Exhibit 99.1

 

 

Antero Resources Reports First Quarter 2014 Financial Results

 

Denver, Colorado, May 7, 2014—Antero Resources Corporation (NYSE: AR) (“Antero” or the “Company”) today released its first quarter 2014 financial results. The relevant financial statements are included in Antero’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, which has been filed with the Securities and Exchange Commission (“SEC”).

 

First Quarter Highlights:

 

·                  Record net daily gas equivalent production averaged 786 MMcfe/d, a 105% increase over the prior year quarter and 16% sequentially

·                  Record net daily liquids production averaged 16,332 Bbl/d, a 583% increase over the prior year quarter and 46% sequentially

·                  Realized natural gas price before hedging averaged $5.05 per Mcf, a 38% increase from the prior year quarter and an $0.11 per Mcf premium to the average NYMEX price for the quarter

·                  Realized NGL price (C3+) averaged $61.69 per barrel for the quarter, or 62% of NYMEX WTI

·                  Realized natural gas equivalent price including NGLs, oil and hedge settlements averaged $5.79 per Mcfe, a 10% increase from the prior year quarter and 10% sequentially

·                  Adjusted net income was $88 million, a 225% increase over the prior year quarter and 21% sequentially

·                  Adjusted EBITDAX was $274 million, a 130% increase over the prior year quarter and 27% sequentially

·                  Adjusted EBITDAX margin was $3.87 per Mcfe, a 13% increase over the prior year quarter and 12% sequentially

·                  Borrowing base increased by 50% to $3.0 billion and lender commitments increased by 33% to $2.0 billion

 

Commenting on the first quarter results, Paul Rady, Antero’s Chairman of the Board and CEO, said, “Antero’s record gas equivalent and liquids production combined with our strong realized prices and high cash flow per Mcfe demonstrate the success of our strategy to emphasize liquids-rich production growth, midstream infrastructure and firm takeaway capacity.  Further, we have assembled one of the largest core liquids-rich drilling inventories in Appalachia and built the balance sheet to support our momentum for many years to come.”

 

Recent Developments

 

Senior Notes Offering

 

On May 6, 2014, Antero closed a private placement of $600 million of 5.125% senior unsecured notes due December 2022 at par.  Antero received net proceeds of approximately $591.6 million, a portion of which will be used to finance the redemption of the Company’s outstanding 7.25% senior notes due 2019 and the remaining net proceeds were used to repay a portion of the outstanding borrowings under its credit facility.

 

Borrowing Base Redetermination and Financial Liquidity

 

On May 5, 2014, Antero entered into a $3.5 billion amended and restated credit facility that extends the maturity until May 2019.  As a result of the significant growth in value of the Company’s proved developed reserve base since the previous borrowing base determination in August of 2013, the borrowing base was increased by 50% to $3.0 billion.  In addition, lender commitments under the facility were increased by 33% to $2.0 billion.  The $2.0 billion commitment may be expanded to the borrowing base upon receipt of the requisite bank approval.

 

As of March 31, 2014, pro forma for the senior notes offering and the borrowing base and lender commitments increase under the Company’s credit facility, Antero had $13 million in cash, $431 million drawn under the credit facility and $73 million in letters of credit outstanding, resulting in $1.5 billion of available liquidity and $2.5 billion of unused borrowing base capacity.

 

1



 

Piedmont Lake Utica Shale Lease Acquisition

 

Antero recently leased 6,363 net acres under and around Piedmont Lake in Belmont and Harrison Counties, Ohio from the Muskingum Watershed Conservancy District (“MWCD”), Ohio’s biggest water conservancy district, for $95 million.  The acreage provides the Company with 29 gross 3P locations assuming 1,000’ inter-lateral distance. This represents the second transaction Antero has entered into with the MWCD.  In 2013, the Company signed a lease with the MWCD to develop 6,500 acres under and around the MWCD’s Seneca Lake property in Guernsey and Noble Counties, Ohio.   Antero currently holds 115,000 net acres in the core of the Utica Shale play in Ohio.

