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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

OR

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to                   

 

Commission file number: 001-36120

 

ANTERO RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

80-0162034

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer Identification No.)

 

 

 

1615 Wynkoop Street
Denver, Colorado

 

80202

(Address of principal executive offices)

 

(Zip Code)

 

(303) 357-7310

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☐

(Do not check if a smaller reporting company)

Emerging growth company ☐

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  ☐ Yes  ☒ No

The registrant had 317,086,304 shares of common stock outstanding as of July 27, 2018.

 

 

 


 

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TABLE OF CONTENTS

 

 

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

    

2

PART I—FINANCIAL INFORMATION 

 

4

Item 1. 

    

Financial Statements (Unaudited)

 

4

Item 2. 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

40

Item 3. 

 

Quantitative and Qualitative Disclosures about Market Risk

 

62

Item 4. 

 

Controls and Procedures

 

64

PART II—OTHER INFORMATION 

 

64

Item 1. 

 

Legal Proceedings

 

64

Item 1A. 

 

Risk Factors

 

66

Item 2. 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

66

Item 6. 

 

Exhibits

 

67

SIGNATURES 

 

68

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Quarterly Report on Form 10-Q may contain forward-looking statements. Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

·

business strategy;

·

reserves;

·

financial strategy, liquidity, and capital required for our development program;

·

natural gas, natural gas liquids (“NGLs”), and oil prices;

·

timing and amount of future production of natural gas, NGLs, and oil;

·

hedging strategy and results;

·

costs and outcomes associated with the ongoing review of potential transactions by the special committee of our board of directors as described herein;

·

ability to meet minimum volume commitments and to utilize or monetize our firm transportation commitments;

·

future drilling plans;

·

competition and government regulations;

·

pending legal or environmental matters;

·

marketing of natural gas, NGLs, and oil;

·

leasehold or business acquisitions;

·

costs of developing our properties;

·

operations of Antero Midstream Partners LP (“Antero Midstream”), including the operations of its unconsolidated affiliates;

·

general economic conditions;

·

credit markets;

·

uncertainty regarding our future operating results; and

·

plans, objectives, expectations, and intentions.

We caution 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 our control, incidental to our business. These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion, and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs, and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing

2


 

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of development expenditures, conflicts of interest among our stockholders, and the other risks described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) on file with the Securities and Exchange Commission (“SEC”).

Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs, and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs, and oil that are ultimately recovered.

Should one or more of the risks or uncertainties described in this report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

 

 

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PART I—FINANCIAL INFORMATION

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2017 and June 30, 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

    

December 31, 2017

    

June 30, 2018

 

Assets

 

Current assets:

 

 

 

 

  

 

 

Cash and cash equivalents

 

$

28,441

 

 

50,608

 

Accounts receivable, net of allowance for doubtful accounts of $1,320 at December 31, 2017 and $1,195 at June 30, 2018, respectively

 

 

34,896

 

 

35,676

 

Accrued revenue

 

 

300,122

 

 

321,214

 

Derivative instruments

 

 

460,685

 

 

420,842

 

Other current assets

 

 

8,943

 

 

6,590

 

Total current assets

 

 

833,087

 

 

834,930

 

Property and equipment:

 

 

 

 

 

 

 

Natural gas properties, at cost (successful efforts method):

 

 

 

 

 

 

 

Unproved properties

 

 

2,266,673

 

 

2,108,109

 

Proved properties

 

 

11,096,462

 

 

11,924,864

 

Water handling and treatment systems

 

 

946,670

 

 

979,937

 

Gathering systems and facilities

 

 

2,050,490

 

 

2,255,385

 

Other property and equipment

 

 

57,429

 

 

60,766

 

 

 

 

16,417,724

 

 

17,329,061

 

Less accumulated depletion, depreciation, and amortization

 

 

(3,182,171)

 

 

(3,647,910)

 

Property and equipment, net

 

 

13,235,553

 

 

13,681,151

 

Derivative instruments

 

 

841,257

 

 

763,592

 

Investments in unconsolidated affiliates

 

 

303,302

 

 

358,830

 

Other assets

 

 

48,291

 

 

52,104

 

Total assets

 

$

15,261,490

 

 

15,690,607

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

Current liabilities:

 

 

 

 

  

 

 

Accounts payable

 

$

62,982

 

 

96,477

 

Accrued liabilities

 

 

443,225

 

 

438,829

 

Revenue distributions payable

 

 

209,617

 

 

211,234

 

Derivative instruments

 

 

28,476

 

 

30,661

 

Other current liabilities

 

 

17,796

 

 

11,532

 

Total current liabilities

 

 

762,096

 

 

788,733

 

Long-term liabilities:

 

 

 

 

 

 

 

Long-term debt

 

 

4,800,090

 

 

5,288,344

 

Deferred income tax liability

 

 

779,645

 

 

763,192

 

Derivative instruments

 

 

207

 

 

 —

 

Other liabilities

 

 

43,316

 

 

47,427

 

Total liabilities

 

 

6,385,354

 

 

6,887,696

 

Commitments and contingencies (notes 12 and 13)

