mont Belvieu

Kevin Moreland MacCurdy

Great. Thanks, guys.

Michael N. Kennedy

So, compared yeah, facility Hook Belvieu. to at we right. a Hook to export see comparing Marcus premium That's Marcus expect as Belvieu, to the

Kevin Moreland MacCurdy

Thanks.

Michael N. Kennedy

you. Thank

Operator

Thank like the over for I'd remarks. much. gentlemen, conference session. turn you Ladies closing to then Mike Kennedy that very our completes back some and question-and-answer to

Michael N. Kennedy

joining our Thank call on you for us today.

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

Operator

you your that Thank disconnect conference gentlemen, attending, much, and for this call. concludes Ladies may Thank and lines. you sir. very you now

Antero Resources (AR) 1 Nov 182018 Q3 Earnings call transcript