Antero Resources Reports Third Quarter 2010 Results, Operating Update
Highlights:
- Net production averaged 143 MMcfed (including NGLs from 3rd party processing), up 45% qtr/qtr
- Consolidated EBITDAX was $50.4 million, up 3% qtr/qtr
- Net debt/proved developed reserves declined 34% to $1.29/Mcfe at end of 3rd qtr, pro forma for $270 million Arkoma midstream sale
- Liquidity rose to $609 million at end of 3rd qtr, pro forma for Arkoma midstream sale and $150 million bank borrowing base increase
- Current gross operated production is 156 MMcfed (142 MMcfed net)
- 4 Antero-operated drilling rigs running including 3 rigs in the Appalachian Basin and 1 rig in the Arkoma Basin
DENVER, Nov. 15, 2010 /PRNewswire/ -- Antero Resources today released its third quarter 2010 results. Those financial statements are included in Antero Resources Finance Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, which has been filed with the Securities and Exchange Commission.
Recent Developments
On November 4, 2010, Antero entered into a new credit facility with a 13-bank syndicate led by J.P. Morgan Securities, LLC and Wells Fargo Securities, LLC. The new $1 billion revolving credit facility replaced Antero's existing $400 million revolving credit facility, has an initial borrowing base of $550 million and expires in November 2015. Closing of the new bank credit facility resulted in a $150 million increase in Antero's bank borrowing base.
On November 5, 2010, Antero closed the previously announced sale of its midstream assets, located in the Woodford Shale area of the Arkoma Basin, to Cardinal Midstream, LLC for $270 million in cash. Pro forma for the midstream closing and application of proceeds for the repayment of bank debt, Antero had $532 million of available and undrawn borrowing capacity under its new bank credit facility and $77 million of cash on hand resulting in total liquidity of $609 million at September 30, 2010. At November 5, 2010, Antero had $532 million of available borrowing capacity under the new credit facility and $49 million of cash on hand resulting in total liquidity of $581 million.
At September 30, 2010
As adjusted for As further adjusted
Latest twelve $150mm borrowing for Arkoma
($ in Millions) months(1) base increase midstream sale(2)
Summary Operating Results
Production (Bcfe) 44.6 44.6 42.2
EBITDAX $ 195 195 171
Proved developed reserves
(Bcfe) (3) 349 349 349
Capital Structure
Cash and cash equivalents $ 0 0 77
Bank credit facility 156 156 0
Senior notes 525 525 525
Net debt 681 681 448
Credit Statistics
Net debt / EBITDAX 3.5x 3.5x 2.6x
EBITDAX / interest expense
(4) 4.2x 4.2x 4.1x
Net debt / proved developed
reserves ($/Mcfe) (3) $ 1.96 1.96 1.29
Liquidity
Current revolver commitment $ 400 550 550
Less: outstandings and
letters of credit (174) (174) (18)
Plus: cash and cash
equivalents (5) 0 0 77
Liquidity $ 226 376 609
(1) Latest twelve months calculated using fourth quarter 2009 and nine months ended September 30, 2010 EBITDAX. (2) Removes 2.4 Bcfe of third party NGLs, $24 million of EBITDA derived from Arkoma midstream business and $10 million of credit facility interest expense. Includes realized gains and losses on commodity hedges. (3) Reserves based on Antero estimated proved reserves at June 30, 2010. (4) Excludes $4 million of interest rate swap losses and $7 million of amortization of deferred financing costs. (5) $270 million Arkoma midstream business sale proceeds include deducts of $30 million and $7 million for tax distribution and other fees and expenses, respectively.
Financial Results
On a consolidated basis for the three months ended September 30, 2010, Antero realized net revenue of $75.0 million (including cash-settled derivatives but excluding unrealized derivative gains and losses), a 14% increase from the third quarter of 2009, primarily driven by increased production.
Reported GAAP earnings resulted in net income of $67.8 million which includes the following non-cash items:
-- $11.0 million charge for impairment of unproved properties due to lease
expirations.
-- $108.4 million unrealized gain on commodity derivatives.
Driven by higher transportation costs and higher interest expense due to the issuance of the senior notes, as well as lower realized gas prices, cash flow from operations before changes in working capital, a non-GAAP measure, declined 4% from the prior-year quarter to $37.2 million. EBITDAX of $50.4 million for the third quarter of 2010 was 3% higher than the prior-year quarter due primarily to 50% higher natural gas production partially offset by higher transportation costs and 23% lower realized gas prices including hedges. See "Non-GAAP Financial Measures" below for the reconciliation of cash flow from operations before changes in working capital to net cash provided by operating activities and EBITDAX to net income.
Net Production for the quarter totaled 13.2 Bcfe, comprised of 12.3 Bcf of gas and 136,200 barrels of oil and natural gas liquids (NGLs), representing a 16% increase over the second quarter of 2010 and a 45% increase over the third quarter of 2009. Net daily production averaged 143 MMcfed for the quarter, a record high for Antero. While gas-equivalent realized prices before hedges increased 9% to $4.12 per Mcfe, wellhead gas-equivalent realized prices including cash-settled derivatives decreased 22% to $5.52 per Mcfe for third quarter 2010 compared to the third quarter of 2009. As a result of its commodity hedging program, Antero realized gains of $17.4 million during the third quarter of 2010, or $1.39 per Mcfe of production, from contracts hedging 100,000 MMBtud at a $6.29 NYMEX equivalent price. This represents a 37% decrease from the $27.9 million of realized hedging gains, $3.31 per Mcfe, in the prior year quarter.
Per unit cash production costs (lease operating, gathering, compression and transportation and production tax) for the third quarter 2010 were $1.56 per Mcfe, a 3% increase from the prior year quarter but a 12% improvement over the previous quarter. Per unit depreciation, depletion and amortization expense decreased 31% from the prior year quarter to $2.87 per Mcfe. On a per Mcfe basis, general and administrative expense for the third quarter 2010 was $0.42 per Mcfe, a 31% decrease from the third quarter of 2009, primarily due to a 45% increase in gas-equivalent production while G&A expense remained relatively flat.
As of today, for the last quarter of 2010 and through the end of 2014, Antero has hedged 198 Bcfe using fixed price swaps at an average NYMEX-equivalent price of $6.49 per MMBtu. Approximately 81% of our fourth quarter 2010 estimated production is hedged at a NYMEX-equivalent price of $6.54 per MMBtu. Over 75% of our 2011 estimated production is hedged at a NYMEX-equivalent price of $6.20 per MMBtu. Virtually all of Antero's financial hedges are tied to the local basin. For presentation purposes, these basin prices are converted by Antero to NYMEX-equivalent prices using current basis differentials in the over-the-counter futures market. Antero has seven different counterparties to its hedge contracts, all of which are lenders in the Company's bank credit facility.
Antero Operations
Antero's current gross operated production is 156 MMcfd (approximately 142 MMcfed net, including non-operated production). During the first nine months of 2010, Antero completed 29 gross operated wells (26 net wells) and currently has 28 gross operated wells (26 net wells) in various stages of drilling, completion, waiting on completion or pipeline.
Marcellus Shale—Antero is operating three drilling rigs in the Marcellus Shale play, all of which are drilling in northern West Virginia. The Company has 63 MMcfd of gross operated production from 17 horizontal wells and one vertical well online resulting in 45 MMcfd of net production. Antero has nine additional horizontal wells waiting on completion. All of these wells waiting on completion are scheduled for fracs between late November and the end of February. Antero has 127,000 net acres in the Appalachian Basin Marcellus Shale play.
Antero has secured 150 MMBtud of firm transportation capacity in Appalachia on Columbia Gas Transmission to move our gas to market. The Clarksburg Lateral, which moves gas through the heart of Antero's West Virginia acreage to Columbia, went into service in September 2010. Our 100 MMcfd firm transportation commitment on the Clarksburg Lateral increases to 150 MMcfd in early 2011 when a connecting pipeline header, the Jarvisville Lateral, is scheduled to go into service.