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

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

 

 

 —

 

 

 —

 

Common stock, $0.01 par value; authorized - 1,000,000 shares; 316,379 shares and 317,052 shares issued and outstanding at December 31, 2017 and June 30, 2018, respectively

 

 

3,164

 

 

3,171

 

Additional paid-in capital

 

 

6,570,952

 

 

6,597,537

 

Accumulated earnings

 

 

1,575,065

 

 

1,453,513

 

Total stockholders' equity

 

 

8,149,181

 

 

8,054,221

 

Noncontrolling interests in consolidated subsidiary

 

 

726,955

 

 

748,690

 

Total equity

 

 

8,876,136

 

 

8,802,911

 

Total liabilities and equity

 

$

15,261,490

 

 

15,690,607

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 2017 and 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

    

2017

    

2018

 

Revenue:

 

 

 

 

 

 

 

Natural gas sales

 

$

454,257

 

 

473,540

 

Natural gas liquids sales

 

 

170,819

 

 

255,985

 

Oil sales

 

 

26,512

 

 

38,873

 

Commodity derivative fair value gains

 

 

85,641

 

 

55,336

 

Gathering, compression, water handling and treatment

 

 

3,192

 

 

5,518

 

Marketing

 

 

49,968

 

 

160,202

 

Marketing derivative fair value losses

 

 

 —

 

 

(110)

 

Total revenue

 

 

790,389

 

 

989,344

 

Operating expenses:

 

 

 

 

 

 

 

Lease operating

 

 

16,992

 

 

30,164

 

Gathering, compression, processing, and transportation

 

 

266,747

 

 

307,786

 

Production and ad valorem taxes

 

 

22,553

 

 

25,891

 

Marketing

 

 

77,421

 

 

213,420

 

Exploration

 

 

1,804

 

 

1,471

 

Impairment of unproved properties

 

 

15,199

 

 

134,437

 

Impairment of gathering systems and facilities

 

 

 —

 

 

8,501

 

Depletion, depreciation, and amortization

 

 

201,182

 

 

238,050

 

Accretion of asset retirement obligations

 

 

649

 

 

700

 

General and administrative (including equity-based compensation expense of $26,975 and $19,071 in 2017 and 2018, respectively)

 

 

64,099

 

 

61,687

 

Total operating expenses

 

 

666,646

 

 

1,022,107

 

Operating income (loss)

 

 

123,743

 

 

(32,763)

 

Other income (expenses):

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

 

3,623

 

 

9,264

 

Interest

 

 

(68,582)

 

 

(69,349)

 

Total other expenses

 

 

(64,959)

 

 

(60,085)

 

Income (loss) before income taxes

 

 

58,784

 

 

(92,848)

 

Provision for income tax (expense) benefit

 

 

(18,819)

 

 

25,573

 

Net income (loss) and comprehensive income (loss) including noncontrolling interests

 

 

39,965

 

 

(67,275)

 

Net income and comprehensive income attributable to noncontrolling interests

 

 

45,097

 

 

69,110

 

Net loss and comprehensive loss attributable to Antero Resources Corporation

 

$

(5,132)

 

 

(136,385)

 

 

 

 

 

 

 

 

 

Loss per common share—basic

 

$

(0.02)

 

 

(0.43)

 

 

 

 

 

 

 

 

 

Loss per common share—assuming dilution

 

$

(0.02)

 

 

(0.43)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

315,401

 

 

316,992

 

Diluted

 

 

315,401

 

 

316,992

 

 

See accompanying notes to condensed consolidated financial statements.

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Six Months Ended June 30, 2017 and 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

    

2017

    

2018

 

Revenue and other:

 

 

 

 

 

 

 

Natural gas sales

 

$

920,921

 

 

971,203

 

Natural gas liquids sales

 

 

365,471

 

 

490,155

 

Oil sales

 

 

53,472

 

 

69,146

 

Commodity derivative fair value gains

 

 

524,416

 

 

77,773

 

Gathering, compression, water handling and treatment

 

 

5,796

 

 

10,453

 

Marketing

 

 

115,892

 

 

304,591

 

Marketing derivative fair value gains

 

 

 —

 

 

94,124

 

Total revenue and other

 

 

1,985,968

 

 

2,017,445

 

Operating expenses:

 

 

 

 

 

 

 

Lease operating

 

 

32,543

 

 

56,886

 

Gathering, compression, processing, and transportation

 

 

533,576

 

 

599,724

 

Production and ad valorem taxes

 

 

47,346

 

 

51,714

 

Marketing

 

 

167,414

 

 

409,159

 

Exploration

 

 

3,911

 

 

3,356

 

Impairment of unproved properties

 

 

42,098

 

 

184,973

 

Impairment of gathering systems and facilities

 

 

 —

 

 

8,501

 

Depletion, depreciation, and amortization

 

 

403,911

 

 

466,294

 

Accretion of asset retirement obligations

 

 

1,286

 

 

1,390

 

General and administrative (including equity-based compensation expense of $52,478 and $40,227 in 2017 and 2018, respectively)

 

 

128,797

 

