AR - Earnings call transcript Q3 2024 | Antero Resources Corporation

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Operator

Greetings. Welcome to Antero Resources Third Quarter 2024 Earnings Call. [Operator Instructions].

As a reminder, this call is being recorded. It is now my pleasure to introduce Brendan Krueger, CFO of Antero Midstream and Vice President of Finance. you. Thank

. begin. may You

Brendan Krueger

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

refer contain our disclosures Today's non-GAAP reconciliations GAAP call may certain measures, such press financial to important measures. for measures. Please most comparable financial to release the including earnings regarding

Michael Gas Kennedy, of and Justin Vice the President and Liquids President Senior Marketing; CFO; me Rady, are Joining on President; call Fowler, Natural Cannelongo, today Marketing of and Senior Dave Transportation. Vice Paul Chairman, CEO

I to over will Paul. turn the now call

Paul Rady

everyone. the drill "Drilling XXXX on well. good gains comments drilling I'll have that the and my Brendan, significant continues performance it we've like operating Completion for you, and records. takes to to set highlight reduced over years. past morning, faster Thank time to X I'd start times the new titled required Efficiencies." achieved us #X Slide Our a

we record And it's day. a day. at set Now, again per side, is last And set below monthly record, a new XX.X XXXX. the this stages days stages in on a XX.X from XX per August, XX% completion new XX This days XXXX. reduction from in averaging completion we quarterly

is These result our in bottom reduced chart per XXXX. level completion year X% compared have increase times XXX and well cycle Overall, times. XXX completion The of declined their the day rates our days. a cycle to in quarterly lowest XX% which since reduced drilling represents average on the XXXX. in to in complete below stages improvements by of since these days, last improvements have XXXX the Shown XX% the the total level to slide, cost average

changes the requirements. This is year directly completion For in in reduced Capital These #X, reduced $XXX Budget." operating result decrease holding this budget million step behind production capital maintenance just efficiencies and drilling to significant that shown our Slide this from "Reduced at titled rigs XX% completion sustain a XXXX, flat. on capital we expenditure to today, X midpoint, A while capital are production X XXXX, and lower able driver crew. approximately we is with

fuel efficiency. lower an to and as be will could ahead $XXX,XXX increased encouraging, $XXX,XXX our e-fleet Looking switched recently well future focus activity. per to time as by results of Early upwards improving we estimate for to XXXX, our pumping and savings on We completion driven cost been continue to potential well we much have costs.

NGL liquids touch of to and Transportation, President on Vice Now over Senior current to Dave going fundamentals, Liquids and Dave? for his I'm turn Cannelongo, our comments. it the to Marketing

David Cannelongo

discussed third the prices have dynamic and to spot majority next U.S. Realizing the last realizations Coast our before our export days benefit strategy market. target earnings continue marketed highlighted strong as premiums expected quarter quarters. execute our cargoes CX+ ship sales constraints our The for ultimately place liquids XX visibility for for our on from to Paul. of export XXXX in actual of expect premiums Thanks, and to barrels dock resulting international LPG our market the great remain at being to several out remainder Gulf vast we XX to Because are played call, in into these export loadings, results. the we export

setting up X.X demand from driven highlights historical Export over volumes XXXX, Asia. million the over day, by record observed international another XX%, year. X past increases the shows consistent have particularly for exports year-to-date, #X resilient export have increased averaged Slide propane exports years. and barrels Since we have a

titled #X, LPG second this to export premiums not Over Slide Northeast continue are time until of frame, on benefiting to XXXX. half seen online. capacity robust are we "Antero until Export comes in Holds As export expected Advantage" the persist the capacity U.S. new export expect likely additions from that

In drying million back going seasonal the exceeded day demand export October. U.S. propane X picked as a a addition to up recovery, February crop high demand total overall to in barrels recently,

in market the increases demand October As colder the look will weather continue to heating begins to demand. arrive, to strong

Mont average XXXX is value with recent a per propane in export gallon quantifies show $X.XX average. in $X.XX Belvieu quarter markets premiums the with to nearly start improve mid- that from the #X the gallon teens Current $X.XX This per their per are these high Mont should gallon of the to gallon on premium Belvieu. prices. and $X.XX quarter premiums XXXX, to and to premiums third fourth this respectively. $X.XX averaging similarly above up Slide export to premiums Butane in year per Antero realized showing to in differentials $X.XX

in Marcus high firm conclude, for the premiums XXXX. at realizing XXXX Hook with export access unconstrained commitments. Pennsylvania to Antero and these our To into continue is through terminal the well balance positioned of

natural President of the I'll to Marketing, Gas market. Fowler, to that, turn Senior now it Natural With our over gas Justin discuss Vice

Justin B. Fowler

Thanks, Dave.

a Bcf power Slide the #X. year. shown averaging on year-to-date X.X higher again has burn last Year-to-date, for burn power is year demand. First, power burn gas let's been that natural once natural at are than record-setting look XXXX trends gas

natural the over demand day. power per increased XX While last gas XX Bcf burn years, has .

on continue power growth incremental of AI the highly positioned of in and the benefit step by to Antero in demand. expected electric from of higher anticipated expected the crypto second demand growth mining combination is is centers, of LNG believe uplift demand demand data Looking that decade. add of wave from vehicles. demand annual ahead, power XX Bcf This top an changes these to end provides by incremental uniquely gas we will this driven natural to be burn trend

the of provides XX% with to delivers demand. exposure and us gas portfolio LNG growing transportation natural to direct corridor LNG our firm Our

expected number new of data in where our supply. to is natural provides necessary of need centers our Virginia gas utilities built. reliable While data the significant in our asset are connect to position Further, portfolio and centers within West transportation to firm infrastructure the be a region

our Turning shrinking sit of continued to by XXX XXX the inventory the #X, and let's the resulted Slide review I Bcf year. Bcf Today, average, supports current in natural storage we the discipline, outlook for March X-year at gas highs nearly XXXX. record in highlighted, that this a burn, constructive level natural with just above since power has surplus gas The combined level. just producer

XXXX to an a beyond. demand step inventories rig continued with combined low higher believe change continue counts to of We in prices in tightening upward lead will and and support

With over Mike Antero's that, to I turn it Kennedy, CFO. will

Michael Kennedy

Thanks, slide Breakeven." like start peer compares levels breakeven Slide titled Justin. I'd unhedged group. to This free flow cash across Free Cash with #XX, XXXX Flow "Lowest our

breakeven $X.XX approximate level X Our primary from benefits drivers.

First, our low our year. and highlighted is in our completion reduction maintenance by improvements capital the capital This drilling driven operational by guidance requirements. as for this

to first a which realizations $X.XX price strong have equivalent second natural NGL The XXXX, liquids. is months $X.XX exposure the X that during provided driver gas our prices, Despite prices CX+ the of through period. averaged to just in uplift weakness our high

the right-hand year. flow X first chart on of slide illustrates the The months the unhedged of side the free through cash

outspend have breakeven small outspends. have opinion, our a way just higher best In unsustainable company's year-to-date, the the this we a peers levels operations. to quality While asset base with determine and our of is

its that the gains benefits per Paul detailed capital Turning chart has higher to most This from group slide. our peer Antero This illustrated our requirements Slide operational Mcfe peer maintenance that suggesting just are depicts #XX, average of titled $X.XX tangible "Peer-Leading than below on Mcfe. the at peers lowest per Capital per that maintenance is Efficiency." earlier. of declining $X.XX have Mcfe. true production, the XX% of Further, capital

with us Antero's plans. capital future our development in program flexibility important provides

gas elected Given the to raised maintaining previously defer year completion we while the production pad of guidance. third still the of our a from pricing, until current the end quarter natural

to second therefore, higher was less plan completed originally gas natural to scheduled completion of incentivize wells. us dryer drilled in In prices are addition, gas pads a we the has and now These of to the that quarter X pads liquids to complete and pad XXXX. require defer first be been with

to Beginning land which production. over at today. turn the Uplift" Cash summarizes year the in titled graph capital the "Free million to $XXX last expected call be is Flow that plus maintaining down #XX of to budget, slide, the Let's top on XXXX and total Slide benefits completion is capital highlighted while left on we've compared what our drilling

year. per expected produce in per bottom down the Moving NGL barrel approximately average XXXX prices slide, on than to graph are CX+ We to XXXX. million more than XX barrels $X the higher left-hand

