ensura
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (IRS Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act: | ||||
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. ⌧
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ⌧
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.
Accelerated Filer ◻ | ||
Non-accelerated Filer ◻ | 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)
The registrant had
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 48 | |||
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1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report on Form 10-Q includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward looking statements. 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, although not all forward-looking statements contain such identifying words. These forward looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering these forward-looking statements, investors should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. These forward-looking statements are management’s belief, based on currently available information, as to the outcome and timing of future events.
Forward looking statements may include statements about:
● | 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; |
● | our ability to successfully complete our share repurchase program; |
● | our ability to meet minimum volume commitments and to utilize or monetize our firm transportation commitments; |
● | future drilling plans; |
● | projected well costs and cost savings initiatives, including with respect to water handling and treatment services provided by Antero Midstream Corporation; |
● | 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 Corporation; |
● | general economic conditions; |
● | credit markets; |
● | expectations regarding the amount and timing of jury awards; |
● | uncertainty regarding our future operating results; and |
● | plans, objectives, expectations, and intentions. |
2
We caution investors that these forward-looking statements are subject to all of the risks and uncertainties incidental to our business, most of which are difficult to predict and many of which are beyond our control. 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 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, 2018 (the “2018 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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 to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
3
PART I—FINANCIAL INFORMATION
ANTERO RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
December 31, 2018 and September 30, 2019
(In thousands, except per share amounts)
|
| (Unaudited) |
| ||||
| December 31, 2018 |
| September 30, 2019 |
| |||
Assets | |||||||
Current assets: |
| ||||||
Accounts receivable | $ | | | ||||
Accrued revenue | | | |||||
Derivative instruments | | | |||||
Other current assets | | | |||||
Total current assets | | | |||||
Property and equipment: | |||||||
Oil and gas properties, at cost (successful efforts method): | |||||||
Unproved properties | | | |||||
Proved properties | | | |||||
Water handling and treatment systems | | — | |||||
Gathering systems and facilities | | | |||||
Other property and equipment | | | |||||
| | ||||||
Less accumulated depletion, depreciation, and amortization | ( | ( | |||||
Property and equipment, net | | | |||||
Operating leases right-of-use assets | — | | |||||
Derivative instruments | | | |||||
Investments in unconsolidated affiliates | | | |||||
Other assets | | | |||||
Total assets | $ | | | ||||
Liabilities and Equity | |||||||
Current liabilities: |
| ||||||
Accounts payable | $ | |
| | |||
Accounts payable, related parties | — | | |||||
Accrued liabilities | | | |||||
Revenue distributions payable | | | |||||
Derivative instruments | | — | |||||
Short-term lease liabilities | | | |||||
Other current liabilities | | | |||||
Total current liabilities | | | |||||
Long-term liabilities: | |||||||
Long-term debt | | | |||||
Deferred income tax liability | | | |||||
Long-term lease liabilities | | | |||||
Other liabilities | | | |||||
Total liabilities | | | |||||
Commitments and contingencies (Notes 13 and 14) | |||||||
Equity: | |||||||
Stockholders' equity: | |||||||
Preferred stock, $ | — | — | |||||
Common stock, $ | | | |||||
Additional paid-in capital | | | |||||
Accumulated earnings | | | |||||
Total stockholders' equity | | | |||||
Noncontrolling interests in consolidated subsidiary | | — | |||||
Total equity | | | |||||
Total liabilities and equity | $ | | |
See accompanying notes to the unaudited condensed consolidated financial statements.
4
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Loss
Three Months Ended September 30, 2018 and 2019
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, | |||||||
| 2018 |
| 2019 |
| |||
Revenue and other: | |||||||
Natural gas sales | $ | | | ||||
Natural gas liquids sales | | | |||||
Oil sales | | | |||||
Commodity derivative fair value gains | | | |||||
Gathering, compression, water handling and treatment | | — | |||||
Marketing | | | |||||
Marketing derivative fair value losses | ( | — | |||||
Other income | — | | |||||
Total revenue | | | |||||
Operating expenses: | |||||||
Lease operating | | | |||||
Gathering, compression, processing, and transportation | | | |||||
Production and ad valorem taxes | | | |||||
Marketing | | | |||||
Exploration | | | |||||
Impairment of oil and gas properties | | | |||||
Impairment of midstream assets | | | |||||
Depletion, depreciation, and amortization | | | |||||
Accretion of asset retirement obligations | | | |||||
General and administrative (including equity-based compensation expense of $ | | | |||||
Contract termination and rig stacking | — | | |||||
Total operating expenses | | | |||||
Operating income (loss) | | ( | |||||
Other income (expenses): | |||||||
Equity in earnings (loss) of unconsolidated affiliates | | ( | |||||
Interest expense, net | ( | ( | |||||
Total other expenses | ( | ( | |||||
Loss before income taxes | ( | ( | |||||
Provision for income tax (expense) benefit | ( | | |||||
Net loss and comprehensive loss including noncontrolling interests | ( | ( | |||||
Net income and comprehensive income attributable to noncontrolling interests | | — | |||||
Net loss and comprehensive loss attributable to Antero Resources Corporation | $ | ( | ( | ||||
Loss per common share—basic and diluted | $ | ( | ( | ||||
Weighted average number of shares outstanding: | |||||||
Basic and diluted | | |
See accompanying notes to the unaudited condensed consolidated financial statements.