 

121,717

 

Total operating expenses

 

 

1,360,882

 

 

1,903,714

 

Operating income

 

 

625,086

 

 

113,731

 

Other income (expenses):

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

 

5,854

 

 

17,126

 

Interest

 

 

(135,252)

 

 

(133,775)

 

Total other expenses

 

 

(129,398)

 

 

(116,649)

 

Income (loss) before income taxes

 

 

495,688

 

 

(2,918)

 

Provision for income tax (expense) benefit

 

 

(150,165)

 

 

16,453

 

Net income and comprehensive income including noncontrolling interests

 

 

345,523

 

 

13,535

 

Net income and comprehensive income attributable to noncontrolling interests

 

 

82,259

 

 

135,087

 

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

 

$

263,264

 

 

(121,552)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share—basic

 

$

0.84

 

 

(0.38)

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share—assuming dilution

 

$

0.83

 

 

(0.38)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

315,179

 

 

316,733

 

Diluted

 

 

315,927

 

 

316,733

 

 

See accompanying notes to condensed consolidated financial statements.

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Equity

Six Months Ended June 30, 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional paid-

 

Accumulated

 

Noncontrolling

 

Total

 

 

    

Shares

    

Amount

    

in capital

    

earnings

    

interests

    

equity

 

Balances, December 31, 2017

 

 

316,379

 

$

3,164

 

 

6,570,952

 

 

1,575,065

 

 

726,955

 

 

8,876,136

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

673

 

 

 7

 

 

(6,656)

 

 

 —

 

 

 —

 

 

(6,649)

 

Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

 

 

 —

 

 

 —

 

 

(4,057)

 

 

 —

 

 

2,739

 

 

(1,318)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

35,732

 

 

 —

 

 

4,495

 

 

40,227

 

Net income (loss) and comprehensive income (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

(121,552)

 

 

135,087

 

 

13,535

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

1,566

 

 

 —

 

 

(1,566)

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(119,023)

 

 

(119,023)

 

Other

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 3

 

 

 3

 

Balances, June 30, 2018

 

 

317,052

 

$

3,171

 

 

6,597,537

 

 

1,453,513

 

 

748,690

 

 

8,802,911

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2017 and 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

    

2017

    

2018

 

Cash flows provided by (used in) operating activities:

 

 

 

 

  

 

 

Net income including noncontrolling interests

 

$

345,523

 

 

13,535

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depletion, depreciation, amortization, and accretion

 

 

405,197

 

 

467,684

 

Impairment of unproved properties

 

 

42,098

 

 

184,973

 

Impairment of gathering systems and facilities

 

 

 —

 

 

8,501

 

Commodity derivative fair value gains

 

 

(524,416)

 

 

(77,773)

 

Gains on settled commodity derivatives

 

 

75,913

 

 

197,225

 

Marketing derivative fair value gains

 

 

 —

 

 

(94,124)

 

Gains on settled marketing derivatives

 

 

 —

 

 

94,158

 

Deferred income tax expense (benefit)

 

 

150,165

 

 

(16,453)

 

Equity-based compensation expense

 

 

52,478

 

 

40,227

 

Equity in earnings of unconsolidated affiliates

 

 

(5,854)

 

 

(17,126)

 

Distributions of earnings from unconsolidated affiliates

 

 

5,820

 

 

17,895

 

Other

 

 

472

 

 

1,932

 

Changes in current assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

13,188

 

 

10,237

 

Accrued revenue

 

 

43,339

 

 

(21,092)

 

Other current assets

 

 

(2,385)

 

 

2,353

 

Accounts payable

 

 

2,072

 

 

2,948

 

Accrued liabilities

 

 

4,204

 

 

24,065

 

Revenue distributions payable

 

 

39,162

 

 

1,617

 

Other current liabilities

 

 

610

 

 

(1,842)

 

Net cash provided by operating activities

 

 

647,586

 

 

838,940

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

Additions to proved properties

 

 

(179,318)

 

 

 —

 

Additions to unproved properties

 

 

(129,876)

 

 

(87,861)

 

Drilling and completion costs

 

 

(629,308)

 

 

(752,781)

 

Additions to water handling and treatment systems

 

 

(95,451)

 

 

(58,127)

 

Additions to gathering systems and facilities

 

 

(155,365)

 

 

(206,753)

 

Additions to other property and equipment

 

 

(6,564)

 

 

(3,502)

 

Investments in unconsolidated affiliates

 

 

(191,364)

 

 

(56,297)

 

Change in other assets

 

 

(12,452)

 

 

(7,026)

 

Other

 

 

2,156

 

 

 —

 

Net cash used in investing activities

 

 

(1,397,542)

 

 

(1,172,347)

 

Cash flows provided by (used in) financing activities:

 

 

 

 

 

 

 

Issuance of common units by Antero Midstream Partners LP

 

 

246,585

 

 

 —

 

Borrowings on bank credit facilities, net

 

 

585,000

 

 

485,000

 

Distributions to noncontrolling interests in consolidated subsidiary

 

 

(61,869)

 

 

(119,023)

 

Employee tax withholding for settlement of equity compensation awards

 

 

(8,433)

 

 

(7,967)

 

Other

 

 

(2,747)

 

 

(2,436)

 

Net cash provided by financing activities

 

 

758,536

 

 

355,574

 

Net increase in cash and cash equivalents

 

 

8,580

 

 

22,167

 

Cash and cash equivalents, beginning of period

 

 

31,610

 

 

28,441

 

Cash and cash equivalents, end of period

 

$

40,190

 

 

50,608

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

125,284

 

 

130,231

 

 

 

 

 

 

 

 

 

Increase in accounts payable and accrued liabilities for additions to property and equipment

 

$

31,182

 

 

2,089

 

 

See accompanying notes to condensed consolidated financial statements.