CX+ So our flow. asset NGL cash driven higher result a cash $XXX combination, every generated in million million flow. change $X is in change the in results increase NGL prices XXXX, while in prices incremental compared approximate maintaining being in XXXX nearly an CX+ cash base. In has to $XX flow of $XXX million Thus,

based flow in flow environment. in XXXX allow These free approximately despite price strip. free unhedged natural a cash neutral significant XXXX and providing on attributes us while remain upside to cash being today's $X.XX gas

call With operator to that, the over now I questions. turn the will for

Operator

first with from Our Bertrand Instructions] [Operator Truth Securities. question is

Bertrand Donnes

your DUC spring DUCs you maybe prices? of future peers to either providing this what But your pads. right at that in your are views or on Obviously, for building like those wanted looks lines are just mirroring a of DUCs turn take where guidance they're in I the and backlog It a maybe some building delaying stab many you're year, now. higher a not

Michael Kennedy

this be X was DUC based now, XX scheduled them in one what's are actually year. natural that completing complete the other Right those -- we gas X be the determined not third pads right when that's quarter, now, to the we're first. Well, prices. completed One them on on have We've . wells we with in to in XXXX. happened, Bert, built pads,

Bertrand Donnes

of would that really of go build the . program? past you sort don't And and pads be Okay. some larger kind want extent X to

Michael Kennedy

program. run Well, a we just X-rig

how So this build, whatever year. and X crew that build pads how program generates that's completion versus a is DUCs one we the

we to if continue just next continue build run year, So crude we'll completion pads. to further on

Bertrand Donnes

makes buyback year been gas pretty has That this elaborate your strategy? maybe sense. on on rough then side. Obviously, perfect And you the could

as maybe buying year holding well, I strong a is free champing is to to think and maybe fiscal Or Street up? forecast any Are pretty the we, responsible? full up. cash come? waiting done year shows that logic 'XX. you for have bit, Or the up great a your there before guys that liquids But you flow

Michael Kennedy

down are to $XXX cash we free of facility essentially that, of debt. I flow year, was will that communicated notes We've million No. outstanding. are to grade this first That's approximately X, think, investment and plan just take $XX -- be still the part reduce then of we XXXX and million, our made to have the credit that

on that's for So at of debt, flow flow. call the in that, will combination after and the $XXX cash Then free the majority be of million free cash first buybacks.

Operator

Jayaram next Our is question Arun with from JPMorgan.

Arun Jayaram

of the last premium of out And of XXXX? with about in terms from JPM. couple had of the benefited Northeast for think this capacity will a quarters, how increases? export LPG the maintaining I of Gulf that do sustaining premium on what's the just the question how or Coast Arun you your in you expectation slide. play terms advantage in Jayaram Dave, kind nice export timing

David Cannelongo

Arun. Thanks, Yes.

you So step-up there first in illustrated see got July that is we've the X. slide,

half of guidance then January of party. shown second around the it's step or I 'XX next is currently big from other, midstream And X, that mid is there 'XX. think the particular 'XX

think year-over-year. we up NGL expansion you with until running see -- at we're U.S. there's So here some max the production in capacity, certainly

So of pressure think there's will of and that that there, constraint. is kind continue relief until it we some

'XX Another you growth, on, that LPG look caution lot able of would that do capacity thing in just, A and 'XX. export people multiple capacity is products. I at when coming to

migrate but more we may So a over time, ethane. like first, they think lot do to that LPG, of you'll see

certainly, Northeast, from continuing of is in these the U.S. to that's kind capacity happen. of situations to needed us But keep not we're one going So benefits in occur, type being for we to additional this to built be the be have constrained. the when the

prior on everything get about to want market, As can so the market. talked we we the export we calls,

it. they've yes, do of we job to when do so And with capturing these we'll what continue far, our good have see But So can strategy. done a appeared always that.

