Fee

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, 2023


☐	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)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	AR	New York Stock Exchange

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 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). ☒ 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 ☐
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 300,383,794 shares of common stock outstanding as of July 21, 2023.

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TABLE OF CONTENTS


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		1
PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51
Item 4.	Controls and Procedures	52
PART II—OTHER INFORMATION		53
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities	53
Item 4.	Mine Safety Disclosures	53
Item 6.	Exhibits	54
SIGNATURES		55

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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” 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. 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 based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

●

our ability to execute our business strategy;

●

our production and oil and gas reserves;

●

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

●

our ability to obtain debt or equity financing on satisfactory terms to fund acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

●

our ability to execute our return of capital program;

●

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

●

impacts of geopolitical events, including the Russia-Ukraine conflict, and world health events;

●

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

●

our hedging strategy and results;

●

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

●

our future drilling plans;

●

our projected well costs;

●

competition;

●

government regulations and changes in laws;

●

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 (“Antero Midstream”);

●

our ability to achieve our greenhouse gas reduction targets and the costs associated therewith;

●

general economic conditions;

●

credit markets;

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●

uncertainty regarding our future operating results; and

●

our other plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q.

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, supply chain or other disruption, availability and cost of drilling, completion and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes or changes in law, 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, impacts of geopolitical and world health events, cybersecurity risks, the state of markets for, and availability of, verified quality carbon offsets and the other risks described or referenced under the heading “Item 1A. Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), which is 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 or referenced 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.

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PART I—FINANCIAL INFORMATION

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)


			(Unaudited)
	December 31,		June 30,
	2022		2023
Assets
Current assets:
Accounts receivable	$	35,488		36,887
Accrued revenue		707,685		323,440
Derivative instruments		1,900		3,099
Prepaid expenses and other current assets		42,452		21,302
Total current assets		787,525		384,728
Property and equipment:
Oil and gas properties, at cost (successful efforts method):
Unproved properties		997,715		1,017,828
Proved properties		13,234,777		13,615,891
Gathering systems and facilities		5,802		5,802
Other property and equipment		83,909		91,255
		14,322,203		14,730,776
Less accumulated depletion, depreciation and amortization		(4,683,399)		(4,854,565)
Property and equipment, net		9,638,804		9,876,211
Operating leases right-of-use assets		3,444,331		3,262,253
Derivative instruments		9,844		7,934
Investment in unconsolidated affiliate		220,429		218,196
Other assets		17,106		17,488
Total assets	$	14,118,039		13,766,810
Liabilities and Equity
Current liabilities:
Accounts payable	$	77,543		60,911
Accounts payable, related parties		80,708		95,360
Accrued liabilities		461,788		366,038
Revenue distributions payable		468,210		359,487
Derivative instruments		97,765		35,509
Short-term lease liabilities		556,636		553,953
Deferred revenue, VPP		30,552		28,878
Other current liabilities		1,707		6,728
Total current liabilities		1,774,909		1,506,864
Long-term liabilities:
Long-term debt		1,183,476		1,492,270
Deferred income tax liability, net		759,861		792,149
Derivative instruments		345,280		59,224
Long-term lease liabilities		2,889,854		2,711,735
Deferred revenue, VPP		87,813		74,337
Other liabilities		59,692		61,903
Total liabilities		7,100,885		6,698,482
Commitments and contingencies
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; 297,393 shares issued and 297,359 outstanding as of December 31, 2022, and 300,359 shares issued and outstanding as of June 30, 2023		2,974		3,004
Additional paid-in capital		5,838,848		5,803,634
Retained earnings		913,896		1,019,256
Treasury stock, at cost; 34 shares and zero shares as of December 31, 2022 and June 30, 2023, respectively		(1,160)		—
Total stockholders' equity		6,754,558		6,825,894
Noncontrolling interests		262,596		242,434
Total equity		7,017,154		7,068,328
Total liabilities and equity	$	14,118,039		13,766,810