Woodford Shale—Antero is operating one drilling rig in the Arkoma Woodford Shale play. The Company has 47 MMcfd of gross operated production from 115 operated horizontal wells online and 54 MMcfd of net production including net non-operated production. Antero has three operated horizontal Woodford wells in the process of completing. In addition, we have 11 non-operated wells drilling with a combined 114% working interest on our Arkoma acreage. Antero has 76,000 net acres in the Arkoma Woodford Shale play.
Fayetteville Shale—Antero has four non-operated Fayetteville Shale wells drilling with a combined 14% working interest. The Company has 9 MMcfd of net production and 6,000 net acres in the Fayetteville Shale play.
Piceance Basin—Antero recently layed down its one operated drilling rig in the Piceance Basin while waiting on permitting and completion of a new compressor station to increase takeaway capacity. Our gross operated production in the Piceance is currently 46 MMcfed (34 MMcfed net including one MMcfed of non-operated production) from 168 operated wells online. Antero has one vertical Mesaverde well waiting on completion in its Battlement Mesa area, nine vertical Mesaverde wells waiting on completion in its Gravel Trend area and two Castle Springs wells in the process of completion. We plan to frac several of these wells in December. Antero has 68,000 net acres in the Piceance Basin.
Capital Expenditures
Antero's capital budget for 2010 is $381 million excluding acquisitions. The budget is expected to be funded internally from operating cash flow and through the use of the wholly undrawn capacity under our new credit facility. The 2010 capital program includes $320 million for drilling and completion, $47 million for leasehold acquisitions and $14 million for the construction of gathering pipelines and facilities. Approximately 55% of the budget is allocated to the Marcellus Shale, 26% is allocated to the Woodford Shale and 19% is allocated to the Piceance. Antero plans to continue operating four drilling rigs for the remainder of 2010.
2010 Outlook
The following table provides Antero's forward-looking guidance based on its updated forecasts for 2010:
2010 Outlook NYMEX Gas Price ($/MMBtu) $4.25/MMBtu Net Production (MMcfe/d) 130 - 140 MMcfe/d EBITDAX ($MMs) $200 - $215 million Cash Production Costs ($/Mcfe) $1.60 - $1.70/Mcfe G&A ($/Mcfe) $0.50/Mcfe
Non-GAAP Financial Measures
Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operations before changes in working capital and exploration expense. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity. The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release:
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2010 2009 2010
Net cash provided by operating activities $25,653 45,607 118,231 106,511
Net change in working capital 9,899 (12,045) (4,245) (10,055)
Exploration expense 3,094 3,644 8,440 7,043
Cash flow from operations before changes
in working capital $38,646 37,206 122,426 103,499
EBITDAX is a non-GAAP financial measure that we define as net income before interest expense and other income or expense, taxes, impairments, depletion, depreciation, amortization, exploration expense, unrealized derivative gains or losses, franchise taxes, noncontrolling interest and stock compensation. EBITDAX, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDAX does not represent funds available for discretionary use because those funds are required for debt service, capital expenditures, working capital, and other commitments and obligations. However, our management team believes EBITDAX is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the natural gas and oil industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and is used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to a covenant under our senior secured revolving credit facility. EBITDAX is also used as a measure of operating performance pursuant to a covenant under the indenture governing our outstanding 9.375% senior notes.
There are significant limitations to using EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating EBITDAX reported by different companies. The following table represents a reconciliation of our net income to EBITDAX for the three and nine months ended September 30, 2010 and 2009:
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2010 2009 2010
Net income (loss) attributable to Antero
members $(53,345) 67,780 (86,838) 138,979
Unrealized loss (gain) on commodity
derivative contracts 44,293 (108,439) 70,742 (217,399)
Interest expense and other 9,215 15,281 27,266 44,363
Provision (benefit) for income taxes 0 25,107 (3,029) 39,287
Depreciation, depletion, amortization
and accretion 34,873 35,965 109,181 101,374
Impairment of unproved properties 9,885 11,043 24,583 31,590
Exploration expense 3,094 3,644 8,440 7,043
Other 851 37 1,683 110
EBITDAX $48,866 50,418 152,008 145,347
The cash prices realized for oil and natural gas production including the amounts realized on cash settled derivatives is a critical component in the Company's performance tracked by investors and professional research analysts in valuing, comparing, rating and providing investment recommendations and forecasts of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Due to the GAAP disclosures of various hedging and derivative transactions, such information is now reported in various lines of the income statement.
Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional natural gas properties primarily located in the Appalachian Basin in West Virginia and Pennsylvania, the Arkoma Basin in Oklahoma and the Piceance Basin in Colorado. Our website is www.anteroresources.com.
This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
ANTERO RESOURCES LLC
Consolidated Balance Sheets
December 31, 2009 and September 30, 2010
(In thousands)
(Unaudited)
December 31, September 30,
2009 2010
Assets
Current assets:
Cash and cash equivalents $ 10,669 —
Accounts receivable — trade, net of allowance
for doubtful accounts of $424 and $191,
respectively 35,897 22,636
Accrued revenue 17,459 18,310
Prepaid expenses and drilling costs 7,419 16,937
Derivative instruments 22,105 87,496
Inventories 1,295 2,064
Assets held for sale — 160,294
Total current assets 94,844 307,737
Property and equipment:
Natural gas properties, at cost (successful
efforts method):
Unproved properties 596,694 579,845
Producing properties 1,340,827 1,614,397
Gathering systems and facilities 185,688 30,886
Other property and equipment 3,302 5,574
2,126,511 2,230,702
Less accumulated depletion, depreciation, and
amortization (322,992) (399,061)
Property and equipment, net 1,803,519 1,831,641
Derivative instruments 18,989 170,997
Other assets, net 19,214 16,202
Total assets $ 1,936,566 2,326,577
ANTERO RESOURCES LLC
Consolidated Balance Sheets
December 31, 2009 and September 30, 2010
(In thousands)
(Unaudited)
December 31, September 30,
2009 2010
Liabilities and Equity
Current liabilities:
Accounts payable $ 48,594 75,463
Accrued expenses 24,440 36,926
Revenue distributions payable 29,304 20,004
Advances from joint interest owners 1,400 1,847
Derivative instruments 8,623 6,312
Capital leases — current 132 152
Liabilities related to assets held for sale — 19,231
Total current liabilities 112,493 159,935
Long-term liabilities:
Bank credit facility 142,080 155,994
Senior notes 372,397 528,110
Derivative instruments 2,464 —
Asset retirement obligations 3,487 3,934
Deferred tax payable 424 38,082
Other long-term liabilities 4,114 3,359
Total liabilities 637,459 889,414
Equity:
Members' equity 1,392,833 1,392,806
Accumulated earnings (deficit) (123,447) 15,532
1,269,386 1,408,338
Noncontrolling interest in consolidated
subsidiary 29,721 28,825
Total equity 1,299,107 1,437,163
Total liabilities and equity $ 1,936,566 2,326,577
ANTERO RESOURCES LLC
Consolidated Statements of Operations
Three months ended September 30, 2009 and 2010
(In thousands)
(Unaudited)
2009 2010
Revenue:
Natural gas sales $ 30,008 49,870
Net realized and unrealized gains (losses) on commodity
derivative instruments
including unrealized gains (losses) of $(44,293) and
$108,439, respectively (16,437) 125,875
Oil sales 1,664 1,684
Gathering and processing revenue 6,209 5,973
Total revenue 21,444 183,402
Operating expenses:
Lease operating expenses 3,664 6,070
Gathering, compression, and transportation 7,522 11,210
Production taxes 1,565 2,187
Exploration expenses 3,094 3,644
Impairment of unproved properties 9,885 11,043
Depletion, depreciation, and amortization 34,805 35,886
Accretion of asset retirement obligations 68 79
General and administrative 5,122 5,296
Total operating expenses 65,725 75,415
Operating income (loss) (44,281) 107,987
Other expense:
Interest expense, net (7,184) (14,526)
Net realized and unrealized losses on interest rate
derivative instruments including
unrealized gains of $1,114 and $1,302, respectively (2,031) (755)