Arun Jayaram

is -- volumes side maybe the modest right couple storage questions Mike, today, Okay. terms of buy gas DUCs one you. given looking in in what complete us storage DUCs conditions price A you're just of of current kind environment? call are just in of Just that Is to understand now, XX commodity the not cause for building U.S. a wells? price a some this overhang. there's of large for? on price you software given, from But would what this building type you guys Help it terms signal? there those

Michael Kennedy

the Arun, really CX+ of high program. typical That's plus. that, on focus and $X.XX. very breakeven we really Yes. And at level BTU kind obviously, in That's NGL. X,XXX liquids $XX with Btu our our

more X,XXX pads these spectrum. With are along the Btu

do that you NGLs, [ gas strip when and ] So $XX That's is. where you XXX on higher. CX+ need the

those It's So around when and but the being about XXXX, in it's it complete XX-day cautious frame. pretty want would strip immediate unhedged. response a time complete We we're suggest that we to them. you and wait

that your pricing that. confident them. be over gas front at and So the confidence [ you that's and XXX will see complete have in look . to we're where headed it'll And ability ] month

Operator

is Our Mariani with Capital. Leo next ROTH from question

Leo Mariani

get kind wanted which that is generally to of little this maintenance efficiencies, CapEx around . be to lot we for year. handful Obviously, guys that million of number a you of during production speaking, expect guys at is of of thinking I to point a the relatively how Just It flat sounds like And sense year? of nice have a a see better like reasonable kind about capital level times you are next $XXX XXXX mean, maintenance? CapEx should is reduced

Michael Kennedy

Bcfe you but we what to Bcfe into maintenance up produced we XXXX our spent we XXXX, a actually year and been we X.X maintenance on at Bcfe in year centered has plans those recall, now, went X.X capital the ahead we look beyond, day X.X and well around still capital if X.X to Yes. capital. a efficiencies $XXX years day, and a when Right a levels. 'XX, this day. And $XXX to a X% million to XXXX X.X million, but we've maintained, Bcfe next always are targeting but in to grew out on day. day, the been around our Bcfe X% based X.X long-term you We've the performance, and of that that's high

the $XXX million low the the and mid-X.Xs. but you're level at be could You in in X.Xs more $XXX level, the you'd be million

to of midpoint. Bcfe capital So $XXX to flat -- what think at we about hold X.X about Bcfe being it is the million X.X

Leo Mariani

the just plays you term, returns. the makes couple gas caution you helpful very That's of as I kind mean, waiting production? terms sense to bringing back in on if gas of understand near Okay. tick some we for some better should down for for market? some little can a in it out, I sure. these then just to here the that strategy are And of of us dry sort But directionality it patch, wait next quarters guys of expect better maybe of give . so

Michael Kennedy

Yes.

fourth and you in to where ] about midpoint That X.XXX [ would quarter. ] of guidance midpoint then X.XX would at we're think that's suggest well. the the for 'XX the as at [ I the get

Operator

is question from Goldman Sachs. next with Our Modak Ati

Ati Modak

are provide how you realizations, quarters gas As the what next the see? strategy about and of anything think can thinking price we over on should you . to the expect marketing few you

Michael Kennedy

to and guests that XX% can currently about we gas and marketing and is goes we in the TCO the in the the as really Gulf flow That's corridor Same the have, all our facilities. of much the Midwest. to then Coast LNG as remainder strategy which of LNG

the gas is molecules is get -- and transport our basin the of full. of all all So relatively out

premiums in we 'XX. and the as So LNG to move expect on increase we gas and comes forward similar those strategy

Ati Modak

then -- that the about liquids you're And completions it. the 'XX. But drilling relatively potentially that DUCs deferring anything of be is could level whether incremental Or you deferred? more price for you're Got into focused? on now talked maybe any color right .

Michael Kennedy

the we were drilled field good a middle that it's kind Those in X,XXX liquids focused. of Canton of wells North of area. some the question. that our in were last -- our Yes, It's inventory more

Wetzel Tyler -- we're Btu which really in been content. we is and County, on Now focused County have really higher

Operator

Our UBS. next Josh with Silverstein from question . is

Joshua Silverstein

savings mentioned in to Or lock something e-fleet. else looking year? it Are before, $XXX,XXX-plus a now this want is you testing from there move locking to with an year? is for before You guys to next you that then next for continue .