 

Marcellus Shale Processing

 

Antero recently committed to a sixth 200 MMcf/d cryogenic processing plant at the Sherwood facility located in Doddridge County, West Virginia.  The Company now has committed to a total of 1.15 Bcf/d of Marcellus cryogenic processing capacity by the second quarter of 2015, 550 MMcf/d of which is currently in service.  Ethane is currently being rejected at the processing facility and left in the gas stream.

 

First Quarter 2014 Financial Results

 

For the three months ended March 31, 2014, Antero reported a net loss from operations of $95 million, or $(0.36) per basic and diluted share, compared to a net loss of $48 million, or $(0.18) per basic and diluted share, in the first quarter of 2013.  The GAAP net loss for the first quarter of 2014 included the following items:

 

·                  Non-cash losses on unsettled hedges of $248 million ($153 million net of tax)

·                  Non-cash stock compensation expense for profits interests awards, that are non-dilutive to public shareholders, of $29 million ($29 million net of tax)

 

Excluding these items, the Company’s results for the first quarter of 2014 were as follows:

 

·                  Adjusted net income of $88 million, or $0.34 per basic and diluted share, a 225% increase compared to $27 million, or $0.10 per basic and diluted share, in the first quarter of 2013

·                  Adjusted EBITDAX of $274 million, a 130% increase compared to $119 million in the first quarter of 2013

·                  Adjusted EBITDAX margin of $3.87 per Mcfe, a 13% increase compared to $3.44 per Mcfe in the first quarter of 2013

·                  Cash flow from operations before changes in working capital of $238 million, a 179% increase compared to $85 million in the first quarter of 2013

 

For reconciliations of adjusted net income, adjusted EBITDAX, adjusted EBITDAX margin and cash flow from operations before changes in working capital to the most comparable GAAP measures, please read “Non-GAAP Financial Measures.”

 

Net production for the first quarter of 2014 averaged a record 786 MMcfe/d, an increase of 105% from the first quarter of 2013 and 16% from the fourth quarter of 2013.  Net production was comprised of 688 MMcf/d of natural gas (88%), 13,316 Bbl/d of natural gas liquids (“NGLs”) (10%) and 3,016 Bbl/d of crude oil (2%).  First quarter 2014 net liquids production averaged a record 16,332 Bbl/d, an increase of 583% from the first quarter of 2013 and 46% from the fourth quarter of 2013.  The net production increase was driven by production from 24 new Marcellus wells and 12 new Utica wells brought on line in the first quarter of 2014.

 

Average natural gas price before hedging increased 38% from the prior year quarter to $5.05 per Mcf, an $0.11 per Mcf premium to the average NYMEX price during the quarter.  This premium to NYMEX is slightly above the top end of Antero’s $0.00 to $0.10 per Mcf guidance for the year.  Approximately 45% of Antero’s first quarter 2014 natural gas revenue was realized at the Columbia Gas Transmission (TCO) index price at a $0.01 per Mcf differential to NYMEX but at a net $0.38 per Mcf premium to NYMEX after Btu upgrade due to ethane remaining in the natural gas stream.  The Company’s remaining natural gas revenue was realized at various other index pricing points at a $0.43 per Mcf differential to NYMEX but at a net $0.11 per Mcf differential to NYMEX after Btu upgrade.

 

Average realized C3+ NGL price for the first quarter of 2014 was $61.69 per barrel, or 62% of the NYMEX WTI oil price, and the average realized oil price was $88.87 per barrel, a negative differential to NYMEX WTI of $9.88 per barrel.  Average natural gas equivalent price including NGLs and oil, but excluding hedge settlements, increased 50% to $5.80 per Mcfe from the prior year quarter.

 

2



 

Average natural gas equivalent price including NGLs, oil and hedge settlements increased by 10% to $5.79 per Mcfe for the first quarter of 2014 as compared to the first quarter of 2013.  For the first quarter of 2014, Antero realized hedging losses of $1.1 million, or $0.01 per Mcfe.

 

GAAP Revenue for the first quarter of 2014 was $165 million as compared to $61 million for the first quarter of 2013.  Revenue for the first quarter of 2014 included a $248 million non-cash loss on unsettled hedges while the first quarter of 2013 included a $120 million non-cash loss on unsettled hedges, both due to rising natural gas prices during the quarter.  Non-GAAP adjusted net revenue increased 127% to $413 million compared to the first quarter of 2013 including cash-settled hedge gains and losses but excluding non-cash unsettled hedge losses.  Liquids production contributed 24% of natural gas, NGLs and oil revenue before hedges in the first quarter of 2014 compared to 9% during the first quarter of 2013.  For a reconciliation of adjusted net revenue to total revenue, the most comparable GAAP measure, please read “Non-GAAP Financial Measures.”

 

Per unit cash production expense (lease operating, gathering, compression, processing and transportation, and production tax) for the first quarter of 2014 was $1.67 per Mcfe a 14% increase compared to $1.47 per Mcfe in the prior year quarter.  The increase was primarily driven by firm transportation costs associated with the Enterprise ATEX ethane pipeline.  Per unit cash production expense is expected to decrease throughout the year as increased production will reduce the per unit effect of fixed costs associated with firm transportation costs.  Per unit general and administrative expense for the first quarter of 2014, excluding non-cash stock compensation expense, was $0.31 per Mcfe, a 16% decrease from the first quarter of 2013.  The decrease was primarily driven by the increase in net production.  Per unit depreciation, depletion and amortization expense increased 9% from the prior year quarter to $1.29 per Mcfe, primarily driven by higher depreciation on gathering and fresh water distribution assets as the Company continued to build out these systems in the rich gas areas of the Marcellus and Utica Shale.

 

Capital Spending

 

Antero’s total capital expenditures for the three months ended March 31, 2014 were $732 million, consisting of drilling and completion costs of $496 million, gathering and compression costs of $108 million, fresh water distribution project costs of $60 million, leasehold acquisitions of $60 million and $8 million of other capital expenditures.  In connection with the recently signed lease for the Piedmont Lake acreage, Antero has increased its 2014 capital budget by approximately $100 million to $2.85 billion.

 

Hedge Update

 

As of today, Antero has hedged 1,390 Bcfe of future production using fixed price swaps covering the period from April 1, 2014 through December 2019 at an average index price of $4.58/MMBtu and $95.22/Bbl.  Over 75% of Antero’s estimated 2014 production is hedged at an average index price of $4.60/MMBtu and $95.22/Bbl.  Approximately 50% of Antero’s financial hedge portfolio is made up of NYMEX hedges and 50% is tied to the Appalachian Basin or Gulf Coast pricing.    Antero has the ability to physically deliver a substantial portion of its gas production through direct firm transportation to Henry, Louisiana, the index for NYMEX pricing, which eliminates basis risk on the Company’s NYMEX hedges.  Antero has 10 different counterparties to its hedge contracts, all of which are lenders in Antero’s bank credit facility.

 

The following table summarizes Antero’s hedge positions held as of May 7, 2014:

 

Calendar Year

 

Natural Gas
MMBtu/day

 

Average
Index price

 

Oil
Bbl/day

 

Average
Index price

 

2014

 

720,000

 

$

4.60

 

3,000

 

$

95.22

 

2015

 

650,000

 

$

4.80

 

 

 

2016

 

642,500

 

$

4.71

 

 

 

2017

 

780,000

 

$

4.33

 

 

 

2018

 

710,000

 

$

4.60

 

 

 

2019

 

467,500

 

$

4.41

 

 

 

 

Conference Call

 

A conference call is scheduled on Thursday, May 8 at 9:00 a.m. MDT.  Topics of the teleconference will include financial results, operational results, and other matters with respect to the first quarter of 2014. A brief Q&A session for security analysts will immediately follow the results discussion.  To participate in the call, dial in at 877-418-5260 (U.S.), 866-605-3852 (Canada), or 412-717-9589 (International) and reference passcode 10044728. A telephone replay of the call will be available until May 19, 2014, at 877-344-7529 (U.S.) or 412-317-0088 (International) using the same passcode.