Total other expense (9,215) (15,281)
Income (loss) before income taxes (53,496) 92,706
Deferred income tax expense — (25,107)
Net income (loss) (53,496) 67,599
Noncontrolling interest in net loss of consolidated
subsidiary 151 181
Net income (loss) attributable to Antero members $ (53,345) 67,780
ANTERO RESOURCES LLC
Consolidated Statements of Operations
Nine months ended September 30, 2009 and 2010
(In thousands)
(Unaudited)
2009 2010
Revenue:
Natural gas sales $ 91,603 146,709
Net realized and unrealized gains on commodity
derivative instruments including
unrealized gains (losses) of $(70,742) and $217,399,
respectively 19,669 263,282
Oil sales 4,251 6,101
Gathering and processing revenue 15,902 18,462
Total revenue 131,425 434,554
Operating expenses:
Lease operating expenses 14,389 16,945
Gathering, compression, and transportation 19,183 32,108
Production taxes 4,393 6,789
Exploration expenses 8,440 7,043
Impairment of unproved properties 24,583 31,590
Depletion, depreciation, and amortization 108,987 101,147
Accretion of asset retirement obligations 194 227
General and administrative 14,396 14,464
Total operating expenses 194,565 210,313
Operating income (loss) (63,140) 224,241
Other expense:
Interest expense, net (23,410) (41,783)
Net realized and unrealized losses on interest rate
derivative instruments including
unrealized gains of $3,811 and $4,776, respectively (3,856) (2,580)
Total other expense (27,266) (44,363)
Income (loss) before income taxes (90,406) 179,878
Deferred income tax benefit (expense) 3,029 (39,287)
Net income (loss) (87,377) 140,591
Noncontrolling interest in net loss (income) of
consolidated subsidiary 539 (1,612)
Net income (loss) attributable to Antero members $ (86,838) 138,979
ANTERO RESOURCES LLC
Consolidated Statements of Cash Flows
Nine months ended September 30, 2009 and 2010
(In thousands)
(Unaudited)
2009 2010
Cash flows from operating activities:
Net income (loss) $ (87,377) 140,591
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Depletion, depreciation, and amortization 108,987 101,147
Dry hole costs 760 2,981
Impairment of unproved properties 24,583 31,590
Accretion of asset retirement obligations 194 227
Amortization of bond premium — (287)
Amortization of deferred financing costs 2,410 3,095
Stock compensation 527 —
Unrealized losses (gains) on derivative instruments,
net 66,931 (222,175)
Deferred tax expense (benefit) (3,029) 39,287
Changes in current assets and liabilities:
Accounts receivable 22,262 951
Accrued revenue 7,588 (850)
Prepaid expenses and drilling costs 187 (9,749)
Inventories 745 (830)
Accounts payable (18,666) 3,305
Accrued expenses (679) 14,145
Revenue distributions payable (758) 2,636
Advances from joint interest owners (6,434) 447
Net cash provided by operating activities 118,231 106,511
Cash flows from investing activities:
Additions to unproved properties (9,459) (27,997)
Drilling costs (216,862) (239,257)
Gathering systems and facilities (3,696) (8,825)
Additions to other property and equipment (144) (2,391)
Decrease (increase) in other assets 159 (317)
Net cash used in investing activities (230,002) (278,787)
ANTERO RESOURCES LLC
Consolidated Statements of Cash Flows
Nine months ended September 30, 2009 and 2010
(In thousands)
(Unaudited)
2009 2010
Cash flows from financing activities:
Issuance of senior notes $ — 156,000
Borrowings on bank credit facility 15,000 170,994
Payments on bank credit facility (25,000) (157,080)
Payments on capital lease obligations (93) (148)
Financing costs (6,461) (3,788)