Michael Kennedy

it's on Yes, X trial. one went pad We've a that pad. pad done We're second our well.

and evaluate next So for in that's year. lock potentially completed, once . we'll that

Joshua Silverstein

over on just not be $X. hedging almost strategy, what them locking or Do about hedged you you at strip the an But the just some to ] gains still now. remain forward XXXX next foresee then mark? opportunity pricing unhedged start And hedged right it. understand down forward? to going remain to [ . Got in X.XX try with year the the wanting on I with for outlook

Paul Rady

on Well, eye to in optimism. on as it some curve, and curve, you out an early the contango give before the some flattens of we're keeping know, course, there's

we're it, promises, threshold but and that in So for improve to we prices look we gas and will it economics. the watching may no lock watch continue

Operator

Our MacCurdy is next question from Energy Pickering with Partners. Kevin

Kevin MacCurdy

if by $XX that midpoint brought was in reduction much down yesterday's I you have of you release, lines? wonder deferred turn XXXX your efficiencies rough With driven the to by compared of the of breakout how CapEx million. the

Michael Kennedy

a lines. first we $XX versus Yes, whether $XX is million complete the chance The year-end efficiencies, $XXX that million is the turn assumes at million XX-XX in pad quarter.

$XX efficiencies. efficiencies . a it drilling of $XX completion million about then So deferral and is and million is the

Kevin MacCurdy

kind mentioned includes that, previously. I efficiency DUCs think you are on budget? $XXX a million earlier, just and of million the to than want That of the better confirm that of kind had gains? . $XXX number X you XXXX number your maintenance little That's items what And that's CapEx communicated those helpful. D&C impacts I

Michael Kennedy

We does. now. confident that feel in It incorporating

well So XXXX. per had those the well quarter since costs lowest efficiencies. foot in I third the our we've mean, were cost

we're rolling into slightly lengths shorter than that are So XXXX. year. this the XXXX, lateral

So per less efficiencies crew achieved day, drilling moves the we on efficient foot 'XX, equates those we very and the feet but have to X rolled 'XX moves. in in that of a it stages basis, in rig days than completion XX in XX,XXX per lateral

in about excited we're lower has So resulted in capital and it, it 'XX.

Operator

Our . next David Deckelbaum from question Cowen. with is

David Deckelbaum

refresh 'XX us Can and 'XX, carry the was just for is just in the not recurring that's Mike, $XX a in I on delta guess, one. quick on million? the benefit that drilling program you maintenance that of apples-to-apples around

Michael Kennedy

Yes, actually is calculation what million, $XX latest on our it's that.

Your $XX the about when think And before which we is XX% in at prices about 'XX. XX% million weakness may it the we it think be more was in in the it, at level. level, where

So million. about it's $XX

$XXX So drilling the low the $XXX and numbers million . doesn't million-ish assume a JV.

David Deckelbaum

X.XX Perfect. should or obviously, productivity I on ] content. towards about in and think those maintenance And level forward comment there then assumptions? performance activity is or bit a a X.X levels. this a of function higher just where continuing quite maintenance assumptions not it Btu those were [ you capitalizing of were over . of excess, experienced know efficiency shifting gains, we The more periods the necessarily more that Or [ is well year, you ]

Michael Kennedy

have mentioned 'XX. maintain we're activity comments try of in pouring in Paul those we lowering X.X. our are that get capital to as times, necessarily No, to as we possible in his and didn't levels to when low just cycle to needed 'XX budgets of X.X capital

and production We we lower can for and have have that level. captured thus, capital 'XX maintain activity those

day. what's solve that So it. lowest maintain Bcfe . to trying X.X We're capital we X.X just to to possible are capturing for a the

Operator

the closing back would This our I conference will for question-and-answer Brendan conclude turn remarks. like over . to to session.

Brendan Krueger

for out you on Yes. you. further reach us today's Thank with call. joining Thank any Please questions.

Operator

This will you. today's Thank conference. conclude

for may your your You lines and you at disconnect this thank time, participation.

Antero Resources (AR) 31 Oct 242024 Q3 Earnings call transcript