 

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A simultaneous webcast of the call may be accessed over the internet at www.anteroresources.com.  The webcast will be archived for replay on the Company’s website until May 19, 2014.

 

Presentation

 

An updated presentation will be posted to the Company’s website before the May 8 conference call. The presentation can be found at www.anteroresources.com on the homepage.  Information on the Company’s website does not constitute a portion of this press release.

 

4



 

Non-GAAP Financial Measures

 

Adjusted net revenue as set forth in this release represents total revenue adjusted for unsettled hedge gains and losses.  Antero believes that adjusted net revenue is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net revenue is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total revenue as an indicator of financial performance.  The following table reconciles total revenue to adjusted net revenue:

 

 

 

Three months ended
March 31,

 

 

 

2013

 

2014

 

 

 

 

 

 

 

Total revenue

 

$

61,454

 

$

164,981

 

Hedge losses

 

71,941

 

248,929

 

Cash receipts (payments) for settled hedges

 

48,131

 

(1,071

)

Adjusted net revenue

 

$

181,526

 

$

412,839

 

 

Adjusted net income as set forth in this release represents net loss from operations, adjusted for certain non-cash items.  Antero believes that adjusted net income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net income is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income (loss) from operations as an indicator of financial performance.  The following table reconciles net loss from operations to adjusted net income:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2013

 

2014

 

 

 

 

 

 

 

Net loss from operations

 

$

(47,997

)

$

(94,759

)

Non-cash losses on unsettled hedges, net of tax ($120,072 and $247,858 before tax)

 

73,508

 

153,186

 

Impairment of unproved properties, net of tax ($1,556 and $1,397 before tax)

 

1,556

 

863

 

Stock compensation, net of tax ($0 and $29,137 before tax)

 

 

28,966

 

Accretion, net of tax ($264 and $302 before tax)

 

162

 

187

 

Adjusted net income

 

$

27,229

 

$

88,443

 

 

Cash flow from operations before changes in working capital, as presented in this release, represents net cash provided by operating activities before changes in working capital.  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 in isolation or as a substitute for cash flows from operating, 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
March 31,

 

 

 

2013

 

2014

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

110,207

 

$

274,307

 

Net change in working capital

 

(24,961

)

(36,646

)

Cash flow from operations before changes in working capital

 

$

85,246

 

$

237,661

 

 

5



 

Adjusted EBITDAX is a non-GAAP financial measure that Antero defines as net loss from operations after adjusting for those items shown in the table below.  Adjusted EBITDAX, as used and defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP.  Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  Adjusted EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position.  Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, Antero’s management team believes adjusted EBITDAX is useful to an investor in evaluating the Company’s financial performance because this measure:

 

·                  is widely used by investors in the oil and gas 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 Antero’s operations from period to period by removing the effect of its capital structure from its operating structure; and

 

·                  is used by the Company’s management team for various purposes, including as a measure of operating performance, in presentations to its board of directors, as a basis for strategic planning and forecasting and by its lenders pursuant to covenants under its credit facility and the indentures governing the Company’s senior notes.

 

There are significant limitations to using adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Antero’s net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating adjusted EBITDAX reported by different companies.  The following table represents a reconciliation of the Company’s net loss from operations to adjusted EBITDAX, a reconciliation of adjusted EBITDAX to net cash provided by operating activities and a reconciliation of realized price before settled hedges to adjusted EBITDAX Margin:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2013

 

2014

 

 

 

 

 

 

 

Net loss from operations

 

$

(47,997

)

$

(94,759

)

Hedge fair value losses

 

71,941

 

248,929

 

Net cash receipts (payments) on settled hedges

 

48,131

 

(1,071

)

Interest expense

 

29,928

 

31,342

 

Provision for income tax benefit

 

(30,400

)

(40,662

)

Depreciation, depletion, amortization and accretion

 

40,628

 

91,508

 

Impairment of unproved properties

 

1,556

 

1,397

 

Exploration expense

 

4,362

 

6,997

 

Stock compensation expense

 

 

29,137

 

State franchise taxes

 

600

 

838

 

Adjusted EBITDAX

 

118,749

 

273,656

 