Issuance of preferred stock 105,000 —
Other (220) 443
Net cash from (to) noncontrolling interest 766 (2,508)
Net cash provided by financing activities 88,992 163,913
Net decrease in cash and cash equivalents (22,779) (8,363)
Cash classified as assets held for sale — (2,306)
Cash and cash equivalents, beginning of period 38,969 10,669
Cash and cash equivalents, end of period $ 16,190 —
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ (27,654) (26,939)
Supplemental disclosure of noncash investing
activities:
Net changes in accounts payable for additions to
properties, systems, and facilities $ (85,688) 23,819
Results of Operations
Three Months Ended September 30, 2009 Compared to Three Months Ended September
30, 2010
Three Months Ended Amount of
September 30, Increase Percent
2009 2010 (Decrease) Change
(in thousands, except per unit data)
Operating revenues:
Natural gas sales $ 30,008 $ 49,870 $ 19,862 66%
Oil sales 1,664 1,684 20 1%
Realized commodity derivative gains 27,856 17,436 (10,420) (37)%
Unrealized commodity derivative
gains (losses) (44,293) 108,439 152,732 *
Gathering and processing 6,209 5,973 (236) (4)%
Total operating revenues 21,444 183,402 161,958 755%
Operating expenses:
Lease operating expense 3,664 6,070 2,406 66%
Gathering, compression and
transportation 7,522 11,210 3,688 49%
Production taxes 1,565 2,187 622 40%
Exploration expense 3,094 3,644 550 18%
Impairment of unproved properties 9,885 11,043 1,158 12%
Depletion depreciation and
amortization 34,805 35,886 1,081 3%
Accretion of asset retirement
obligations 68 79 11 16%
General and administrative 5,122 5,296 174 3%
Total operating expenses 65,725 75,515 9,690 15%
Operating income (loss) (44,281) 107,987 152,268
Other income (expense):
Interest expense (7,184) (14,526) (7,342) 102%
Realized interest rate derivative
losses (3,145) (2,056) 1,089 (35)%
Unrealized interest rate derivative
gains 1,114 1,301 187 17%
Total other expense (9,215) (15,281) (6,066) 66%
Income (loss) before income taxes (53,496) 92,706 146,202 *
Deferred income tax (expense)
benefit — (25,107) (25,107) *
Net income (loss) (53,496) 67,599 121,095 *
Non-controlling interest in net
income of consolidated subsidiary 151 181 30 20%
Net income (loss) attributable to
Antero members $ (53,345) $ 67,780 $ 121,245 *
Production data:
Natural gas (Bcf) 8.2 12.3 4.1 50%
Oil (MBbl) 31.6 26.0 (5.6) (18)%
NGLs (MBbl)(1) 113.8 110.2 (3.6) (3)%
Combined (Bcfe) 9.1 13.2 4.1 45%
Daily combined production (MMcfe/d) 98.8 143.1 44.3 45%
Average prices before effects of
hedges(2):
Natural gas (per Mcf) $ 3.65 $ 4.04 $ 0.39 11%
Oil (per Bbl) $ 52.66 $ 64.77 $ 12.11 23%
Combined (per Mcfe) $ 3.77 $ 4.12 $ 0.35 9%
Average realized prices after
effects of hedges(2):
Natural gas (per Mcf) $ 7.04 $ 5.45 $ (1.59) (23)%
Oil (per Bbl) $ 52.66 $ 64.77 $ 12.11 23%
Combined (per Mcfe) $ 7.08 $ 5.52 $ (1.56) (22)%
Average Costs (per Mcfe):
Lease operating costs $ 0.44 $ 0.49 $ 0.05 11%
Gathering, compression and
transportation $ 0.89 $ 0.90 $ 0.01 1%
Production taxes $ 0.19 $ 0.17 $ (0.02) (11)%
Depletion, depreciation
amortization and accretion $ 4.14 $ 2.88 $ (1.27) (31)%
General and administrative $ 0.61 $ 0.42 $ (0.19) (31)%
(1) Represents NGLs retained by our midstream business as compensation for processing third-party gas under long term contracts. These amounts are not reflected in the per Mcfe data in this table. (2) Average prices shown in the table reflect both of the before-and-after effects of our realized commodity hedging transactions. Our calculation of such after-effects includes realized gains or losses on cash settlements for commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes. Oil production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. * Not meaningful or applicable
