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)
Number of shares of the registrant’s common stock outstanding as of October 25, 2024 (in thousands):
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 33 | |||
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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, 2023. 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 natural gas, natural gas liquids (“NGLs”) and oil 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, 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; |
1
● | 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, 2023 (the “2023 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.
2
PART I—FINANCIAL INFORMATION
ANTERO RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited) | |||||||
December 31, | September 30, | ||||||
| 2023 |
| 2024 |
| |||
Assets | |||||||
Current assets: | |||||||
Accounts receivable | $ | |
| | |||
Accrued revenue | | | |||||
Derivative instruments | | | |||||
Prepaid expenses | | | |||||
Other current assets | | | |||||
Total current assets | | | |||||
Property and equipment: | |||||||
Oil and gas properties, at cost (successful efforts method): | |||||||
Unproved properties | | | |||||
Proved properties | | | |||||
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 | | | |||||
Investment in unconsolidated affiliate | | | |||||
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 | | | |||||
Deferred revenue, VPP | | | |||||
Other current liabilities | | | |||||
Total current liabilities | | | |||||
Long-term liabilities: | |||||||
Long-term debt | | | |||||
Deferred income tax liability, net | | | |||||
Derivative instruments | | | |||||
Long-term lease liabilities | | | |||||
Deferred revenue, VPP | | | |||||
Other liabilities | | | |||||
Total liabilities | | | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Stockholders' equity: | |||||||
Preferred stock, $ | |||||||
Common stock, $ | | | |||||
Additional paid-in capital | | | |||||
Retained earnings | | | |||||
Total stockholders' equity | | | |||||
Noncontrolling interests | | | |||||
Total equity | | | |||||
Total liabilities and equity | $ | | |
See accompanying notes to unaudited condensed consolidated financial statements.
3
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, | |||||||
| 2023 |
| 2024 |
| |||
Revenue and other: | |||||||
Natural gas sales | $ | | | ||||
Natural gas liquids sales | | | |||||
Oil sales | | | |||||
Commodity derivative fair value gains | | | |||||
Marketing | | | |||||
Amortization of deferred revenue, VPP | | | |||||
Other revenue and income | | | |||||
Total revenue | | | |||||
Operating expenses: | |||||||
Lease operating | | | |||||
Gathering, compression, processing and transportation | | | |||||
Production and ad valorem taxes | | | |||||
Marketing | | | |||||
Exploration | | | |||||
General and administrative (including equity-based compensation expense of $ | | | |||||
Depletion, depreciation and amortization | | | |||||
Impairment of property and equipment | | | |||||
Accretion of asset retirement obligations | | | |||||
Contract termination, loss contingency and settlements | | ( | |||||
Gain on sale of assets | ( | ( | |||||
Other operating expense | | | |||||
Total operating expenses | | | |||||
Operating income (loss) | | ( | |||||
Other income (expense): | |||||||
Interest expense, net | ( | ( | |||||
Equity in earnings of unconsolidated affiliate | | | |||||
Loss on early extinguishment of debt | — | ( | |||||
Total other expense | ( | ( | |||||
Income (loss) before income taxes | | ( | |||||
Income tax expense | ( | ( | |||||
Net income (loss) and comprehensive income (loss) including noncontrolling interests | | ( | |||||
Less: net income and comprehensive income attributable to noncontrolling interests | | | |||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation | $ | | ( | ||||
Net income (loss) per common share—basic | $ | | ( | ||||
Net income (loss) per common share—diluted | $ | | ( | ||||
Weighted average number of common shares outstanding: | |||||||
Basic | | | |||||
Diluted | | |
See accompanying notes to unaudited condensed consolidated financial statements.
4
ANTERO RESOURCES CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(In thousands, except per share amounts)
Nine Months Ended September 30, | |||||||
| 2023 |
| 2024 | ||||
Revenue and other: | |||||||
Natural gas sales | $ | | | ||||
Natural gas liquids sales | | | |||||
Oil sales | | | |||||
Commodity derivative fair value gains | | | |||||
Marketing | | | |||||
Amortization of deferred revenue, VPP | | | |||||
Other revenue and income | | | |||||
Total revenue | | | |||||
Operating expenses: | |||||||
Lease operating | | | |||||
Gathering, compression, processing and transportation | | | |||||
Production and ad valorem taxes | | | |||||
Marketing | | | |||||
Exploration and mine expenses | | | |||||
General and administrative (including equity-based compensation expense of $ | | | |||||
Depletion, depreciation and amortization | | | |||||
Impairment of property and equipment | | | |||||
Accretion of asset retirement obligations | | | |||||
Contract termination, loss contingency and settlements | | | |||||
Gain on sale of assets | ( | ( | |||||
Other operating expense | | | |||||
Total operating expenses | | | |||||
Operating income (loss) | | ( | |||||
Other income (expense): | |||||||
Interest expense, net | ( | ( | |||||
Equity in earnings of unconsolidated affiliate | | | |||||
Loss on early extinguishment of debt | — | ( | |||||
Loss on convertible note inducement | ( | — | |||||
Total other expense | ( | ( | |||||
Income (loss) before income taxes | | ( | |||||
Income tax benefit (expense) | ( | | |||||
Net income (loss) and comprehensive income (loss) including noncontrolling interests | | ( | |||||
Less: net income and comprehensive income attributable to noncontrolling interests | | | |||||
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation | $ | | ( | ||||
Net income (loss) per common share—basic | $ | | ( | ||||
Net income (loss) per common share—diluted | $ | | ( | ||||
Weighted average number of common shares outstanding: | |||||||
Basic | | | |||||
Diluted | | |
See accompanying notes to unaudited condensed consolidated financial statements.
5
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 | | $ | | | | ( | $ | ( | | | |||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | — | — | ( | |||||||||||||||||
Conversion of 2026 Convertible Notes | | | | — | — | — | — | | |||||||||||||||||
Repurchases and retirements of common stock | ( | ( | ( | ( | | | — | ( | |||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Net income and comprehensive income | — | — | — | | — | — | | | |||||||||||||||||
Balances, March 31, 2023 | | | | | — | — | | | |||||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | — | — | ( | |||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Net income (loss) and comprehensive income (loss) | — | — | — | ( | — | — | | ( | |||||||||||||||||
Balances, June 30, 2023 | | | | | — | — | | | |||||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | — | ( | — | — | — | — | ( | |||||||||||||||||
Conversion of 2026 Convertible Notes | | — | | — | — | — | — | | |||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Net income and comprehensive income | — | — | — | | — | — | | | |||||||||||||||||
Balances, September 30, 2023 | | $ | | | | — | $ | — | | |
See accompanying notes to unaudited condensed consolidated financial statements.
6
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, 2023 | | $ | | | | — | $ | — | | | ||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | — | — | ( | ||||||||||||||||
Conversion of 2026 Convertible Notes | | | | — | — | — | — | | ||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||
Net income and comprehensive income | — | — | — | | — | — | | | ||||||||||||||||
Balances, March 31, 2024 | | | | | — | — | | | ||||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | | ( | — | — | — | — | ( | ||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||
Net income (loss) and comprehensive income (loss) | — | — | — | ( | — | — | | ( | ||||||||||||||||
Balances, June 30, 2024 | | | | | — | — | | | ||||||||||||||||
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes | | — | ( | — | — | — | — | ( | ||||||||||||||||
Equity-based compensation | — | — | | — | — | — | — | | ||||||||||||||||
Distributions to noncontrolling interest | — | — | — | — | — | — | ( | ( | ||||||||||||||||
Net income (loss) and comprehensive income (loss) | — | — |