 

8


 

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

(1)Organization

 

Antero Resources Corporation (individually referred to as “Antero” or the “Parent”) and its consolidated subsidiaries (collectively referred to as the “Company”) are engaged in the exploration, development, and acquisition of natural gas, NGLs, and oil properties in the Appalachian Basin in West Virginia and Ohio.  The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs, and oil from unconventional formations.  Through its consolidated subsidiary, Antero Midstream Partners LP, a publicly-traded limited partnership (“Antero Midstream”), the Company has gathering and compression, as well as water handling and treatment operations in the Appalachian Basin.  The Company’s corporate headquarters are located in Denver, Colorado.

 

(2)Summary of Significant Accounting Policies

(a)Basis of Presentation

These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC applicable to interim financial information and should be read in the context of the December 31, 2017 consolidated financial statements and notes thereto for a more complete understanding of the Company’s operations, financial position, and accounting policies.  The December 31, 2017 consolidated financial statements have been filed with the Securities and Exchange Commission (“SEC”) in the Company’s 2017 Form 10-K.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, and, accordingly, do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2017 and June 30, 2018, the results of its operations for the three and six months ended June 30, 2017 and 2018, and its cash flows for the six months ended June 30, 2017 and 2018.  The Company has no items of other comprehensive income or loss; therefore, its net income or loss is equal to its comprehensive income or loss.  Operating results for the period ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs, and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, and other factors.

The Company’s exploration and production activities are accounted for under the successful efforts method.

As of the date these financial statements were filed with the SEC, the Company completed its evaluation of potential subsequent events for disclosure and no items requiring disclosure were identified.

(b)Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Antero, its wholly-owned subsidiaries, any entities in which the Company owns a controlling interest, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. 

We have determined that Antero Midstream is a VIE for which Antero is the primary beneficiary.  Therefore, Antero Midstream’s accounts are consolidated in the Company’s condensed consolidated financial statements.  Antero is the primary beneficiary of Antero Midstream based on its power to direct the activities that most significantly impact Antero Midstream’s economic performance, and its obligation to absorb losses of, or right to receive benefits from, Antero Midstream that could be significant to Antero Midstream.  In reaching the determination that Antero is the primary beneficiary of Antero Midstream, the Company considered the following:

·

Antero Midstream was formed to own, operate, and develop midstream energy assets to service Antero’s production and completion activities under long-term service contracts.

·

Antero owned 52.9% of the outstanding limited partner interests in Antero Midstream at June 30, 2018.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

·

Antero Midstream GP LP (“AMGP”) indirectly controls the general partnership interest in Antero Midstream and directly controls Antero IDR Holdings LLC (“IDR LLC”), which owns the incentive distribution rights in Antero Midstream.  However, AMGP has not provided, and is not expected to provide, financial support to Antero Midstream.  Antero does not control AMGP and does not have any investment in AMGP. 

·

Antero’s officers and management group also act as management of Antero Midstream and AMGP.

·

Antero and Antero Midstream have contracts with 20-year initial terms and automatic renewal provisions, whereby Antero has dedicated the rights for gathering and compression, and water delivery and treatment services to Antero Midstream.  Such dedications cover a substantial portion of Antero’s current acreage and future acquired acreage, in each case, except for acreage that was already dedicated to other parties prior to entering into the service contracts or that was acquired subject to a pre-existing dedication.  The contracts call for Antero to present, in advance, its drilling and completion plans in order for Antero Midstream to develop gathering and compression and water delivery and handling assets to service Antero’s operations.  Consequently, the drilling and completion capital investment decisions made by Antero control the development and operation of all of Antero Midstream’s assets.  Because of these contractual obligations and the capital requirements related to these obligations, Antero Midstream has and, for the foreseeable future, will devote substantially all of its resources to servicing Antero’s operations.

·

Revenues from Antero provide substantially all of Antero Midstream’s financial support and, therefore, its ability to finance its operations.

·

As a result of the long-term contractual commitment to support Antero’s substantial growth plans, Antero Midstream will be practically and physically constrained from providing any substantive amount of services to third-parties.

All significant intercompany accounts and transactions have been eliminated in the Company’s condensed consolidated financial statements.  Noncontrolling interest in the Company’s condensed consolidated financial statements represents the interests in Antero Midstream which are owned by the public and the incentive distribution rights in Antero Midstream.  Noncontrolling interests in consolidated subsidiaries is included as a component of equity in the Company’s condensed consolidated balance sheets.