Interest expense and other

 

(29,928

)

(31,342

)

Exploration expense

 

(4,362

)

(6,997

)

Changes in current assets and liabilities, net

 

24,961

 

36,646

 

State franchise taxes

 

(600

)

(838

)

Other non-cash items

 

1,387

 

3,182

 

Net cash provided by operating activities

 

$

110,207

 

$

274,307

 

 

6



 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2013

 

2014

 

Adjusted EBITDAX margin:

 

 

 

 

 

Realized price before settled hedges

 

$

3.87

 

$

5.80

 

Gathering, compression, and water distribution revenues

 

 

0.05

 

Lease operating expense

 

(0.03

)

(0.07

)

Gathering, compression, processing and transportation costs

 

(1.19

)

(1.30

)

Production taxes

 

(0.25

)

(0.30

)

General and administrative(1)

 

(0.35

)

(0.30

)

Adjusted EBITDAX margin before settled hedges

 

2.03

 

3.88

 

Cash receipts (payments) for settled hedges

 

1.39

 

(0.01

)

Adjusted EBITDAX margin

 

$

3.44

 

$

3.87

 

 


(1)        — excludes franchise taxes that are included in G&A

 

Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional oil and liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. Our website is located at www.anteroresources.com.

 

This release includes “forward-looking statements”.  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 cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading “Item 1A. Risk Factors” in Antero’s Annual Report on Form 10-K for the year ended December 31, 2013.

 

For more information, contact Michael Kennedy — VP Finance, at (303) 357-6782 or mkennedy@anteroresources.com.

 

7



 

ANTERO RESOURCES CORPORATION

 

Condensed Consolidated Balance Sheets

 

December 31, 2013 and March 31, 2014

 

(In thousands, except share amounts)

 

 

 

2013

 

2014

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

17,487

 

12,580

 

Accounts receivable — trade, net of allowance for doubtful accounts of $1,251 in 2013 and 2014

 

30,610

 

27,250

 

Notes receivable - short-term portion

 

2,667

 

1,333

 

Accrued revenue

 

96,825

 

145,675

 

Derivative instruments

 

183,000

 

130,679

 

Other

 

2,975

 

4,405

 

Total current assets

 

333,564

 

321,922

 

Property and equipment:

 

 

 

 

 

Oil and gas properties, at cost (successful efforts method):

 

 

 

 

 

Unproved properties

 

1,513,136

 

1,543,118

 

Proved properties

 

3,621,672

 

4,191,186

 

Fresh water distribution systems

 

231,684

 

290,132

 

Gathering and compression systems

 

584,626

 

713,485

 

Other property and equipment

 

15,757

 

26,731

 

 

 

5,966,875

 

6,764,652

 

Less accumulated depletion, depreciation, and amortization

 

(407,219

)

(498,425

)

Property and equipment, net

 

5,559,656

 

6,266,227

 

Derivative instruments

 

677,780

 

500,882

 

Other assets, net

 

42,581

 

45,426

 

Total assets

 

$

6,613,581

 

7,134,457

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

370,640

 

428,938

 

Accrued liabilities

 

77,126

 

125,102

 

Revenue distributions payable

 

96,589

 

136,563

 

Deferred income tax liability

 

69,191

 

43,182

 

Derivative instruments

 

646

 

17,623

 

Other

 

8,037

 

9,398

 

Total current liabilities

 

622,229

 

760,806

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

2,078,999

 

2,535,819

 

Deferred income tax liability

 

278,580

 

263,927

 

Other long-term liabilities

 

35,113

 

40,867

 

Total liabilities

 

3,014,921

 

3,601,419

 

Stockholders’ Equity:

 

 

 

 

 

Common stock, $0.01 par value; authorized - 1,000,000,000 shares; issued and outstanding 262,049,659 shares

 

2,620

 

2,620

 

Preferred stock, $0.01 par value; authorized - 50,000,000 shares; none issued

 

 

 

Additional paid-in capital

 

3,402,180

 

3,431,317

 

Accumulated earnings

 

193,860

 

99,101

 

Total stockholders’ equity

 