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30,
	2022		2023
Revenue and other:
Natural gas sales	$	1,558,994		437,130
Natural gas liquids sales		702,388		397,733
Oil sales		89,185		57,962
Commodity derivative fair value gains (losses)		(265,662)		8,284
Marketing		106,150		43,793
Amortization of deferred revenue, VPP		9,375		7,618
Other revenue and income		1,255		785
Total revenue		2,201,685		953,305
Operating expenses:
Lease operating		25,253		28,748
Gathering, compression, processing and transportation		656,212		663,975
Production and ad valorem taxes		81,842		36,158
Marketing		131,298		66,175
Exploration and mine expenses		1,394		743
General and administrative (including equity-based compensation expense of $8,171 and $13,512 in 2022 and 2023, respectively)		44,439		53,901
Depletion, depreciation and amortization		173,395		171,406
Impairment of property and equipment		23,363		15,710
Accretion of asset retirement obligations		804		1,204
Contract termination		2,096		4,441
Loss (gain) on sale of assets		71		(220)
Total operating expenses		1,140,167		1,042,241
Operating income (loss)		1,061,518		(88,936)
Other income (expense):
Interest expense, net		(34,213)		(27,928)
Equity in earnings of unconsolidated affiliate		14,713		19,098
Loss on early extinguishment of debt		(4,414)		—
Total other expense		(23,914)		(8,830)
Income (loss) before income taxes		1,037,604		(97,766)
Income tax benefit (expense)		(225,571)		29,833
Net income (loss) and comprehensive income (loss) including noncontrolling interests		812,033		(67,933)
Less: net income and comprehensive income attributable to noncontrolling interests		46,898		15,151
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	765,135		(83,084)

Income (loss) per share—basic	$	2.46		(0.28)
Income (loss) per share—diluted	$	2.29		(0.28)

Weighted average number of shares outstanding:
Basic		310,535		300,141
Diluted		334,561		300,141

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In thousands, except per share amounts)


	Six Months Ended June 30,
	2022		2023
Revenue and other:
Natural gas sales	$	2,554,786		1,105,445
Natural gas liquids sales		1,362,693		893,168
Oil sales		152,479		109,773
Commodity derivative fair value gains (losses)		(1,277,042)		134,476
Marketing		175,188		102,322
Amortization of deferred revenue, VPP		18,647		15,151
Other revenue and income		1,774		1,318
Total revenue		2,988,525		2,361,653
Operating expenses:
Lease operating		43,033		58,069
Gathering, compression, processing and transportation		1,246,490		1,309,147
Production and ad valorem taxes		134,650		85,434
Marketing		230,194		147,536
Exploration and mine expenses		2,292		1,506
General and administrative (including equity-based compensation expense of $12,820 and $26,530 in 2022 and 2023, respectively)		80,130		111,162
Depletion, depreciation and amortization		341,783		338,988
Impairment of property and equipment		45,825		31,270
Accretion of asset retirement obligations		3,248		2,082
Contract termination		2,104		33,991
Loss (gain) on sale of assets		1,857		(311)
Other operating expense		—		225
Total operating expenses		2,131,606		2,119,099
Operating income		856,919		242,554
Other income (expense):
Interest expense, net		(71,926)		(53,628)
Equity in earnings of unconsolidated affiliate		39,891		36,779
Loss on early extinguishment of debt		(15,068)		—
Loss on convertible note inducement		—		(86)
Total other expense		(47,103)		(16,935)
Income before income taxes		809,816		225,619
Income tax expense		(172,479)		(32,350)
Net income and comprehensive income including noncontrolling interests		637,337		193,269
Less: net income and comprehensive income attributable to noncontrolling interests		28,621		62,922
Net income and comprehensive income attributable to Antero Resources Corporation	$	608,716		130,347

Income per share—basic	$	1.95		0.44
Income per share—diluted	$	1.81		0.42

Weighted average number of shares outstanding:
Basic		312,300		298,461
Diluted		337,589		311,488

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)