Investments in entities for which the Company exercises significant influence, but not control, are accounted for under the equity method.  Such investments are included in Investments in unconsolidated affiliates on the Company’s condensed consolidated balance sheets.  Income from investees that are accounted for under the equity method is included in Equity in earnings of unconsolidated affiliates on the Company’s condensed consolidated statements of operations and cash flows.

(c)Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions which affect revenues, expenses, assets, and liabilities, as well as the disclosure of contingent assets and liabilities.  Changes in facts and circumstances or discovery of new information may result in revised estimates, and actual results could differ from those estimates.

The Company’s condensed consolidated financial statements are based on a number of significant estimates including estimates of natural gas, NGLs, and oil reserve quantities, which are the basis for the calculation of depletion and impairment of oil and gas properties.  Reserve estimates, by their nature, are inherently imprecise.  Other items in the Company’s condensed consolidated financial statements which involve the use of significant estimates include derivative assets and liabilities, accrued revenue, deferred income taxes, equity-based compensation, asset retirement obligations, depreciation, amortization, and commitments and contingencies.

(d)Risks and Uncertainties

The markets for natural gas, NGLs, and oil have, and continue to, experience significant price fluctuations.  Price fluctuations can result from variations in weather, levels of production, availability of transportation capacity to other regions of the country, the level of imports to and exports from the United States, and various other factors.  Increases or decreases in the prices the Company receives for its production could have a significant impact on the Company’s future results of operations and reserve quantities.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

(e)Cash and Cash Equivalents

The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents.  The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.  From time to time, the Company may be in the position of a “book overdraft” in which outstanding checks exceed cash and cash equivalents.  The Company classifies book overdrafts within accounts payable within its condensed consolidated balance sheets, and classifies the change in accounts payable associated with book overdrafts as an operating activity within its condensed consolidated statements of cash flows.

(f)Derivative Financial Instruments

In order to manage its exposure to natural gas, NGLs, and oil price volatility, the Company enters into derivative transactions from time to time, which may include commodity swap agreements, basis swap agreements, collar agreements, and other similar agreements related to the price risk associated with the Company’s production.  To the extent legal right of offset exists with a counterparty, the Company reports derivative assets and liabilities on a net basis.  The Company has exposure to credit risk to the extent that the counterparty is unable to satisfy its settlement obligations.  The Company actively monitors the creditworthiness of counterparties and assesses the impact, if any, on its derivative positions.

The Company records derivative instruments on the condensed consolidated balance sheets as either assets or liabilities measured at fair value and records changes in the fair value of derivatives in current earnings as they occur.  Changes in the fair value of commodity derivatives, including gains or losses on settled derivatives, are classified as revenues on the Company’s condensed consolidated statements of operations.  The Company’s derivatives have not been designated as hedges for accounting purposes.

(g)Asset Retirement Obligations

The Company is obligated to dispose of certain long‑lived assets upon their abandonment.  The Company’s asset retirement obligations (“AROs”) relate primarily to its obligation to plug and abandon oil and gas wells at the end of their lives, as well as Antero Midstream’s future closure and postclosure costs associated with the landfill at its wastewater treatment facility.  AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations, which is then discounted at the Company’s credit‑adjusted, risk‑free interest rate.  Revisions to estimated AROs often result from changes in retirement cost estimates or changes in the estimated timing of abandonment.  The fair value of the liability is added to the carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset.  The liability is accreted at the end of each period through charges to operating expense.  If an obligation is settled for an amount other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.

(h)Income Taxes

For the three and six months ended June 30, 2017, the Company’s overall effective tax rate was different than the statutory rate of 35% primarily due to the effects of noncontrolling interests, state tax rates, and permanent differences on vested equity compensation awards.  For the three and six months ended June 30, 2018, the Company’s overall effective tax rate was different than the statutory rate of 21% primarily due to the effects of noncontrolling interests, state tax rates, and permanent differences on vested equity compensation awards.  Additionally, due to a change in Colorado tax laws that decreased our effective state tax rates, we recognized a $20 million benefit during the three and six months ended June 30, 2018 from the resulting reduction of our deferred tax liabilities.

(i)Industry Segments and Geographic Information

Management has evaluated how the Company is organized and managed and has identified the following segments: (1) the exploration, development, and production of natural gas, NGLs, and oil; (2) gathering and processing; (3) water handling and treatment; and (4) marketing and utilization of excess firm transportation capacity.