3,598,660

 

3,533,038

 

Total liabilities and equity

 

$

6,613,581

 

7,134,457

 

 

8



 

ANTERO RESOURCES CORPORATION

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

 

Three Months ended March 31, 2013 and 2014

 

(Unaudited)

 

(In thousands, except per share amounts)

 

 

 

2013

 

2014

 

Revenue:

 

 

 

 

 

Natural gas sales

 

$

121,946

 

312,336

 

Natural gas liquids sales

 

10,572

 

73,928

 

Oil sales

 

877

 

24,122

 

Gathering, compression, and water distribution

 

 

3,524

 

Commodity derivative fair value losses

 

(71,941

)

(248,929

)

Total revenue

 

61,454

 

164,981

 

Operating expenses:

 

 

 

 

 

Lease operating

 

1,071

 

4,869

 

Gathering, compression, processing, and transportation

 

40,970

 

92,265

 

Production and ad valorem taxes

 

8,619

 

21,039

 

Exploration

 

4,362

 

6,997

 

Impairment of unproved properties

 

1,556

 

1,397

 

Depletion, depreciation, and amortization

 

40,364

 

91,206

 

Accretion of asset retirement obligations

 

264

 

302

 

General and administrative (including stock compensation of $29,137 in 2014)

 

12,717

 

50,985

 

Total operating expenses

 

109,923

 

269,060

 

Operating loss

 

(48,469

)

(104,079

)

Interest expense

 

(29,928

)

(31,342

)

Loss before income taxes

 

(78,397

)

(135,421

)

Provision for income tax benefit

 

30,400

 

40,662

 

Net loss and comprehensive loss

 

$

(47,997

)

(94,759

)

Loss per common share

 

$

(0.18

)

(0.36

)

Loss per common share - assuming dilution

 

$

(0.18

)

(0.36

)

 

9



 

ANTERO RESOURCES CORPORATION

 

Consolidated Statements of Cash Flows

 

Three Months Ended March 31, 2013 and 2014

 

(In thousands)

 

 

 

2013

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(47,997

)

(94,759

)

Adjustment to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depletion, depreciation, amortization, and accretion

 

40,628

 

91,508

 

Impairment of unproved properties

 

1,556

 

1,397

 

Derivative fair value losses

 

71,941

 

248,929

 

Cash receipts (payments) for settled derivatives

 

48,131

 

(1,071

)

Deferred income tax benefit

 

(30,400

)

(40,662

)

Stock compensation

 

 

29,137

 

Other

 

1,387

 

3,182

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(10,545

)

3,360

 

Accrued revenue

 

(5,948

)

(48,850

)

Other current assets

 

11,711

 

(96

)

Accounts payable

 

(1,584

)

(5,718

)

Accrued liabilities

 

24,290

 

47,976

 

Revenue distributions payable

 

7,037

 

39,974

 

Net cash provided by operating activities

 

110,207

 

274,307

 

Cash flows used in investing activities:

 

 

 

 

 

Additions to unproved properties

 

(148,972

)

(60,149

)

Drilling and completion costs

 

(334,965

)

(496,221

)

Additions to fresh water distribution systems

 

(9,020

)

(60,030

)

Additions to gathering and compression systems

 

(55,975

)

(107,523

)

Additions to other property and equipment

 

(721

)

(7,783

)

Change in other assets

 

1,768

 

(3,807

)

Net cash used in investing activities

 

(547,885

)

(735,513

)

Cash flows from financing activities:

 

 

 

 

 

Issuance of senior notes

 

231,750

 

 

Borrowings on bank credit facility, net

 

187,000

 

457,000

 

Payments of deferred financing costs

 

(3,014

)

(701

)

Other

 

7,759

 

 

Net cash provided by financing activities

 

423,495

 

456,299

 

Net decrease in cash and cash equivalents

 

(14,183

)

(4,907

)

Cash and cash equivalents, beginning of period

 

18,989

 

17,487

 

Cash and cash equivalents, end of period

 

$

4,806

 

12,580

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for interest

 

$

16,160

 

13,087

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

Changes in accounts payable for additions to property and equipment

 

$

88,843

 

64,016

 

 

10



 

OPERATING DATA

 

The following table sets forth selected operating data (as recast for discontinued operations) for the three months ended March 31, 2013 compared to the three months ended March 31, 2014.

 

 

 

Three Months Ended
March 31,

 

Amount of
Increase

 

 

 

 

 

2013

 

2014

 

(Decrease)

 

Percent Change

 

 

 

(in thousands, except per unit and production data)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

121,946

 

$

312,336

 

190,390

 

156

%

NGL sales

 

10,572

 

73,928

 

63,356

 

599

%

Oil sales

 

877

 

24,122

 

23,245

 

2,651

%

Gathering, compression, and water distribution

 

 

3,524

 

3,524

 

 

*

Commodity derivative fair value losses

 

(71,941

)

(248,929

)

(176,988

)

 

*

Total operating revenues

 

61,454

 

164,981

 

103,527

 

168

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating

 

1,071

 

4,869

 

3,798

 

355

%

Gathering, compression, processing, and transportation

 

40,970

 

92,265

 

51,295

 

125

%

Production and ad valorem taxes

 

8,619

 

21,039

 

12,420

 

144

%

Exploration

 

4,362

 

6,997

 

2,635

 

60

%

Impairment of unproved properties

 

1,556

 

1,397

 

(159

)

(10

)%

Depletion, depreciation, and amortization

 

40,364

 

91,206

 

50,842

 

126

%

Accretion of asset retirement obligations

 

264

 

302

 

38

 

14

%

General and administrative (before stock compensation)

 

12,717

 

21,848

 

9,131

 

72

%

Stock compensation

 

 

29,137

 

29,137

 

 

*

Total operating expenses

 

109,923

 

269,060

 

159,137

 

145

%

Operating loss

 

(48,469

)

(104,079

)

(55,610

)

 

*

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(29,928

)

(31,342

)

1,414

 

5

%

Loss before income taxes

 

(78,397

)

(135,421

)

(57,024

)

 

*

Income tax benefit

 

30,400

 

40,662

 

10,262

 

34

%

Net loss

 

(47,997

)

(94,759

)

(46,762

)

 

*

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDAX

 

$

118,749

 

$

273,656

 

154,907

 

130

%

 

 

 

 

 

 

 

 

 

 

Production data:

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

33

 

62

 

29

 

86

%

NGLs (MBbl)

 

205

 

1,198

 

993

 

484

%

Oil (MBbl)

 

10

 

271

 

261

 

2,563

%

Combined (Bcfe)

 

34

 

71

 

37

 

105

%

Daily combined production (MMcfe/d)

 

383

 

786

 

403

 

105

%

Average prices before effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

3.67

 

$

5.05

 

$

1.38

 

38

%

NGLs (per Bbl)

 

$

51.55

 

$

61.69

 

$

10.14

 

20

%

Oil (per Bbl)

 

$

86.12

 

$

88.87

 

$

2.75

 

3

%

Combined (per Mcfe)

 

$

3.87

 

$

5.80

 

$

1.93

 

50

%

Average realized prices after effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

5.13

 

$

5.02

 

$

(0.11

)

(2

)%

NGLs (per Bbl)

 

$

51.55

 

$

61.69

 

$

10.14

 

20

%

Oil (per Bbl)

 

$

75.41

 

$

90.78

 

$

15.37

 

20

%

Combined (per Mcfe)

 

$

5.26

 

$

5.79

 

$

0.53

 

10

%

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

Lease operating

 

$

0.03

 

$

0.07

 

$

0.04

 

133

%

Gathering, compression, processing, and transportation

 

$

1.19

 

$

1.30

 

$

0.11

 

9

%

Production and ad valorem taxes

 

$

0.25

 

$

0.30

 

$

0.05

 

20

%

Depletion, depreciation, amortization, and accretion

 

$

1.18

 

$

1.29

 

$

0.11

 

9

%

General and administrative

 

$

0.37

 

$

0.31

 

$

(0.06

)

(16

)%

 

11