Results of Operations
Nine Months Ended September 30, 2009 Compared to Nine Months Ended September
30, 2010
Nine Months Ended Amount of
September 30, Increase Percent
2009 2010 (Decrease) Change
(in thousands, except per unit data)
Operating revenues:
Natural gas sales $ 91,603 $ 146,709 $ 55,106 60%
Oil sales 4,251 6,101 1,850 44%
Realized commodity derivative
gains 90,411 45,883 (44,528) (49)%
Unrealized commodity derivative
gains (losses) (70,742) 217,399 288,141 *
Gathering and processing 15,902 18,462 2,560 16%
Total operating revenues 131,425 434,554 303,129 231%
Operating expenses:
Lease operating expense 14,389 16,945 2,556 18%
Gathering, compression and
transportation 19,183 32,108 12,925 67%
Production taxes 4,393 6,789 2,396 55%
Exploration expense 8,440 7,043 (1,397) (17)%
Impairment of unproved properties 24,583 31,590 7,007 29%
Depletion depreciation and
amortization 108,987 101,147 (7,840) (7)%
Accretion of asset retirement
obligations 194 227 33 17%
General and administrative 14,396 14,464 68 *
Total operating expenses 194,565 210,313 15,748 8%
Operating income (loss) (63,140) 224,241 287,381 *
Other income (expense):
Interest expense (23,410) (41,783) 18,373 78%
Realized interest rate derivative
losses (7,667) (7,355) (312) (4)%
Unrealized interest rate
derivative gains 3,811 4,775 (964) 25%
Total other expense (27,266) (44,363) 17,097 63%
Income (loss) before income taxes (90,406) 179,878 270,284 *
Deferred income tax (expense)
benefit 3,029 (39,287) (42,316) *
Net income (loss) (87,377) 140,591 227,968 *
Non-controlling interest in net
income of consolidated subsidiary 539 (1,612) (2,151) *
Net income (loss) attributable to
Antero members $ (86,838) $ 138,979 $ 225,817 *
Production data:
Natural gas (Bcf) 26.3 32.7 6.4 24%
Oil (MBbl) 92.1 94.3 2.2 2%
NGLs (MBbl)(1) 341.3 301.6 (39.7) (12)%
Combined (Bcfe) 28.9 35.1 6.2 21%
Daily combined production
(MMcfe/d) 105.9 128.5 22.6 21%
Average prices before effects of
hedges(2):
Natural gas (per Mcf) $ 3.48 $ 4.49 $ 1.01 29%
Oil (per Bbl) $ 46.16 $ 64.70 $ 18.54 40%
Combined (per Mcfe) $ 3.57 $ 4.59 $ 1.02 29%
Average realized prices after
effects of hedges(2):
Natural gas (per Mcf) $ 6.92 $ 5.89 $ (1.03) (15)%
Oil (per Bbl) $ 46.16 $ 64.70 $ 18.54 40%
Combined (per Mcfe) $ 6.93 $ 5.97 $ (0.96) (14)%
Average Costs (per Mcfe):
Lease operating costs $ 0.54 $ 0.51 $ (0.03) (6)%
Gathering, compression and
transportation $ 0.71 $ 0.97 $ 0.26 37%
Production taxes $ 0.16 $ 0.20 $ 0.04 25%
Depletion, depreciation
amortization and accretion $ 4.06 $ 3.04 $ (1.02) (25)%
General and administrative $ 0.54 $ 0.43 $ (0.11) (20)%
(1) Represents NGLs retained by our midstream business as compensation for processing third-party gas under long term contracts. These amounts are not reflected in the per Mcfe data in this table. (2) Average prices shown in the table reflect both of the before-and-after effects of our realized commodity hedging transactions. Our calculation of such after-effects includes realized gains or losses on cash settlements for commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes. Oil production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. * Not meaningful or applicable
SOURCE Antero Resources
Released November 15, 2010