Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.19.2
Segment Information
6 Months Ended
Jun. 30, 2019
Segment Information  
Segment Information

(17) Segment Information

See Note 2(i) to the unaudited condensed consolidated financial statements for a description of the Company’s determination of its reportable segments. Revenues from gathering and processing and water handling and treatment operations were primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations prior to the closing of the Transactions. Through March 12, 2019, the results of Antero Midstream Partners were included in the consolidated financial statements of Antero. Effective March 13, 2019, the results of Antero Midstream Partners are no longer consolidated in Antero’s result; however, the Company’s segment disclosures include the results of our unconsolidated affiliates due to their significance to the Company’s operations. See Note 3 to the unaudited condensed consolidated financial statements for further discussion on the Transactions. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties.

Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income (loss) of each segment. General and administrative expenses were allocated to the gathering and

processing and water handling and treatment segments based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2 to the unaudited condensed consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the three months ended June 30, 2018 and 2019 (in thousands):

    

Exploration
and
production

    

Marketing

    

Midstream

    

Elimination of
intersegment
transactions

    

Consolidated
total

 

Three months ended June 30, 2018:

Sales and revenues:

Third-party

$

823,734

160,092

5,518

 

989,344

Intersegment

 

5,179

245,457

(250,636)

 

Total

$

828,913

 

160,092

 

250,975

 

(250,636)

 

989,344

Operating expenses:

Lease operating

$

32,312

62,218

(64,366)

30,164

Gathering, compression, processing, and transportation

409,708

12,400

(114,322)

 

307,786

Impairment of oil and gas properties

134,437

134,437

Impairment of gathering systems and facilities

8,501

8,501

Depletion, depreciation, and amortization

201,393

36,657

 

238,050

General and administrative

46,662

15,494

(469)

61,687

Other

27,023

213,420

4,986

(3,947)

241,482

Total

851,535

213,420

140,256

(183,104)

1,022,107

Operating income (loss)

$

(22,622)

 

(53,328)

 

110,719

 

(67,532)

(32,763)

Equity in earnings of unconsolidated affiliates

$

9,264

9,264

Segment assets

$

13,381,044

61,684

3,293,101

(1,045,222)

15,690,607

Capital expenditures for segment assets

$

506,055

130,925

(73,919)

563,061

    

Exploration
and
production

    

Marketing

    

Equity Method Investment in Antero Midstream Corporation

    

Elimination of

intersegment

transactions and

unconsolidated

affiliates

    

Consolidated
total

 

Three months ended June 30, 2019:

Sales and revenues:

Third-party

$

1,234,824

63,080

46

 

1,297,950

Intersegment

 

1,760

255,572

(255,618)

 

1,714

Total

$

1,236,584

 

63,080

 

255,618

 

(255,618)

 

1,299,664

Operating expenses:

Lease operating

$

40,857

50,549

(50,549)

40,857

Gathering, compression, processing, and transportation

566,834

12,311

(12,311)

 

566,834

Impairment of oil and gas properties

130,999

130,999

Impairment of gathering systems and facilities

594

(594)

Depletion, depreciation, and amortization

242,302

36,447

(36,447)

 

242,302

General and administrative

42,382

34,622

(34,622)

42,382

Other

38,755

137,539

3,504

(3,504)

176,294

Total

1,062,129

137,539

138,027

(138,027)

1,199,668

Operating income (loss)

$

174,455

 

(74,459)

 

117,591

 

(117,591)

99,996

Equity in earnings of unconsolidated affiliates

$

13,585

13,623

(13,623)

13,585

Investments in unconsolidated affiliates

$

1,967,203

1,186,161

(1,186,161)

1,967,203

Segment assets

$

17,305,519

25,361

6,769,009

(6,769,009)

17,330,880

Capital expenditures for segment assets

$

342,253

125,185

(125,185)

342,253

The operating results and assets of the Company’s reportable segments were as follows for the six months ended June 30, 2018 and 2019 (in thousands):

    

Exploration
and
production

    

Marketing

    

Midstream

    

Elimination of
intersegment
transactions

    

Consolidated
total

Six months ended June 30, 2018:

Sales and revenues:

Third-party

$

1,608,277

398,715

10,453

 

2,017,445

Intersegment

 

11,054

470,113

(481,167)

 

Total

$

1,619,331

 

398,715

 

480,566

 

(481,167)

 

2,017,445

Operating expenses:

Lease operating

$

63,574

117,090

(123,778)

56,886

Gathering, compression, processing, and transportation

794,053

23,768

(218,097)

 

599,724

Impairment of oil and gas properties

184,973

184,973

Impairment of gathering systems and facilities

8,501

8,501

Depletion, depreciation, and amortization

396,981

69,313

 

466,294

General and administrative

93,082

29,949

(1,314)

121,717

Other

54,371

409,159

9,910

(7,821)

465,619

Total

1,587,034

409,159

258,531

(351,010)

1,903,714

Operating income (loss)

$

32,297

 

(10,444)

 

222,035

 

(130,157)

113,731

Equity in earnings of unconsolidated affiliates

$

17,126

17,126

Segment assets

$

13,381,044

61,684

3,293,101

(1,045,222)

15,690,607

Capital expenditures for segment assets

$

978,822

264,880

(134,678)

1,109,024

    

Exploration
and
production

    

Marketing

    

Equity Method Investment in Antero Midstream Corporation

    

Elimination of

intersegment

transactions and

unconsolidated

affiliates

    

Consolidated
total

Six months ended June 30, 2019:

Sales and revenues:

Third-party

$

2,176,459

154,266

50

 

2,330,775

Intersegment

 

3,518

309,676

(306,898)

 

6,296

Total

$

2,179,977

 

154,266

 

309,726

 

(306,898)

 

2,337,071

Operating expenses:

Lease operating

$

83,826

62,377

(63,614)

82,589

Gathering, compression, processing, and transportation

1,101,849

15,233

(125,719)

 

991,363

Impairment of oil and gas properties

212,243

212,243

Impairment of gathering systems and facilities

7,576

(594)

6,982

Depletion, depreciation, and amortization

460,796

44,097

(22,390)

 

482,503

General and administrative

92,290

54,431

(36,137)

110,584

Other

82,892

300,623

4,795

(3,792)

384,518

Total

2,033,896

300,623

188,509

(252,246)

2,270,782

Operating income (loss)

$

146,081

 

(146,357)

 

121,217

 

(54,652)

66,289

Equity in earnings of unconsolidated affiliates

$

15,402

16,503

(4,239)

27,666

Investments in unconsolidated affiliates

$

1,967,203

1,186,161

(1,186,161)

1,967,203

Segment assets

$

17,305,519

25,361

6,769,009

(6,769,009)

17,330,880

Capital expenditures for segment assets

$

761,034

141,190

(88,038)

814,186