					Additional		Retained Earnings
	Common Stock				Paid-in		(Accumulated		Treasury Stock				Noncontrolling		Total
	Shares		Amount		Capital		Deficit)		Shares		Amount		Interests		Equity
Balances, December 31, 2021		313,930	$	3,139		6,371,398		(617,377)		—	$	—		308,932		6,066,092
Equity component of 2026 Convertible Notes, net		—		—		(24,411)		3,229		—		—		—		(21,182)
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		780		8		(10,385)		—		—		—		—		(10,377)
Repurchases and retirements of common stock		(3,690)		(37)		(74,745)		(25,263)		—		—				(100,045)
Equity-based compensation		—		—		4,649		—		—		—		—		4,649
Distributions to noncontrolling interests		—		—		—		—		—		—		(35,757)		(35,757)
Net loss and comprehensive loss		—		—		—		(156,419)				—		(18,277)		(174,696)
Balances, March 31, 2022		311,020		3,110		6,266,506		(795,830)		—		—		254,898		5,728,684
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		2,112		21		(54,463)		—		—		—		—		(54,442)
Conversion of 2026 Convertible Notes		921		9		3,955		—		—		—		—		3,964
Repurchases and retirements of common stock		(5,241)		(52)		(104,524)		(88,430)		—		—		—		(193,006)
Equity-based compensation		—		—		8,171		—		—		—		—		8,171
Distributions to noncontrolling interests		—		—		—		—		—		—		(31,541)		(31,541)
Net income and comprehensive income		—		—		—		765,135		—		—		46,898		812,033
Balances, June 30, 2022		308,812	$	3,088		6,119,645		(119,125)		—	$	—		270,255		6,273,863

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)


					Additional
	Common Stock				Paid-in		Retained		Treasury Stock				Noncontrolling		Total
	Shares		Amount		Capital		Earnings		Shares		Amount		Interests		Equity
Balances, December 31, 2022		297,393	$	2,974		5,838,848		913,896		(34)	$	(1,160)		262,596		7,017,154
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		514		5		(11,464)		—		—		—		—		(11,459)
Conversion of 2026 Convertible Notes		4,030		40		17,132		—								17,172
Repurchases and retirements of common stock		(2,616)		(26)		(51,503)		(24,987)		34		1,160		—		(75,356)
Equity-based compensation		—		—		13,018		—		—		—		—		13,018
Distributions to noncontrolling interests		—		—		—		—		—		—		(51,339)		(51,339)
Net income and comprehensive income		—		—		—		213,431		—		—		47,771		261,202
Balances, March 31, 2023		299,321		2,993		5,806,031		1,102,340		—		—		259,028		7,170,392
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		1,038		11		(15,909)		—		—		—		—		(15,898)
Equity-based compensation		—		—		13,512		—		—		—		—		13,512
Distributions to noncontrolling interests		—		—		—		—		—		—		(31,745)		(31,745)
Net income (loss) and comprehensive income (loss)		—		—		—		(83,084)		—		—		15,151		(67,933)
Balances, June 30, 2023		300,359	$	3,004		5,803,634		1,019,256		—	$	—		242,434		7,068,328

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Six Months Ended June 30,
	2022		2023
Cash flows provided by (used in) operating activities:
Net income including noncontrolling interests	$	637,337		193,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization and accretion		345,031		341,070
Impairments		45,825		31,270
Commodity derivative fair value losses (gains)		1,277,042		(134,476)
Losses on settled commodity derivatives		(844,713)		(10,787)
Payments for derivative monetizations		—		(202,339)
Deferred income tax expense		171,707		32,288
Equity-based compensation expense		12,820		26,530
Equity in earnings of unconsolidated affiliate		(39,891)		(36,779)
Dividends of earnings from unconsolidated affiliate		62,569		62,569
Amortization of deferred revenue		(18,647)		(15,151)
Amortization of debt issuance costs, debt discount and debt premium		2,515		1,732
Settlement of asset retirement obligations		(886)		(633)
Loss (gain) on sale of assets		1,857		(311)
Loss on early extinguishment of debt		15,068		—
Loss on convertible note inducement