All of the Company’s assets are located in the United States and substantially all of its production revenues are attributable to customers located in the United States; however, some of the Company’s production revenues are attributable to customers who resell the Company’s production to third parties located in foreign countries.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

(j)Earnings per Common Share

Earnings per common share—basic for each period is computed by dividing net income attributable to Antero by the basic weighted average number of shares outstanding during the period.  Earnings per common share—assuming dilution for each period is computed after giving consideration to the potential dilution from outstanding equity awards, calculated using the treasury stock method.  The Company includes performance share unit awards in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of the performance period required for the vesting of the awards.  During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is antidilutive.  The following is a reconciliation of the Company’s basic weighted average shares outstanding to diluted weighted average shares outstanding during the periods presented (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

Basic weighted average number of shares outstanding

 

315,401

 

316,992

 

315,179

 

316,733

 

Add: Dilutive effect of restricted stock units

 

 —

 

 —

 

710

 

 —

 

Add: Dilutive effect of outstanding stock options

 

 —

 

 —

 

 —

 

 —

 

Add: Dilutive effect of performance stock units

 

 —

 

 —

 

38

 

 —

 

Diluted weighted average number of shares outstanding

 

315,401

 

316,992

 

315,927

 

316,733

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of outstanding equity awards excluded from calculation of diluted earnings per common share(1):

 

 

 

 

 

 

 

 

 

Restricted stock units

 

5,105

 

2,899

 

1,596

 

3,088

 

Outstanding stock options

 

679

 

639

 

681

 

646

 

Performance stock units

 

1,213

 

1,860

 

896

 

1,556

 


(1)   The potential dilutive effects of these awards were excluded from the computation of earnings per common share—assuming dilution because the inclusion of these awards would have been anti-dilutive.

(k)Adoption of New Accounting Principle

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The ASU replaced most existing revenue recognition guidance in GAAP when it became effective and was incorporated into GAAP as Accounting Standards Codification (“ASC”) Topic 606.  The new standard became effective for the Company on January 1, 2018.  The standard permits the use of either the full retrospective or modified retrospective transition method.  The Company elected the modified retrospective transition method.  The adoption of this standard had no impact on the Company’s consolidated financial statements.  See Note 4 to the condensed consolidated financial statements for the Company’s disclosures under ASC 606.

(l)Recently Issued Accounting Standard

On February 25, 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to present nearly all leasing arrangements on the balance sheet as liabilities along with a corresponding right-of-use asset.  The ASU will replace most existing lease guidance in GAAP when it becomes effective.  The new standard becomes effective for the Company on January 1, 2019.  Although early application is permitted, the Company does not plan to early adopt the ASU.  The standard requires the use of the modified retrospective transition method.  The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.  Currently, the Company is evaluating the standard’s applicability to its various contractual arrangements.  The Company believes that adoption of the standard will result in increases to its assets and liabilities on its consolidated balance sheet as well as changes to the presentation of certain operating expenses on its consolidated statement of operations, including the accelerated recognition of expenses attributable to certain of is leasing arrangements.  However, the Company has not yet determined the extent of the adjustments that will be required upon implementation of the standard.  The Company continues to monitor relevant industry guidance regarding the implementation of ASU 2016-02 and will adjust its implementation strategies as necessary.  The Company does not believe that adoption of the standard will impact its operational strategies, growth prospects, or cash flows.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

 

(3)Antero Midstream Partners LP

In 2014, the Company formed Antero Midstream to own, operate, and develop midstream energy assets that service Antero’s production.  Antero Midstream’s assets consist of gathering systems and facilities, water handling and treatment facilities, and interests in processing and fractionation plants, through which it provides services to Antero under long-term, fixed-fee contracts.  AMGP indirectly owns the general partnership interest in Antero Midstream and directly owns capital interests in IDR LLC, which owns the incentive distribution rights in Antero Midstream.  Antero Midstream is an unrestricted subsidiary as defined by Antero’s senior secured revolving bank credit facility (the “Credit Facility”).  As an unrestricted subsidiary, Antero Midstream and its subsidiaries are not guarantors of Antero’s obligations, and Antero is not a guarantor of Antero Midstream’s obligations (see Note 16).

In connection with Antero’s contribution of its water handling and treatment assets to Antero Midstream in September 2015, Antero Midstream agreed to pay Antero (a) $125 million in cash if Antero Midstream delivers 176,295,000 barrels or more of fresh water during the period between January 1, 2017 and December 31, 2019 and (b) an additional $125 million in cash if Antero Midstream delivers 219,200,000 barrels or more of fresh water during the period between January 1, 2018 and December 31, 2020.

Antero Midstream has an Equity Distribution Agreement (the “Distribution Agreement”) pursuant to which Antero Midstream may sell, from time to time through brokers acting as its sales agents, common units representing limited partner interests having an aggregate offering price of up to $250 million.  Sales of the common units are made by means of ordinary brokers’ transactions on the New York Stock Exchange, at market prices, in block transactions, or as otherwise agreed to between Antero Midstream and the sales agents.  Proceeds are used for general partnership purposes, which may include repayment of indebtedness and funding working capital or capital expenditures.  Antero Midstream is under no obligation to offer and sell common units under the Distribution Agreement.

During the six months ended June 30, 2018, Antero Midstream did not sell any common units under the Distribution Agreement.  As of June 30, 2018, Antero Midstream had the capacity to issue additional common units under the Distribution Agreement up to an aggregate sales price of $157.3 million.

On February 6, 2017, Antero Midstream formed a joint venture (the “Joint Venture”) to develop processing assets in Appalachia with MarkWest Energy Partners, L.P. (“MarkWest”), a wholly owned subsidiary of MPLX, L.P. (see note 5).  In conjunction with the formation of the Joint Venture, on February 10, 2017, Antero Midstream issued 6,900,000 common units, including common units issued pursuant to the underwriters’ option to purchase additional common units, generating net proceeds of approximately $223 million.  Antero Midstream used the net proceeds to fund the initial contribution to the Joint Venture, repay outstanding borrowings under its credit facility, and for general partnership purposes.

Antero owned approximately 52.9% of the limited partner interests of Antero Midstream at December 31, 2017 and June 30, 2018.

 

(4)Revenue

(a)   Revenue from Contracts with Customers

Product revenue

Our revenues are primarily derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from our natural gas. Sales of natural gas, NGLs, and oil are recognized when we satisfy a performance obligation by transferring control of a product to a customer. Payment is generally received in the month following the month that the sale occurred.

Under our natural gas sales contracts, we deliver natural gas to the purchaser at an agreed upon delivery point. Natural gas is transported from our wellheads to delivery points specified under sales contracts. To deliver natural gas to these points, Antero Midstream or third parties gather, compress, process and transport our natural gas. We maintain control of the natural gas during gathering, compression, processing, and transportation. Our sales contracts provide that we receive a specific index price adjusted for pricing differentials. We transfer control of the product at the delivery point and recognize revenue based on the contract price. The costs to gather, compress, process and transport the natural gas are recorded as Gathering, compression, processing and transportation expenses.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

NGLs, which are extracted from natural gas through processing, are either sold by us directly or by the processor under processing contracts. For NGLs sold by us directly, our sales contracts provide that we deliver the product to the purchaser at an agreed upon delivery point and that we receive a specific index price adjusted for pricing differentials. We transfer control of the product to the purchaser at the delivery point and recognize revenue based on the contract price. The costs to further process and transport NGLs are recorded as Gathering, compression, processing, and transportation expenses. For NGLs sold by the processor, our processing contracts provide that we transfer control to the processor at the tailgate of the processing plant and we recognize revenue based on the price received from the processor.

Under our oil sales contracts, we generally sell oil to the purchaser from storage tanks near the wellhead and collect a contractually agreed upon index price, net of pricing differentials. We transfer control of the product from the storage tanks to the purchaser and recognize revenue based on the contract price.

Gathering, compression, water handling and treatment revenue

Substantially all revenues from our gathering, compression, water handling and treatment operations are derived from intersegment transactions for services Antero Midstream provides to our exploration and production operations. The portion of such fees shown in our consolidated financial statements represent amounts charged to interest owners in Antero-operated wells, as well as fees charged to other third parties for water handling and treatment services provided by Antero Midstream or usage of Antero Midstream’s gathering and compression systems. For gathering and compression revenue, Antero Midstream satisfies its performance obligations and recognizes revenue when low pressure volumes are delivered to a compressor station, high pressure volumes are delivered to a processing plant or transmission pipeline, and compression volumes are delivered to a high pressure line. Revenue is recognized based on the per Mcf gathering or compression fee charged by Antero Midstream in accordance with the gathering and compression agreement. For water handling and treatment revenue, Antero Midstream satisfies its performance obligations and recognizes revenue when the fresh water volumes have been delivered to the hydration unit of a specified well pad and the wastewater volumes have been delivered to its wastewater treatment facility. For services contracted through third party providers, Antero Midstream’s performance obligation is satisfied when the service performed by the third party provider has been completed. Revenue is recognized based on the per barrel fresh water delivery or wastewater treatment fee charged by Antero Midstream in accordance with the water services agreement.

Marketing revenue

Marketing revenues are derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties. We retain control of the purchased natural gas and NGLs prior to delivery to the purchaser. The Company has concluded that we are the principal in these arrangements and therefore we recognize revenue on a gross basis, with costs to purchase and transport natural gas and NGLs presented as marketing expenses. Contracts to sell third party gas and NGLs are generally subject to similar terms as contracts to sell our produced natural gas and NGLs. We satisfy performance obligations to the purchaser by transferring control of the product at the delivery point and recognize revenue based on the price received from the purchaser.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

(b)   Disaggregation of Revenue

In the following table, revenue is disaggregated by type (in thousands). The table also identifies the reportable segment to which the disaggregated revenues relate. For more information on reportable segments, see Note 15—Reportable Segments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

Segment to which

 

 

 

2017

 

2018

 

2017

 

2018

 

revenues relate

 

Revenues from contracts with customers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

454,257

 

 

473,540

 

 

920,921

 

 

971,203

 

Exploration and production

 

Natural gas liquids sales (ethane)

 

 

21,404

 

 

32,687

 

 

39,873

 

 

59,762

 

Exploration and production

 

Natural gas liquids sales (C3+ NGLs)

 

 

149,415

 

 

223,298

 

 

325,598

 

 

430,393

 

Exploration and production

 

Oil sales

 

 

26,512

 

 

38,873

 

 

53,472

 

 

69,146

 

Exploration and production

 

Gathering and compression

 

 

2,324

 

 

4,263

 