5
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Nine Months Ended September 30, 2018 and 2019
(Unaudited)
(In thousands, except per share amounts)
Nine Months Ended September 30, | |||||||
| 2018 |
| 2019 |
| |||
Revenue and other: | |||||||
Natural gas sales | $ | | | ||||
Natural gas liquids sales | | | |||||
Oil sales | | | |||||
Commodity derivative fair value gains | | | |||||
Gathering, compression, water handling and treatment | | | |||||
Marketing | | | |||||
Marketing derivative fair value gains | | — | |||||
Other income | — | | |||||
Total revenue and other | | | |||||
Operating expenses: | |||||||
Lease operating | | | |||||
Gathering, compression, processing, and transportation | | | |||||
Production and ad valorem taxes | | | |||||
Marketing | | | |||||
Exploration | | | |||||
Impairment of oil and gas properties | | | |||||
Impairment of midstream assets | | | |||||
Depletion, depreciation, and amortization | | | |||||
Loss on sale of assets | — | | |||||
Accretion of asset retirement obligations | | | |||||
General and administrative (including equity-based compensation expense of $ | | | |||||
Contract termination and rig stacking | — | | |||||
Total operating expenses | | | |||||
Operating income (loss) | | ( | |||||
Other income (expenses): | |||||||
Equity in earnings (loss) of unconsolidated affiliates | | ( | |||||
Interest expense, net | ( | ( | |||||
Gain on deconsolidation of Antero Midstream Partners LP | — | | |||||
Total other income (expenses) | ( | | |||||
Income (loss) before income taxes | ( | | |||||
Provision for income tax expense | ( | ( | |||||
Net income (loss) and comprehensive income (loss) including noncontrolling interests | ( | | |||||
Net income and comprehensive income attributable to noncontrolling interests | | | |||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation | $ | ( | | ||||
Earnings (loss) per common share—basic | $ | ( | | ||||
Earnings (loss) per common share—assuming dilution | $ | ( | | ||||
Weighted average number of shares outstanding: | |||||||
Basic | | | |||||
Diluted | | |
6
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Equity
Three and Nine Months Ended September 30, 2018
(Unaudited)
(In thousands)
Common Stock | Additional paid- | Accumulated | Noncontrolling | Total | |||||||||||||||
| Shares |
| Amount |
| in capital |
| earnings |
| interests |
| equity |
| |||||||
Balances, December 31, 2017 | | $ | | | | | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | ( | |||||||||||||
Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes | — | — | ( | — | | ( | |||||||||||||
Equity-based compensation | — | — | | — | | | |||||||||||||
Net income and comprehensive income | — | — | — | | | | |||||||||||||
Effects of changes in ownership interests in consolidated subsidiaries | — | — | ( | — | | — | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | |||||||||||||
Other | — | — | — | — | ( | ( | |||||||||||||
Balances, March 31, 2018 | | $ | | | | | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | ( | |||||||||||||
Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes | — | — | ( | — | | ( | |||||||||||||
Equity-based compensation | — | — | | — | | | |||||||||||||
Net income (loss) and comprehensive income (loss) | — | — | — | ( | | ( | |||||||||||||
Effects of changes in ownership interests in consolidated subsidiaries | — | — | | — | ( | — | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | |||||||||||||
Other | — | — | — | — | | | |||||||||||||
Balances, June 30, 2018 | | $ | | | | | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | — | ( | — | — | ( | |||||||||||||
Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes | — | — | ( | — | | ( | |||||||||||||
Equity-based compensation | — | — | | — | | | |||||||||||||
Net income (loss) and comprehensive income (loss) | — | — | — | ( | | ( | |||||||||||||
Effects of changes in ownership interests in consolidated subsidiaries | — | — | ( | — | | — | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | |||||||||||||
Balances, September 30, 2018 | | $ | | | | | |
See accompanying notes to the unaudited condensed consolidated financial statements.
7
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Equity
Three and Nine Months Ended September 30, 2019
(Unaudited)
(In thousands)
Common Stock | Additional paid- | Accumulated | Noncontrolling | Total | |||||||||||||||
| Shares |
| Amount |
| in capital |
| earnings |
| interests |
| equity |
| |||||||
Balances, December 31, 2018 | | $ | | | | | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | ( | |||||||||||||
Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes | — | — | ( | — | | ( | |||||||||||||
Equity-based compensation | — | — | | — | | | |||||||||||||
Net income and comprehensive income | — | — | — | | | | |||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | |||||||||||||
Effect of deconsolidation of Antero Midstream Partners LP | — | — | ( | — | ( | ( | |||||||||||||
Balances, March 31, 2019 | | $ | | | | — | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | ( | |||||||||||||
Equity-based compensation | — | — | | — | — | | |||||||||||||
Net income and comprehensive income | — | — | — | | — | | |||||||||||||
Balances, June 30, 2019 | | $ | | | | — | | ||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | ( | |||||||||||||
Repurchases and retirements of common stock | ( | ( | ( | — | — | ( | |||||||||||||
Equity-based compensation | — | — | | — | — | | |||||||||||||
Net loss and comprehensive loss | — | — | — | ( | — | ( | |||||||||||||
Balances, September 30, 2019 | | $ | | | | — | |
See accompanying notes to the unaudited condensed consolidated financial statements.
8
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2018 and 2019
(Unaudited)
(In thousands)
Nine Months Ended September 30, | |||||||
| 2018 |
| 2019 |
| |||
Cash flows provided by (used in) operating activities: |
| ||||||
Net income (loss) including noncontrolling interests | $ | ( |
| | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |