ANTERO RESOURCES Corp [AR] Filings

10-Q 1 ar-20230930x10q.htm 10-Q

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 September 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

Number of shares of the registrant’s common stock outstanding as of October 20, 2023 (in thousands): 300,544

Table of Contents

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	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	53
PART II—OTHER INFORMATION		54
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5	Other Information	54
Item 6.	Exhibits	55
SIGNATURES		56

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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 and in our Annual Report on Form 10-K for the year ended December 31, 2022. 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 conflicts in Ukraine and in the Middle East, 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,		September 30,
	2022		2023
Assets
Current assets:
Accounts receivable	$	35,488		36,928
Accrued revenue		707,685		373,391
Derivative instruments		1,900		2,563
Prepaid expenses and other current assets		42,452		9,537
Total current assets		787,525		422,419
Property and equipment:
Oil and gas properties, at cost (successful efforts method):
Unproved properties		997,715		1,020,394
Proved properties		13,234,777		13,773,718
Gathering systems and facilities		5,802		5,802
Other property and equipment		83,909		95,317
		14,322,203		14,895,231
Less accumulated depletion, depreciation and amortization		(4,683,399)		(4,957,449)
Property and equipment, net		9,638,804		9,937,782
Operating leases right-of-use assets		3,444,331		3,128,584
Derivative instruments		9,844		6,627
Investment in unconsolidated affiliate		220,429		220,110
Other assets		17,106		21,035
Total assets	$	14,118,039		13,736,557
Liabilities and Equity
Current liabilities:
Accounts payable	$	77,543		81,904
Accounts payable, related parties		80,708		89,350
Accrued liabilities		461,788		335,093
Revenue distributions payable		468,210		338,244
Derivative instruments		97,765		31,134
Short-term lease liabilities		556,636		551,037
Deferred revenue, VPP		30,552		27,990
Other current liabilities		1,707		6,302
Total current liabilities		1,774,909		1,461,054
Long-term liabilities:
Long-term debt		1,183,476		1,606,895
Deferred income tax liability, net		759,861		805,775
Derivative instruments		345,280		52,584
Long-term lease liabilities		2,889,854		2,581,323
Deferred revenue, VPP		87,813		67,524
Other liabilities		59,692		63,214
Total liabilities		7,100,885		6,638,369
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 300,386 shares issued and outstanding as of September 30, 2023		2,974		3,004
Additional paid-in capital		5,838,848		5,822,013
Retained earnings		913,896		1,037,064
Treasury stock, at cost; 34 shares and zero shares as of December 31, 2022 and September 30, 2023, respectively		(1,160)		—
Total stockholders' equity		6,754,558		6,862,081
Noncontrolling interests		262,596		236,107
Total equity		7,017,154		7,098,188
Total liabilities and equity	$	14,118,039		13,736,557

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)


	Three Months Ended September 30,
	2022		2023
Revenue and other:
Natural gas sales	$	1,736,039		516,214
Natural gas liquids sales		620,816		482,570
Oil sales		67,025		62,629
Commodity derivative fair value gains (losses)		(530,523)		3,448
Marketing		159,985		53,068
Amortization of deferred revenue, VPP		9,478		7,701
Other revenue and income		1,804		546
Total revenue		2,064,624		1,126,176
Operating expenses:
Lease operating		27,453		33,484
Gathering, compression, processing and transportation		716,388		671,886
Production and ad valorem taxes		92,998		32,258
Marketing		185,377		69,542
Exploration and mine expenses		2,975		591
General and administrative (including equity-based compensation expense of $10,402 and $18,458 in 2022 and 2023, respectively)		42,903		58,425
Depletion, depreciation and amortization		169,607		176,259
Impairment of property and equipment		33,924		13,476
Accretion of asset retirement obligations		630		889
Contract termination and loss contingency		17,995		13,659
Loss (gain) on sale of assets		214		(136)
Other operating expense		—		111
Total operating expenses		1,290,464		1,070,444
Operating income		774,160		55,732
Other income (expense):
Interest expense, net		(28,326)		(31,634)
Equity in earnings of unconsolidated affiliate		14,972		22,207
Loss on early extinguishment of debt		(30,307)		—
Loss on convertible note inducement		(169)		—
Total other expense		(43,830)		(9,427)
Income before income taxes		730,330		46,305
Income tax expense		(135,823)		(13,663)
Net income and comprehensive income including noncontrolling interests		594,507		32,642
Less: net income and comprehensive income attributable to noncontrolling interests		34,748		14,834
Net income and comprehensive income attributable to Antero Resources Corporation	$	559,759		17,808

Income per share—basic	$	1.83		0.06
Income per share—diluted	$	1.72		0.06

Weighted average number of shares outstanding:
Basic		305,343		300,141
Diluted		325,997		311,534

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)


	Nine Months Ended September 30,
	2022		2023
Revenue and other:
Natural gas sales	$	4,290,825		1,621,659
Natural gas liquids sales		1,983,509		1,375,738
Oil sales		219,504		172,402
Commodity derivative fair value gains (losses)		(1,807,565)		137,924
Marketing		335,173		155,390
Amortization of deferred revenue, VPP		28,125		22,852
Other revenue and income		3,578		1,864
Total revenue		5,053,149		3,487,829
Operating expenses:
Lease operating		70,486		91,553
Gathering, compression, processing and transportation		1,962,878		1,981,033
Production and ad valorem taxes		227,648		117,692
Marketing		415,571		217,078
Exploration and mine expenses		5,267		2,097
General and administrative (including equity-based compensation expense of $23,222 and $44,988 in 2022 and 2023, respectively)		123,033		169,587
Depletion, depreciation and amortization		511,390		515,247
Impairment of property and equipment		79,749		44,746
Accretion of asset retirement obligations		3,878		2,971
Contract termination and loss contingency		20,099		47,650
Loss (gain) on sale of assets		2,071		(447)
Other operating expense		—		336
Total operating expenses		3,422,070		3,189,543
Operating income		1,631,079		298,286
Other income (expense):
Interest expense, net		(100,252)		(85,262)
Equity in earnings of unconsolidated affiliate		54,863		58,986
Loss on early extinguishment of debt		(45,375)		—
Loss on convertible note inducement		(169)		(86)
Total other expense		(90,933)		(26,362)
Income before income taxes		1,540,146		271,924
Income tax expense		(308,302)		(46,013)
Net income and comprehensive income including noncontrolling interests		1,231,844		225,911
Less: net income and comprehensive income attributable to noncontrolling interests		63,369		77,756
Net income and comprehensive income attributable to Antero Resources Corporation	$	1,168,475		148,155

Income per share—basic	$	3.77		0.50
Income per share—diluted	$	3.51		0.48

Weighted average number of shares outstanding:
Basic		309,954		298,461
Diluted		333,738		310,958

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
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		25		—		(210)		—		—		—		—		(210)
Conversion of 2026 Convertible Notes		4,751		48		20,230		—		—		—		—		20,278
Repurchases and retirements of common stock		(10,457)		(105)		(208,090)		(174,166)		—		—		—		(382,361)
Equity-based compensation		—		—		10,402		—		—		—		—		10,402
Distributions to noncontrolling interests		—		—		—		—		—		—		(46,217)		(46,217)
Net income and comprehensive income		—		—		—		559,759		—		—		34,748		594,507
Balances, September 30, 2022		303,131	$	3,031		5,941,977		266,468		—	$	—		258,786		6,470,262

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

ANTERO RESOURCES Corp [AR] Filings
10-Q	[2023-10-25]
10-Q	[2023-07-26]
10-Q	[2023-04-26]
10-K	[2023-02-15]
10-Q	[2022-10-26]
10-Q	[2022-07-27]
10-Q	[2022-04-27]
10-K	[2022-02-16]
10-Q	[2021-10-27]
10-Q	[2021-07-28]
10-Q	[2021-04-28]
10-K	[2021-02-17]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-04-29]
10-K	[2020-02-12]
10-Q	[2019-10-29]
10-Q	[2019-07-31]
10-Q	[2019-05-01]
10-K	[2019-02-13]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-04-25]
10-K	[2018-02-13]
10-Q	[2017-11-01]
10-Q	[2017-08-02]
10-Q	[2017-05-08]
10-K	[2017-02-28]
10-Q	[2016-10-26]
10-Q	[2016-08-02]
10-Q	[2016-04-27]
10-K	[2016-02-24]
10-Q	[2015-10-28]
10-Q	[2015-07-29]
10-Q	[2015-04-29]
10-K	[2015-02-25]
10-Q	[2014-11-05]
10-Q	[2014-08-06]
10-Q	[2014-05-07]
10-K	[2014-02-27]
10-Q	[2013-11-06]
S-1	[2013-06-13]