 

4,863

 

 

8,408

 

Gathering and processing

 

Water handling and treatment

 

 

868

 

 

1,255

 

 

933

 

 

2,045

 

Water handling and treatment

 

Marketing

 

 

49,968

 

 

160,202

 

 

115,892

 

 

304,591

 

Marketing

 

Total

 

 

704,748

 

 

934,118

 

 

1,461,552

 

 

1,845,548

 

 

 

Income from derivatives and other sources

 

 

85,641

 

 

55,226

 

 

524,416

 

 

171,897

 

 

 

Total revenue and other

 

$

790,389

 

 

989,344

 

 

1,985,968

 

 

2,017,445

 

 

 

 

(c)   Transaction Price Allocated to Remaining Performance Obligations

For our product sales that have a contract term greater than one year, we have utilized the practical expedient in ASC 606, which states that a company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under our product sales contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. For our product sales that have a contract term of one year or less, we have utilized the practical expedient in ASC 606, which states that a company is not required to disclose the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

(d)   Contract Balances

Under our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. At December 31, 2017 and June 30, 2018, our receivables from contracts with customers were $300 million and $321 million, respectively.

 

(5)Equity Method Investments

In 2016, Antero Midstream acquired a 15% equity interest in Stonewall Gas Gathering LLC (“Stonewall”), which operates a regional gathering pipeline on which Antero is an anchor shipper.

On February 6, 2017, Antero Midstream formed the Joint Venture to develop gas processing and fractionation assets in Appalachia with MarkWest, a wholly owned subsidiary of MPLX. Antero Midstream and MarkWest each own a 50% equity interest in the Joint Venture and MarkWest operates the Joint Venture assets, which consist of processing plants in West Virginia, and a one-third interest in a MarkWest fractionator in Ohio.

The Company’s consolidated statements of operations and comprehensive income (loss) includes Antero Midstream’s proportionate share of the net income of equity method investees. When Antero Midstream records its proportionate share of net income, it increases equity income in the consolidated statements of operations and comprehensive income (loss) and the carrying value of that investment on the Company’s consolidated balance sheet.  When a distribution is received, it is recorded as a reduction to the carrying value of that investment on the consolidated balance sheet.  The Company uses the equity method of accounting to account for its investments in Stonewall and the Joint Venture because Antero Midstream exercises significant influence, but not control, over the entities.  The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as Antero Midstream’s ownership interest, representation on the board of directors, and participation in the policy-making decisions of Stonewall and the Joint Venture.

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Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

December 31, 2017 and June 30, 2018

The following table is a reconciliation of investments in unconsolidated affiliates for the six months ended June 30, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Stonewall

 

MarkWest
Joint Venture

 

Total

 

Balance at December 31, 2017

 

$

67,128

 

 

236,174

 

 

303,302

 

Investments

 

 

 —

 

 

56,297

 

 

56,297

 

Equity in net income of unconsolidated affiliates

 

 

5,542

 

 

11,584

 

 

17,126

 

Distributions from unconsolidated affiliates

 

 

(4,590)

 

 

(13,305)

 

 

(17,895)

 

Balance at June 30, 2018

 

$

68,080

 

 

290,750

 

 

358,830

 

 

Investments in the Joint Venture during the six months ended June 30, 2018 relate to capital contributions for construction of additional processing facilities.

 

(6)Accrued Liabilities

Accrued liabilities as of December 31, 2017 and June 30, 2018 consisted of the following items (in thousands):

 

 

 

 

 

 

 

 

 

    

December 31, 2017

    

June 30, 2018

 

Capital expenditures

 

$

155,300

 

 

126,476

 

Gathering, compression, processing, and transportation expenses

 

 

88,850

 

 

95,441

 

Marketing expenses

 

 

59,049

 

 

81,179

 

Interest expense

 

 

40,861

 

 

42,399

 

Other

 

 

99,165

 

 

93,334

 

 

 

$

443,225

 

 

438,829

 

 

 

(7)Long-Term Debt

 

Long-term debt was as follows at December 31, 2017 and June 30, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

    

December 31, 2017

    

June 30, 2018

 

Antero Resources:

 

 

 

 

 

 

 

Credit Facility(a)

 

$

185,000

 

 

455,000

 

5.375% senior notes due 2021(b)

 

 

1,000,000

 

 

1,000,000

 

5.125% senior notes due 2022(c)

 

 

1,100,000

 

 

1,100,000

 

5.625% senior notes due 2023(d)

 

 

750,000

 

 

750,000

 

5.00% senior notes due 2025(e)

 

 

600,000

 

 

600,000

 

Net unamortized premium

 

 

1,520

 

 

1,382

 

Net unamortized debt issuance costs

 

 

(32,430)

 

 

(29,604)

 

Antero Midstream:

 

 

 

 

 

 

 

Midstream Credit Facility(g)

 

 

555,000

 

 

770,000

 

5.375% senior notes due 2024(h)

 

 

650,000

 

 

650,000

 

Net unamortized debt issuance costs

 

 

(9,000)

 

 

(8,434)

 

 

 

$

4,800,090